Incorporation of a private company limited by shares – simplified (Société par Actions Simplifiée)

Incorporation of a private company limited by shares – simplified (Société par Actions Simplifiée)

The société par actions simplifiée (hereafter “SAS”) is a limited liability company which is principally used by large industrial enterprises as the corporate vehicle for holding companies and joint ventures both on a national and international level. One of the major advantages of the SAS is its flexibility and the wide latitude it offers to its shareholders with respect to corporate organization.

Subject to a limited number of legal requirements, the SAS is primarily governed by the terms and conditions of its Articles of Incorporation. The legal requirements to which the SAS is subject are: the general principles set forth in the Civil Code (Articles 1832 through 1844-17); the special rules applicable to SASs set forth in the Commercial Code; and, to the extent they are compatible with the special rules applicable to SASs, the provisions of the Commercial Code regulating sociétés anonymes with the exception of Articles L.225-17 through L.225-126 relating to management and shareholders’ decisions (, art. L.227-1) and Article L.225-243 relating to the transformation of a société anonyme into other corporate forms. Inasmuch as the provisions applicable to sociétés anonymes, the following text will focus on those aspects of the SAS which differ from the société anonyme.


An SAS may be formed ex-nihilo or via the transformation of an existing company as long as such transformation is unanimously approved by the shareholders of the existing company and the latter is in compliance with the requirements relating to SASs at the time of the transformation (, art. L.227-3).

[i]  Name

The name of an SAS preceded or followed by the words société par actions simplifiée or the initials “SAS” and a statement of the company’s registered capital must appear on all documents issued by the company and destined for third parties.

[ii]  Shareholders

Companies or individuals may be shareholders of an SAS (, art. L.227-1). An SAS may be formed with as little as one shareholder. Moreover, since the SAS is in essence a closely-held company, it is prohibited from making public offerings (, art. L.227-2). The violation of the prohibition against public offerings can subject the President or any person performing management duties on a de facto or de jure basis to a fine of 18,000 euros (, arts. L.244-3 and L.244-4).

[iii]  Registered Capital

No minimum registered capital is required. Its amount shall be determined by the Articles (, art. L.227-2). It need not be fully paid in at the time of the incorporation of the SAS, and therefore may be paid in in the same manner as that applicable to société anonymes.


The organization of management is freely determined in the Articles of the SAS (, art. L.227-5). The only management body of the SAS which is required by law is the President who is appointed to represent the company in its dealings with third parties (, art. L.227-6). A company or other legal entity may be appointed President. The Articles determine the procedure for appointing and removing the President as well as his term of office and the renewal thereof. The President’s remuneration may be specified in the Articles or left to a vote of the shareholders. The powers of the President to act for and on behalf of the company are plenary limited only by the corporate purpose (, art. L.227-6). He binds the company even by actions outside of the corporate purpose unless it can be shown that the third party in question knew or under the circumstances could not have been unaware that the act of the President was not within the corporate purpose. In addition, the limitations imposed upon the powers of the President by the Articles are not enforceable against third parties (, art. L.227-6).

In the event that the management duties are not to be conducted solely by the President, the Articles determine the nature and number of management bodies to be established. For example, the Articles can provide for a body comparable to the board of directors or directorate of a société anonyme, or any other type of board or committee with proposal, decision-making or veto powers. The minimum and maximum number of members of management as well as the procedure for appointing and removing them, their terms of office and the renewal thereof, and their remuneration may be fixed by the Articles. A legal entity may be a member of management of an SAS.

The Articles also set forth the organization of management meetings such as the manner in which they are called, quorum requirements, place and frequency of meetings, voting majority, and proxy rules. Unlike the case of the President, the powers of the other members of management are not specifically provided by statute. Consequently, the powers of the members of management may be specified in the Articles or may be the result of a shareholder decision or delegation of powers by the President. The allocation of powers among the various members of management as well as the division of management positions among the different shareholder groups may also be included in the Articles.


The President and the other members of management, if any, of the SAS are subject to the same rules governing civil liability as the members of the board of directors or directorate of a société anonyme (, art. L.227-8); with respect to criminal liability, the President and other members of management are subject to the same penalties as the president, directors and general manager of a société anonyme (, art. L.244-1). Moreover, it should be noted that in the event that a legal entity is the President or member of management of the SAS, the officers and directors of such legal entity are jointly and severally liable with the legal entity (, art. L.227-7).

[d]  Statutory Auditors

The SAS must have one or more Statutory Auditor(s) if two of the following thresholds are met:

1.      the sum of the net values of its assets is greater than 1,000,000 euros,
2.      its pre-tax turnover is greater than 2,000,000 euros, or
3.      it employed during the fiscal year an average number of employees which exceeded fifty (, arts. L.227-9-1 and R.227-1).

The SAS which controls or is controlled by one or more legal entities is also subject to this requirement (, art. L.227-9-1).

Even if the foregoing criteria are not attained, one or more shareholders of the SAS that hold, in the aggregate, at least 10 percent of its registered capital may petition the Commercial Court for an order appointing a Statutory Auditor and an Alternate Statutory Auditor (, art. L.227-9-1).

The Statutory Auditor’s principal function is to ensure that the company complies with certain provisions of applicable corporate law, and to certify the fairness and accuracy of the financial statements of the company as well as the accuracy of all financial data submitted to the shareholders (, art. L.823-9 and L.823-10). He must apply specific professional rules of certification of the financial statements (, arts. L.823-12-1 and A.823-27-1). The Statutory Auditors are appointed by the shareholders (, art. L.227-9). The rules governing the number of Statutory Auditors that must be appointed, as well as their powers, remuneration and liability are the same as those that apply to Statutory Auditors of a société anonyme. The criminal sanctions applicable to certain violations committed by the Statutory Auditors of a société anonyme also apply to the Statutory Auditors of an SAS (, art. L.244-1).