When Can Decisions of a SAS Be Annulled?

The SAS (Société par Actions Simplifiée) is known for its contractual flexibility. But this freedom comes with a unique question: in which cases can corporate decisions be challenged or annulled? The answer matters because it goes straight to the heart of legal security in company governance.

1. A Variety of Sanctions, Not Just Nullity

In a SAS, corporate decisions don’t always lead directly to nullity. Several remedies exist:

• Annulment (nullity): when the law or bylaws are violated.

• Liability of directors: directors can be held personally responsible.

• Alternative sanctions: decisions may be declared irregular, ineffective, or corrected by the courts.

What makes the SAS special is the importance of its bylaws. Unlike in traditional companies, the bylaws play such a central role that they often determine whether a decision can stand — or fall.

2. The Legal Framework: Civil Code & Commercial Code

Two key sources set the rules:

• Civil Code (art. 1844-10): a decision can be annulled if it breaches a mandatory provision of company law, or if it deprives a shareholder of their fundamental right to participate in collective decisions.
  Example: a clause that excludes a shareholder from voting is automatically invalid.

• Commercial Code (art. L. 235-1): distinguishes between amendments to bylaws (which require an express ground for nullity) and other decisions, which can be annulled if they violate mandatory rules or contract law (fraud, defective consent, illegality).

Courts have applied this by annulling decisions where, for example, bylaws required prior authorization but the managers ignored it.

3. The SAS Case Law: From Restriction to Expansion

• Before 2023 (Larzul I, 2010): nullity could only be based on a breach of mandatory law. Violating the SAS bylaws wasn’t enough. This was criticized, since the SAS is built around its bylaws.

• Since 2023 (Larzul II, Cass. com., 15 March 2023): the Court of Cassation changed course. Now, violating statutory clauses (art. L. 227-9 al. 1) can indeed lead to nullity — if the violation could influence the decision’s outcome.

In short: the SAS bylaws now really matter. Ignoring them can get decisions annulled.

4. Practical Applications

• Annulment of collective decisions (art. L. 227-9): a decision may be annulled if taken by the wrong body (e.g. president instead of shareholders), if quorum or majority rules were ignored, or if statutory powers were breached.

• Other grounds: abuse of majority, failure to appoint a statutory auditor, or violation of shareholders’ right to information.

5. What About Directors’ Decisions?

Directors’ decisions are harder to annul. Nullity is rare, except when:

• a director acts beyond powers specifically set out in the bylaws;

• rules of consent or capacity are violated;

• specific authorizations (e.g. for guarantees) were required but ignored.

For now, courts are more lenient with directors — but lower courts sometimes push the boundaries.

6. Nullity for Lack of Minutes

If the SAS has a supervisory or administrative board, the absence of a written minutes (PV) can trigger nullity (art. L. 235-14). But this only applies when there is a collegial body.

7. Procedure: How to Bring an Annulment Action

• Legal basis: articles L. 235-3 to L. 235-13 of the Commercial Code.

• Limitation: generally 3 years, except shorter deadlines for mergers or capital increases.

• Exception of nullity: no time limit, but you can’t invoke it if you already carried out the contested act.

8. Third Parties and Good Faith

As a rule, annulment cannot be used against third parties acting in good faith (art. L. 235-12).
Exception: where consent was vitiated or a party lacked capacity, the victim can invoke nullity even against third parties.

9. Which Court Is Competent?

• Commercial courts: for ordinary SAS.

• Civil courts: for SELAS (professional SAS) under art. L. 411-6 COJ.

• Arbitration: possible if the bylaws contain an arbitration clause. Courts have upheld arbitration even for disputes involving director liability.

10. Other Sanctions (When Nullity Fails)

If annulment isn’t available, alternatives exist:

• Injunctions: courts can order corrections, e.g. ensuring the “SAS” label appears on documents.

• Suspension of rights: voting and dividend rights may be suspended until compliance is restored.

• Director removal: bylaws can allow removal for serious misconduct.

• Shareholder exclusion: art. L. 227-16 allows it if provided in the bylaws.

• Restricting rights: some bylaws limit voting, dividends, or access to information in cases of breach.

• Challenging minutes: possible, though often ineffective.

11. Reform Discussions

Legal scholars and institutions (HCJP, ANSA) are pushing for clearer rules:

• a specific law allowing annulment of decisions gravely breaching bylaws,

• a shorter 1-year limitation,

• and a shift from distinguishing “law vs. bylaws” to a single test: was a condition necessary for the validity of the decision violated?

Key Takeaways