SMP

TAKE A SEAT

France

Typical legal form for start-ups

société par actions simplifiée (SAS)

Brief information

French start-ups usually choose the legal form of the SAS. The SAS offers a broad range of flexibility with regard to the design of corporate governance. In addition, the articles of association can restrict the free transfer of shares to third parties.

It is necessary to examine the individual case as to whether the participation of a PE/VC Fund is permissible.
A PE/VC Fund can also in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.

The provisions of the SA apply to the SAS, which is why the structuring possibilities outlined there apply in principle mutatis mutandis to the SAS. In addition, the articles of association can determine the company's structure to a large extent at will. Only a chairman (président), responsible for the day-to-day management of the company and who represents it vis-à-vis third parties, is mandatory. Where provided for in the articles of association, other Directors-General (directeur général) or Deputy Directors-General (directeur général délégué) may exercises the powers of the Chairman. Fundamental decisions and other decisions granted by the articles of association remain within the authority of the shareholders' meeting.

Due to the free structuring of the governing bodies in the articles of association of the SAS, it is necessary to examine the individual case as to whether the participation of a PE/VC Fund is permissible.
A PE/VC Fund can also in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.

Other legal form

société anonyme (SA)

Brief information

The SA is inflexible due to its strong legal regulation and is not used by start-ups. It is mandatory for certain companies (e.g. insurance companies).

In a monistic structure, a PE/VC Fund can in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
In a dualistic structured company a PE/VC Fund can participate in the Supervisory Board.

The SA can have a monistic or dualistic structure. Modifications to the articles of association lie in the sole responsibility of the general meeting.
In the monistic system, the Board of Directors (conseil d'administration) is responsible for planning and implementing the corporate strategy as well as for supervision and monitoring. The day-to-day management of the Company lies in the responsibility of the General Manager (directeur général) and, where appointed, the Deputy General Managers (directeurs généraux délégués). Investors can be granted observer seat status by contract. The observer may attend management meetings but is not entitled to vote.
In the dualistic system, the Management Board (directoire) manages the company. The Supervisory Board (conseil de surveillance) controls the Management Board.

In a monistic structure, a PE/VC Fund can in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
In a dualistic structured company a PE/VC Fund can participate in the Supervisory Board.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Chammas & Marcheteau

Sources: Wegen/Spahlinger/Barth, Gesellschaftsrecht des Auslands 2. EL Januar 2018