Among the major decisions a company founder must make in France, one of the primaries is choosing the most applicable corporate structure. Of the several types that exist, the one that is selected more often in France is the société par actions simplifiée/SAS (simplified joint-stock company). Here’s why.
The Simplified Joint Stock company (SAS)
The main features of this type of company are the following:
- SAS is a form of a commercial corporation. Thus, irrespective of the activity offered, this entity is always considered commercial.
- Société par actions simplifiée/SAS (simplified joint-stock company) has no restriction when it comes to the type and size of the activity.
- As for the type of financial activity, the range of the SAS is one of the broadest.
- Société par actions simplifiée/SAS (simplified joint-stock company) is a private company that is restricted from making a public offering. Therefore, it cannot be listed on a stock exchange.
- SAS can be set up by people or legal entities, profitable or not-for-profit.
- SAS is a limited liability company, in which shareholders do not risk their own patrimony.
- The process of incorporation in France is quick, cheap, and simple; practically all formalities can be finalized online.
Outlined next are the main reasons for choosing a SAS in France.
Articles of association of your Simplified Joint Stock company (SAS)
The unique feature of the Simplified Joint Stock company (SAS) in comparison to all other business vehicles is that it has very few compulsory provisions. Therefore, there is sufficient flexibility for the articles of association to rule governance, collective decisions, and associations between shareholders.
In the French commercial code, there are several provisions devoted to each company: SARL – 44 articles, SA – more than 250 provisions, and SAS – 22, of which most are not compulsory and simply verify the articles of association.
This liberty in drafting articles of association is highly admired by lawyers and in-house advisers, who can customize the organization of the Société par actions simplifiée/SAS (simplified joint-stock company) to meet the real demands of their clients.
Adaptability to future corporate developments
It is possible to modify the SAS for the development of the company. For example, a SAS doesn’t require an external auditor before the company reaches a certain size. Also, it is possible to change its governance.
This structure enables simple transposition of the economic power ratios between the shareholders, bestowing more power to those who took the most risks, alongside the founders. Its operation can be very modest at the start of the company and become much more intricate as it matures to take into account the numerous interests of each stakeholder.
SAS governance and collective decisions
When it comes to governance and collective decisions, the SAS provides almost endless freedom to founders. The only compulsory provisions pertain to the duty to appoint one President of the SAS, the Directors’ liability, and a list of mandatory decisions to be taken using communal decision-making.
On all the other elements, governance and collective decisions are vacant pages for the founders, who can make decisions freely on the governance structure.
A choice among Investors
Several Investors prefer the SAS structure for the flexibility it gives its organization and the possibility of negotiating its shares and discretion.
Financing opportunities
When it comes to financing instruments, SAS offers several opportunities.
SAS can issue ordinary shares, as well as preference shares. The SAS can also issue bonds and quasi-equity instruments, such as convertible bonds or subordinated securities. These financial instruments give the benefit of reinforcing the company’s proper funds and, thus, do not weaken its balance sheet.
Additionally, SAS may raise funds through crowdfunding platforms.
The only limitation is the banning of making a public offering (I.P.O.) and, therefore, quoting shares on a stock-exchange market.
The SAS is compatible with all types of activities and all business sizes, with only one limitation – the restriction from public offerings and, hence, stock listing. There is practically nothing one cannot conduct within the framework of a SAS.
If you want to open your company in France – SAS or any other suitable type of company to your business project, let’s go ahead and contact your Damalion expert now.
