Foreign founders often discover the drag-along clause only when a buyer is ready to acquire a French company and one shareholder refuses to sign. The expression sounds familiar to an international investor: a majority or qualifying group accepts an offer, and the other shareholders must sell on the same terms. In a French société par actions simplifiée (SAS, a simplified joint-stock company), however, the result depends on the legal architecture chosen at incorporation. A clause in a confidential shareholders’ agreement does not operate in exactly the same way as a clause in the articles of association.

This distinction matters particularly where the founders live in different countries, where a foreign parent is investing in the French subsidiary, or where the buyer requires a clean transfer of all shares. The agreement must identify the trigger, the affected securities, the price, the notice process, the documents to be signed, the treatment of non-cash consideration and the remedies available if a shareholder remains abroad or contests the sale. It must also be coordinated with the French company’s articles, because the French Commercial Code gives articles-based transfer restrictions a corporate effect that a private contract may not provide.

The current position is also affected by recent case law. On 11 March 2026, the Commercial Chamber of the Cour de cassation held that a shareholders’ agreement without an express term may be presumed to last for the remaining life of the company, so that the parties cannot terminate it unilaterally. On 21 June 2023, the same court distinguished an extra-statutory “buy or sell” mechanism from a statutory exclusion clause. These decisions make drafting, duration and the location of the clause decisive.

This guide answers the practical questions a foreign founder or investor asks before signing: can a French SAS compel a minority shareholder to sell, where should the drag-along clause sit, how should the price and notice be calculated, and what can be done if a shareholder refuses to cooperate? It is written for cross-border business readers. French terms are translated when first used, and the legal references are linked to official sources.

I. What does a drag-along clause do in a French SAS?

A. Can a French SAS force minority shareholders to sell?

A drag-along clause is usually called an obligation de sortie conjointe in French practice. It is a contractual mechanism under which a shareholder who accepts a qualifying offer may require other shareholders to transfer their shares to the same buyer, at the same price per share and on equivalent economic terms. Its commercial purpose is simple: a purchaser that wants control, or 100% of the capital, should not be held hostage by a small shareholder who refuses to sign.

The clause does not arise automatically because the company is an SAS. The SAS is flexible because its shareholders define much of the governance system in the articles. Article L. 227-5 of the French Commercial Code states: “Les statuts fixent les conditions dans lesquelles la société est dirigée.” In English, the articles set the conditions under which the company is managed. That flexibility allows the founders to build a transfer system, but it does not replace the drafting of the actual obligation to sell.

The first question is therefore not “does French law recognise drag-along?” The better question is “which people are bound by a sufficiently precise obligation, and what corporate mechanism supports it?” If the clause is only in a shareholders’ agreement, it generally binds the signatories. A later investor, employee shareholder or transferee who never adhered to that agreement may not be bound by its private obligations. A buyer may also be a third party to the agreement and cannot be expected to know every private covenant unless the transaction documents and accession arrangements make the mechanism clear.

The second question is what the trigger actually says. A usable clause should distinguish at least four situations:

• a sale of more than a stated percentage of the share capital;
• a transfer that gives the buyer control of voting rights or the power to appoint management;
• a sale of all shares requested by a bona fide third-party buyer; and
• a sale following a financing, merger or other transaction where the buyer is acquiring the business rather than only a founder’s shares.

“Bona fide offer” should not be left as an unexplained expression. The clause can require a written offer from an identified buyer, a description of the consideration, proof that the buyer has funds or financing, and a price that is not designed to transfer value secretly to the selling majority. If the majority accepts a non-binding term sheet, the drag-along right should not normally be triggered as if a binding sale agreement already existed. The trigger should identify when the offer becomes sufficiently firm and when the minority’s obligation begins.

Drag-along must also be separated from related mechanisms. A tag-along right, or droit de sortie conjointe, gives a minority shareholder the right to sell alongside a majority seller; it protects the minority from being left with a new controlling shareholder. A pre-emption right gives existing shareholders priority to buy shares offered to a third party. An approval clause controls the identity of a transferee. An inalienability clause temporarily prevents transfers. An exclusion clause allows the company or the shareholders to require a transfer because of a defined event. A drag-along clause is different: it is normally activated by an external sale opportunity and is aimed at delivering the whole company to that buyer.

The distinction affects remedies. A private drag-along covenant may support a claim for performance, damages or an order requiring a defaulting signatory to complete the promised transfer. It does not necessarily make every transfer made in breach of the pact void. A statutory transfer restriction is stronger against the corporate process, but it must be drafted and adopted in the form required for an SAS. A foreign founder should therefore avoid using “drag-along” as a label and assume that the label itself will compel a sale. The operative provisions must do the work.

There is also a governance question. Article L. 227-9 of the French Commercial Code provides that the articles determine which decisions are taken collectively by the shareholders and the forms and conditions of those decisions. A drag-along clause should explain whether the sale is approved by a shareholder vote, by the selling shareholders acting under the pact, by a corporate body, or by a combination of those steps. The clause should not rely on an undefined “majority decision” where a buyer needs certainty about who can sign and which shares will be delivered.

For a company founded by two foreign entrepreneurs holding 50% each, the danger is particularly acute. If one founder accepts a sale and the other refuses, the buyer may withdraw, the company may lose its financing window, and the dispute may become a broader deadlock. The clause should therefore be negotiated while the relationship is functional, not after the buyer has appeared. A good drafting exercise asks what would happen if the shareholder is in another country, has changed address, has lost access to the company’s bank account, has ceased to perform operational duties, or claims that the offer is below value.

B. Should the clause be in the articles or in the shareholders’ agreement?

French founders use two documents. The articles of association are the public constitutional document of the SAS. The shareholders’ agreement, often called a pacte d’actionnaires for a company with shares, is a private contract signed by some or all shareholders. Both can contain transfer arrangements, but they do not have the same reach.

Question	Articles of association	Shareholders’ agreement
Who is normally bound?	Shareholders and the company within the corporate framework, subject to the clause and applicable law.	The people and entities that sign or later adhere to the agreement.
Visibility	Corporate information may be accessible through the company’s filings and corporate records.	Usually confidential and not filed as a complete document.
Flexibility	Amendment follows the voting and filing rules in the articles and French company law.	Amendment is usually contractual and requires the consent specified in the pact.
Transfer protection	Can interact with statutory approval, transfer and exclusion provisions.	Creates personal contractual obligations between signatories.
New investor	Automatically faces the articles if it becomes a shareholder.	Should sign an accession deed before or at completion.

The articles should normally contain the corporate protections that must apply to future shareholders and to the company itself. The pact can contain the confidential economic and procedural detail: the investor’s information rights, the negotiation timetable, the sale process, the founder-specific consequences of departure, the valuation formula and the dispute escalation process. Many cross-border transactions use both documents, with an express consistency clause explaining which provision prevails if there is a conflict.

For an approval mechanism, Article L. 227-14 of the French Commercial Code says that the articles may subject any transfer of shares to the company’s prior approval. For a violation of a statutory transfer clause, Article L. 227-15 states: “Toute cession effectuée en violation des clauses statutaires est nulle.” This is a direct corporate sanction, but it applies to a statutory clause and not simply to every promise made in a private pact.

The articles may also address compulsory transfers. Article L. 227-16 states: “Dans les conditions qu’ils déterminent, les statuts peuvent prévoir qu’un associé peut être tenu de céder ses actions.” The provision is powerful, but the words “dans les conditions qu’ils déterminent” are the drafting warning. The articles must define the event, the decision-maker, the procedure, the rights of the affected shareholder and the method for determining the price. A vague reference to a separate pact may not be enough to give every required corporate effect to the forced transfer.

The price should be coordinated with Article 1843-4 of the French Civil Code. Where that provision applies, a disputed value may be determined by an expert appointed by the parties or, if they disagree, by the president of the competent judicial or commercial court under an accelerated procedure. The expert must apply the valuation rules and methods found in the articles or in a convention binding the parties when such rules exist. A foreign investor should not assume that an expert will invent a commercially acceptable formula after the dispute begins.

The choice of document also matters when an international buyer asks for clean title. If the drag-along exists only in the pact, the company’s counsel must collect accession documents, transfer instruments, powers of attorney and evidence that the defaulting signatory is bound. If the clause is in the articles, the notarial or corporate file may be easier to explain to the buyer, but the clause is public and must be drafted with greater care. The usual solution is not to choose one document mechanically. It is to place the essential corporate transfer rule in the articles and use the pact to organise the confidential sale mechanics.

Foreign founders should check the incorporation file before adding a drag-along clause. The official Service-Public guidance on drafting and registering company articles explains that articles form the company’s legal, tax and corporate rules. The Service-Public registration guidance identifies the documents required for a company filing, including signed articles and, in some situations, translated documents for a foreign legal person. This is relevant when the foreign parent is a shareholder or when a corporate representative will sign the accession deed.

Since the 2025 reform of company-law nullities, the consequences of a statutory irregularity require careful analysis rather than a generic promise that any breach makes a corporate decision void. The official Service-Public summary of the company-law nullity reform describes the conditions that can affect an action for nullity and the importance of an express statutory basis in some situations. The articles and the pact should therefore be reviewed together with the version of the French Commercial Code in force on the date of the contemplated transaction.

II. How can foreign founders enforce a French SAS drag-along exit?

A. What price, notice and buyer terms must the clause define?

Most drag-along disputes are not caused by the word “drag”. They are caused by an incomplete price or procedure. A clause that says “the minority shall sell on the same terms” leaves unanswered what happens to an earn-out, a buyer’s indemnity claim, a rollover into the buyer’s group, deferred consideration, locked-up shares, tax withholding or a different class of shares. The drafting should make the economics comparable before the buyer’s offer is accepted.

The price provision should identify the unit of value and the adjustment method. It should say whether the same price per share applies to every class, whether preference shares receive their contractual preference first, and whether the majority may retain a benefit that is not offered to the dragged shareholders. If the buyer offers cash and shares, the clause should define the exchange ratio or require an independent valuation. If the offer includes a contingent payment, the minority should receive the same right to that payment, subject to the same conditions. If the majority gives a warranty, the dragged shareholder should not be forced to give a materially broader warranty or an unlimited indemnity.

The clause should also address transaction costs and taxes. It can allocate legal fees, broker fees, registration duties and bank charges, but it should not silently shift a majority seller’s personal tax liability to the minority. The agreement can require the buyer to provide a completion statement, a payment schedule and evidence of funds. Where the buyer is outside France, the clause should identify the currency, the exchange-rate source, the date used for conversion and the account to which the price will be paid. A foreign founder who has moved between jurisdictions should also verify the tax treatment with counsel in the relevant countries.

The trigger and threshold need equal precision. A clause can require an offer for all shares, an offer for a defined percentage, or an offer that would transfer control. It should state whether the threshold is measured by issued shares, voting rights or diluted capital. It should address options, warrants, free shares and convertible instruments. If a foreign parent holds the majority indirectly, the clause should explain whether a change of control of the parent triggers the right. Without that language, a buyer may acquire control above the French company without formally purchasing the French shares.

Notice should be a sequence, not a single sentence. A practical sequence is:

1. the selling shareholders deliver the buyer’s signed offer or final transaction document;
2. the notice identifies the buyer, the number and class of shares, the price, consideration, conditions, expected completion date and all material side benefits;
3. the dragged shareholders receive a reasonable period to verify the offer and obtain advice;
4. the seller gives an exercise notice on behalf of the qualifying holders or the company records the required corporate decision;
5. each shareholder signs the transfer instrument, powers of attorney and buyer documents by the completion deadline; and
6. the company updates its share register and completes any required corporate, tax or registration formalities.

A French share transfer should not be treated as complete merely because an email announces that the drag-along has been exercised. The agreement should specify the form of the transfer order, the evidence of authority, the delivery of certificates or electronic records, the date on which title and risk pass, and the treatment of a shareholder who cannot be located. If a representative may sign for a defaulting shareholder, the power of attorney must be drafted and granted before the conflict, with a scope that is compatible with French contract and corporate law.

For a foreign founder, the language clause is operationally important. A bilingual agreement should identify the controlling version, define technical terms such as “control”, “affiliate”, “completion”, “qualifying offer” and “same terms”, and state how notices are served across countries. A translated version may help a foreign court, bank or buyer, but translation does not cure an ambiguous French operative clause. The parties should also choose the governing law and forum deliberately. If the French SAS, its shares and its corporate records are central to the dispute, a French court may remain relevant even if the parties have added an arbitration clause or selected another law for some contractual issues.

The promise structure can improve enforceability. Under Article 1124 of the French Civil Code, “La promesse unilatérale est le contrat par lequel une partie, le promettant, accorde à l’autre, le bénéficiaire, le droit d’opter” for a contract whose essential terms are determined. The same article provides that revocation during the option period does not prevent formation of the promised contract. A drag-along can be drafted as a sufficiently complete transfer promise, but the essential terms, price or valuation method, option period and beneficiary must be identifiable. A label such as “the minority will cooperate” is weaker than a clear promise to sell a defined number of shares under an objectively ascertainable formula.

Article 1843-4 should not be used as a substitute for drafting. If the articles or a binding convention contain a valuation method, the expert is directed to apply it when it exists. The clause should therefore say whether the price is the third-party offer, a fixed formula, a discounted or undiscounted market value, an enterprise-value-to-equity bridge, or a value determined by an independent expert. It should define the expert’s appointment, information rights, timetable, costs, treatment of minority or control discounts, and what happens if one party refuses to provide financial information.

Tag-along protection should be designed at the same time. A minority that is forced to sell should receive equal economic treatment, while a minority that is not dragged should not be left with an unsuitable buyer without a right to exit. The agreement can also address a partial sale, a sale to a competitor, a sale involving confidential information and the buyer’s right to require that founders remain for a transition period. These clauses must be coordinated with employment, intellectual property and confidentiality documents; otherwise, a founder may transfer shares but retain critical know-how or remain contractually bound to provide services without a defined transition.

Finally, the clause should explain the relationship between a drag-along sale and a deadlock. A deadlock is a persistent inability to make a required decision, often in a 50/50 company. A sale offer is not always a deadlock, but a refusal to implement a valid sale can create one. The founders can define a negotiation period, mediation, an independent expert stage and, if the conflict continues, a buy-or-sell or auction mechanism. Each stage should have a duration and a clear consequence. An escalation ladder is useful only if the agreement says what happens when a party does nothing.

B. What remedies apply when a shareholder refuses to sign?

The first step is evidence. The selling shareholder should preserve the offer, the acceptance, the cap table, the articles, the shareholders’ agreement, accession deeds, notices, powers of attorney, board minutes, valuation material and messages showing the refusal. A foreign shareholder’s address and service details should be checked against the last contractual notice. If the clause requires a qualifying majority, the calculation should be made from the share register and voting rights, not from an informal spreadsheet.

The next step is a formal notice to perform. The notice should identify the clause, the trigger, the offer, the shares concerned, the completion date and the documents that must be signed. It should allow the contractual cure period, if any, and reserve the right to seek performance, damages and urgent relief. The notice should be translated when the recipient’s contractual language or a foreign enforcement step makes that prudent. It should be served using the method specified in the agreement and with evidence of receipt.

The contractual foundation begins with Article 1103 of the French Civil Code, which states: “Les contrats légalement formés tiennent lieu de loi à ceux qui les ont faits.” A valid pact is binding between its parties. Article 1104 adds that contracts must be negotiated, formed and performed in good faith. Good faith does not rewrite a bad price formula or create a power that was never granted, but it may matter where a party conceals the buyer’s side benefit, manipulates the valuation process or uses a notice defect opportunistically.

Article 1217 of the French Civil Code lists the principal responses to non-performance: suspension, performance in kind, price reduction, termination and damages, with compatible remedies capable of being combined. For a clear transfer promise, Article 1221 provides that a creditor may, after formal notice, pursue performance in kind unless performance is impossible or manifestly disproportionate. The court will still examine the contract, the precision of the obligation, the interests at stake and the practical consequences of ordering a transfer.

The claimant should therefore ask for a remedy that matches the document. If the pact contains a complete promise to transfer and the price is determinable, the claim may seek an order to sign and complete the transfer, together with damages for delay. If the price is uncertain, the first dispute may concern valuation rather than the refusal itself. If the clause is only a general obligation to cooperate, damages or an order to perform specified acts may be more realistic than asking the court to invent the sale terms.

The distinction between a private pact and the articles is central here. If a shareholder sells to a buyer in violation of a purely contractual drag-along obligation, the sale may remain effective against the buyer while the defaulting shareholder faces contractual liability. If the sale violates a statutory transfer restriction, Article L. 227-15 may support a claim that the transfer is void. The drafting should not promise the buyer that a private pact alone automatically prevents registration or makes a third-party sale disappear.

The Cour de cassation has supplied useful guidance. In Commercial Chamber, 21 June 2023, no. 21-25.952, the court examined a “buy or sell” clause in an extra-statutory shareholders’ agreement. Its official case commentary explains that the nullity provided by Article L. 227-15 “vise uniquement à sanctionner la violation de toute clause statutaire” governing a freely consented transfer; it does not automatically govern an exclusion and compulsory transfer resulting from a different contractual mechanism. The practical lesson is to distinguish a contractual exit option from a corporate exclusion procedure and to draft each with its own conditions.

The decision builds on Commercial Chamber, 6 May 2014, no. 13-17.349, which treated an option granted to co-shareholders after a defined event as a unilateral promise to sell rather than automatically as an exclusion. The same line was discussed in Commercial Chamber, 6 November 2019, no. 18-14.287. These are not shortcuts: they show why the wording, the event, the price and the identity of the beneficiary determine the legal character of the mechanism.

Duration is a separate risk. In Commercial Chamber, 11 March 2026, no. 24-21.896, the Cour de cassation held that a shareholders’ agreement without an express term may, absent contrary evidence, be treated as lasting for the remaining life of the company. The official formulation states that the parties “ne peuvent y mettre fin unilatéralement”. For foreign founders, this means that a pact signed at incorporation can remain relevant years later, even after the business model, investors or founder relationship have changed. The agreement should state its duration, renewal, termination events, survival of transfer obligations and treatment of a pending offer at termination.

If the shareholders’ agreement does not resolve the conflict, a court may be asked to address the company’s functioning. The possibility of judicial dissolution is a last resort, not a substitute for an exit clause. Article 1844-7 of the French Civil Code includes dissolution at an associate’s request for just cause, including a disagreement that paralyses the company. A founder who wants to preserve value should use this rule as a risk indicator: an effective drag-along and deadlock process may prevent a commercial disagreement from becoming a company-ending dispute.

After a transfer, corporate and administrative records must be updated. The INPI guidance on modifying a company directs companies to use the secure e-procedures portal for modification formalities and to follow the required signature process. The INPI is the French National Institute of Industrial Property; its portal is the Guichet unique, the single online filing channel for many business formalities. A foreign founder should verify whether the transaction changes a filed item, the registered representatives, the beneficial-owner information or the company’s registered data in the RNE, the National Register of Enterprises, and the RCS, the Trade and Companies Register. The result may affect the company’s Kbis, the official extract evidencing its commercial registration.

The tax and payment trail should be handled at the same time. The company’s professional account on impots.gouv.fr is used to access the company’s tax account and professional filings. The French tax administration explains that the professional space can be used to declare and pay business taxes and to request certain refunds. A share sale may have registration, withholding, capital-gain or reporting consequences for the seller, buyer or company depending on the transaction and the jurisdictions involved. The drag-along clause should allocate the obligation to provide tax forms and transaction statements without pretending that a contractual allocation changes mandatory tax law.

For the cross-border closing file, the following checklist is safer than an informal demand that the reluctant shareholder “just sign”:

• confirm the exact shareholders bound by the pact and obtain any accession deed;
• read the articles for approval, inalienability, exclusion, voting and transfer clauses;
• test the buyer’s offer against the trigger and threshold in the drag-along clause;
• compare cash, shares, deferred consideration, earn-out and warranties for every dragged shareholder;
• apply the valuation formula or appoint the expert specified by the agreement;
• send the notice and formal demand through the agreed channels, preserving proof;
• prepare transfer orders, powers of attorney, board or shareholder minutes and buyer accession documents;
• obtain a written position on any statutory approval or corporate registration issue;
• coordinate INPI, RNE, RCS, tax and beneficial-owner updates after completion; and
• if refusal continues, seek a remedy that matches the legal instrument: performance, urgent measures, damages, valuation directions or, only as a last resort, a claim concerning the company’s paralysis.

A foreign founder should also identify who pays for urgent advice and which lawyer may communicate with the buyer. The buyer’s timetable often becomes the hidden source of pressure. A short completion deadline may be commercially sensible, but it should not deprive the dragged shareholder of the notice and valuation rights promised in the pact. Conversely, an overly long notice period can destroy the transaction. The clause should set a realistic number of business days and explain how weekends, public holidays, banking delays and international signatures are treated.

Finally, do not copy a common-law drag-along template without adapting it. French corporate law distinguishes the company, its shareholders and the signatories to a private pact. The articles, the pact, the share register, the buyer’s contract and the filing record must tell the same story. A foreign parent should decide whether it signs as shareholder, guarantor, seller, buyer affiliate or corporate representative. A founder should decide whether a departure from management triggers a transfer right, an exclusion clause or a separate bad-leaver arrangement. Each choice changes the remedy.

Conclusion

A drag-along clause can make a French SAS sale possible when one founder or investor refuses to cooperate, but its effectiveness comes from precision rather than terminology. The founders should define the qualifying offer, threshold, price, consideration, notice, valuation, signature process, duration and consequences of default. The core corporate protection should be coordinated with the articles of association, while the confidential economic and procedural detail can sit in a shareholders’ agreement with accession obligations for every new investor.

The recent decisions on duration and “buy or sell” clauses reinforce the same practical message. A French court will examine the instrument that was actually signed, the terms that were actually determined and the corporate rules that were actually adopted. A foreign founder who prepares both the legal architecture and the closing evidence has a far better chance of preserving the buyer’s timetable, protecting minority economics and avoiding a dispute that paralyses the company.

For broader guidance on forming and structuring a French company, see the firm’s French company formation and corporate law page.

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