The Bylaws of the SAS: Substantive Rules, Legal Form, and Practical Consequences

1. Definition and role of the bylaws of the SAS

The bylaws of a Société par Actions Simplifiée (SAS) are the constitutive act by which the shareholders agree to create a company. They define the organization, the rules of functioning, the rights and obligations of the shareholders, as well as the management methods. In other words, the bylaws constitute the “law of the parties”: they are binding on all shareholders and on the directors, as long as they comply with public policy.

The bylaws are also the foundation of the company’s legal personality: without bylaws that are signed and filed, the SAS does not legally exist. They also serve as an essential reference in the event of disputes between shareholders, and they are often required in relations with third parties (banks, business partners, administration).

2. Drafting the bylaws of the SAS

The bylaws of the SAS are the constitutive contract of the company. They set the rules of organization, functioning, and governance, and have binding force on shareholders and corporate bodies. Their drafting is therefore decisive: it must respect mandatory provisions of law, while also allowing the insertion of optional clauses adapted to the needs of the shareholders.

a. The form of the bylaws

The bylaws of the SAS must be drawn up in writing (article 1835 of the Civil Code). This act may be executed under private signature or by notarial deed. Intervention of the notary is, however, mandatory in the following cases:

• contribution of a building or a real estate right,

• leasehold right of more than 12 years,

• requirement of land publicity.

The notarial form is also recommended when heirs or spouses participate in the incorporation of the company. It may also have stronger evidentiary value and secure the commitments made at incorporation.

b. The mandatory content of the bylaws

According to article L.210-2 of the Commercial Code, the bylaws must necessarily state:

• the legal form (SAS),

• the duration of the company (maximum 99 years),

• the corporate name,

• the address of the registered office,

• the corporate purpose,

• the amount of the share capital.

In a SAS, the bylaws must also determine the conditions of management of the company (article L.227-5 of the Commercial Code), in particular the designation of the president. This is a fundamental requirement: without such specification, the SAS could not validly function.

c. Optional clauses

Beyond these mentions, the bylaws may contain optional clauses, such as:

• rules for the allocation of profits,

• organization of meetings or consultations,

• approval clause for the transfer of shares,

• exclusion clause,

• preemption clause or temporary inalienability,

• procedures for convening and deliberating of corporate bodies.

These clauses, although optional, play a strategic role in regulating relations between shareholders and ensuring capital stability. For example, an exclusion clause helps prevent deadlock or long-term conflicts between shareholders.

d. The preamble

It may be useful to introduce the bylaws with a preamble setting out the intentions of the parties, their common objectives, and the desired principles of governance. This preamble can have legal effect if the principles it contains include expressly stipulated obligations or prohibitions. In such a case, the preamble becomes a source of contractual obligations with the same value as the body of the bylaws.

3. Simplified or detailed bylaws of the SAS?

The question of how detailed the bylaws should be often arises when creating a SAS. Unlike a SA or a SARL, the bylaws of a SAS must be particularly detailed, because this legal form leaves broad freedom to the shareholders to organize their company.

It is therefore strongly discouraged to settle for “simplified” bylaws in the case of a SAS. Precision in the bylaws is essential, in particular to distribute powers among directors, organize decision-making, and anticipate conflicts. Moreover, well-drafted bylaws help avoid costly litigation or blockages in day-to-day management.

4. Acts complementing the bylaws of the SAS

In addition to the bylaws themselves, a SAS may rely on complementary documents that help clarify its internal organization and secure the commitments of its founders. These may take the form of internal regulations, which set out practical rules of daily management, or annexes and formation acts, which record prior agreements and contributions. While they do not replace the bylaws, these instruments reinforce them, offering more flexibility and legal security without the need to constantly amend the founding document.

a. Internal regulations

The bylaws may be supplemented by internal regulations detailing certain modalities of functioning. These are valid as long as they do not contradict the bylaws or the law. They may be adopted by a simple majority, unless otherwise provided. The regulations are binding on shareholders once they are enforceable against them.

They may contain practical provisions on the organization of meetings, remote consultation methods, internal management rules, or relations between active shareholders and mere investors. This allows greater flexibility without amending the bylaws.

b. Annexes and formation acts

The bylaws may contain annexes such as:

• the report of the contribution auditor,

• the list of acts performed on behalf of the company in formation,

• a shareholders’ agreement or a promise of transfer.

These documents formalize commitments made before registration and secure the rights of the founders.

5. Signature and date of incorporation of the SAS

The signing of the bylaws marks the conclusion of the company contract. Each shareholder may sign personally or through an agent with a special power of attorney.

The company is considered incorporated on the date the bylaws are signed. However, it acquires legal personality only from its registration with the Trade and Companies Register (RCS). Between signing and registration, the company is said to be “in formation” and can only act through its founders for acts expressly taken over.

The bylaws may include a suspensive or resolutory condition affecting incorporation, or provide for incorporation at a term. A conditional clause makes incorporation subject to the occurrence of a future uncertain event (e.g., obtaining an administrative authorization), while a term clause defers the effect to a certain date.

6. Binding force of the bylaws of the SAS

The bylaws of the SAS constitute the fundamental contract of the company. They govern the relations between shareholders, the functioning of the management bodies, and the organization of powers. Their binding force is exercised differently depending on whether they concern shareholders, directors, or third parties.

a. With respect to shareholders

The bylaws are binding on all shareholders, including those who joined later. They may, under certain conditions, derogate from the bylaws through an extrastatutory agreement, provided there is unanimous consent, except for clauses concerning the management of the SAS, which must appear in the bylaws.

Case law allows shareholders to conclude extrastatutory agreements (shareholders’ agreements), provided they do not contradict the bylaws. In case of contradiction, the bylaws prevail.

b. With respect to directors

The bylaws are binding on directors, especially regarding limitations of powers. Failure to comply may incur their liability. They must also comply with all rules relating to convening shareholders, the distribution of powers, and formalities provided in the bylaws. Breach of these rules may result in their dismissal or liability for mismanagement.

c. With respect to third parties

The bylaws are not enforceable against third parties, except in cases provided by law (for example, certain limitations of powers in SARL, but not in SAS). Thus, a third party acting in good faith may validly contract with the president of the SAS, even if the latter has exceeded the internal limitations of powers provided in the bylaws.

7. Updates and legislative developments

It is essential to ensure the regular updating of the bylaws to take into account legislative changes. Clauses reproducing repealed provisions remain applicable unless expressly modified.

Therefore, in the event of a reform (e.g., thresholds for statutory auditors, possibilities of simplified mergers), it is necessary to review whether the bylaws must be adapted. Without updating, the company may fall out of step with current law, with potentially serious legal and practical consequences.

Conclusion

The bylaws of the SAS are a fundamental document, both as the birth certificate of the company and as a governance tool. Their drafting requires rigor, foresight, and constant adaptation to legal developments. Because the SAS offers wide statutory freedom, it is all the more crucial not to leave uncertainties in the organization defined by its founders.

Clarity and consistency in the bylaws are the best guarantees of effective management and the prevention of internal conflicts. Seeking the advice of a professional (lawyer, notary) is often advisable to secure the drafting process and ensure compliance of the bylaws with legal requirements and the founders’ objectives.