Société Par Actions Simplifiée
Société Par Actions Simplifiée (SAS)
The SAS is a type of corporate structure that was created in 1994 and improved in 1999 to give more flexibility to the founders in setting the basic rules of the company. This type of company is increasingly used, especially by small and mid-size businesses. The attractiveness of the SAS, in comparison to the SA, has even recently increased due to new requirements imposed on SAs. Nowadays, SAS are clearly favored by foreign groups which are setting up subsidiaries in France.
1 General Structure
In principle, there must be at least two shareholders in an SAS, that may be any individuals or legal entities, French or foreign. An individual or a corporate entity may be a shareholder of several SAS. However, the two-shareholder minimum requirement may be set aside with some specific rule applying (see 2.6 below).
The minimum stated capital is 37,000 €. Shareholders’ contributions may be made under the same conditions as in the SA (see above, 1.1). One specificity of SASs, however, is that they may not be listed on the French stock exchange.
2 General Management
A SAS provides much more freedom than a SA regarding the internal organization of powers. The only corporate body required is the Président who can be either a corporation or a natural person. There is no obligation for the Président to be a shareholder. If the Président is a corporation, it is represented either by the legal representative of that corporation, or by a person that the legal representative appoints. The Président may be a salaried employee of the SAS. The employment agreement may be entered into after his status as Président is secured, which is not allowed in the SA.
The Président is appointed by the shareholders and revoked as set forth in the articles of incorporation. He represents the corporation when dealing with third parties. His authority to act in the name of the corporation may be broadly defined within the limitation of the commercial purpose. However, with regard to third parties, he binds the company even if his actions are beyond the corporate purpose unless a third party knew or should have known so, given the circumstances.
The articles of incorporation may provide for the appointment of one or several general managers, who may be entrusted with the same authority as that of the Chairman regarding third parties. There may also be a Board of Directors or any other body whose members’ appointment, revocation, and authority are to be set forth in the articles of incorporation.
Officers of the SAS (the Président and, if applicable, general managers) are civilly and criminally liable like directors of SAs. When a corporation is itself appointed Président or manager of an SAS, the representatives of the said corporation are held to the same rules and incur the same civil and criminal liabilities as they would be had they been individually Président or manager.
3 Shareholders’ Rights and Powers
Shareholders of a SAS are given considerable freedom in making decisions. The articles of incorporation determine the conditions in which decisions are taken by the shareholders (e.g.: in a General Meeting, by videoconferencing, by correspondence, by facsimile, or by written consent signed by the shareholder). The articles of incorporation also stipulate the information to be given to the shareholders in view of the meetings.
Shareholders have the usual rights, such as voting rights and the right to payment of dividends. One of the specificities of the SAS, however, is that proportional voting is not mandatory. Certain shareholders may have more votes than others, based upon various criteria, such as the number of shares they hold of course, but also their seniority or status. The articles of incorporation may also provide that each shareholder may dispose of his number of votes in any way he pleases. For example, if six resolutions are proposed in the General Meeting of shareholders and the shareholder has 600 votes, he may use, for example, 450 for one resolution, 100 for another, etc if the articles of incorporation provide so.
The following decisions must be taken by the General Meeting of shareholders of the SAS: approval of accounts; appointment of the statutory auditor; modification of the stated capital; review and approval of agreements between the company and its officers or shareholders; merger, division, and transformation of the SAS into another corporate structure. Quorum and majority are set forth by the articles of incorporation. Unless otherwise provided by the latter, decisions which do not modify the articles of incorporation and those for which unanimity is not required are decided by a majority of votes.
Certain types of statutory clauses must be decided or modified unanimously, e.g.: the possibility of exclusion of a shareholder, the change of nationality of the company or the regulation of the transfer of shares, etc.
The articles of incorporation may subject to an agreement the transfer of shares to a third party, or even to an existing shareholder or to a parent. Corporate authority to give such agreement may lie in the Chairman, or more frequently, in the shareholders or in part of the shareholders. The articles of incorporation may also prohibit any transfer of shares for a period of time up to ten years and they may provide that such prohibition only applies to certain shareholders or to sales to certain third parties (a competitor, for example).
4 Statutory Auditor
The same rules as for the SA apply to statutory auditors of SAS (see above, 1.4).
5 Société par Actions Simplifiées Unipersonnelle (SASU)
Rules applicable to the SAS apply to the SASU, a special type of SAS which may have a single shareholder, either a corporation, including another SASU, or an individual.
The minimum stated capital is still 37,000 €, of which at least half must be paid upon the date of subscription. Like a SAS, a SASU may not be listed on a stock exchange.
The sole shareholder may appoint himself as Président of the company or appoint somebody else who may be a corporation or a natural person. The sole shareholder has the same powers as the collectivity of the shareholders in the SAS (approval of annual accounts, appointment of the statutory auditor, increase or decrease in the stated capital…).
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