A foreign shareholder who discovers that a French SAS has paid a director, a parent company, or another group entity on unusually generous terms is not limited to accepting the transaction. A challenge is possible, but the legal route is often misunderstood. In a French société par actions simplifiée (SAS), shareholder approval is not always a condition of validity, and the absence of approval does not automatically unwind the contract. The key questions are different: was the transaction a regulated agreement, an ordinary agreement on normal terms, or a prohibited transaction; was it properly reported under the company’s articles; did it damage the company; and can the shareholder prove a distinct personal loss?
This guide is written for a founder, investor, or corporate shareholder located outside France. It focuses on a related-party transaction involving a French SAS, including a payment to a foreign parent, an intercompany service agreement, a loan, a licence, a transfer of intellectual property, or the sale of a business opportunity to another company controlled by the same people. It explains the evidence to collect, the urgent procedures available in France, and the difference between compensation paid to the company and compensation paid directly to a shareholder. The current statutory framework and the practical steps below should be checked against the company’s latest articles of association and the transaction chronology before any claim is filed.
The French administration’s overview of the SAS structure and its flexible articles of association is a useful starting point. That flexibility is valuable for international groups, but it makes the articles, shareholder agreement, reports, voting rules, and accounting trail central to the dispute. A foreign shareholder should therefore preserve the documents before confronting the other side. The firm’s French company formation and corporate support page provides the broader entry point for founders planning or operating a French business.
I. Can a foreign shareholder challenge a related-party transaction in a French SAS?
A. Which French SAS agreements are regulated, ordinary or prohibited?
The first task is classification. French company law does not treat every transaction between connected businesses in the same way. A transaction may be subject to the SAS regulated-agreement procedure, excluded because it is an ordinary transaction made on normal terms, or prohibited because it falls within a specific ban. The label used by the parties is not decisive. A document called a “group service agreement” may still be a regulated agreement if a director of the French company controls, manages, or represents the supplier and the price or scope is abnormal.
Article L. 227-1 of the French Commercial Code defines the SAS framework and states which public limited company provisions are, and are not, carried across. The current text of Article L. 227-1 is especially important because it excludes the public limited company provisions on regulated agreements found in Articles L. 225-38 to L. 225-42. The SAS has its own rule in Article L. 227-10. That distinction prevents a foreign investor from importing the remedy applicable to a French société anonyme (SA) without checking the SAS-specific text.
Under Article L. 227-10, the statutory auditor, known as the commissaire aux comptes or CAC, or, if the SAS has no CAC, its president, presents the shareholders with a report on agreements made directly or through an intermediary between the company and its president, one of its directors, a shareholder holding more than 10% of the voting rights, or, where the shareholder is a company, the company controlling it under Article L. 233-3. The shareholders decide on the report. The text uses the phrase Les conventions non approuvées, produisent néanmoins leurs effets
: an agreement that is not approved nevertheless continues to produce its effects, while the interested person and, where applicable, the president and other directors may have to bear the damaging consequences for the company.
That rule answers a common question from overseas founders: “Can I cancel the contract simply because the majority refused to approve it?” Usually, no. Non-approval is a serious warning and may support a liability claim, but it is not by itself an automatic cancellation mechanism in an SAS. The contract must be examined for another ground of invalidity, breach, fraud, lack of authority, a violation of the articles, a prohibited transaction, or a separate contractual or tortious fault.
The scope of the rule is deliberately wider than a contract signed personally by the president. It can include an agreement between the SAS and a foreign company in which the president is also a director. It can include a contract with a company owned by a parent entity when the statutory control relationship is established. Article L. 233-3 of the Commercial Code sets out control tests such as holding a majority of voting rights, having the power to determine decisions in fact, or appointing or removing most management or supervisory bodies. A foreign parent’s corporate chart, voting agreement, nominee arrangement, or concerted action may therefore matter even when the French shareholder register does not show an obvious personal conflict.
Article L. 227-11 creates the principal exclusion. The text of Article L. 227-11 states that Article L. 227-10 does not apply to agreements concerning ordinary operations concluded on normal terms. Two elements must be present. The operation must be ordinary for the company’s business, and the terms must be normal when compared with the company’s market, size, risk, bargaining position, and actual performance. A recurring purchase of standard software at a documented market price may qualify. A one-off transfer of a valuable customer list to a director’s foreign company for nominal consideration usually requires a much closer analysis.
“Normal terms” does not mean that the price is simply written in a contract or approved by a finance department. A court may examine whether the supplier actually performed the services, whether the same work was already done by the French team, whether the price was supported by independent comparables, whether payment terms were unusually generous, and whether the French company assumed risks that a normal customer would have rejected. The absence of a competitor quote is not automatically fatal, but it makes the contemporaneous explanation and the economic evidence more important.
There is also a separate category of prohibited transactions. Article L. 227-12 extends to the president and directors of an SAS the prohibitions in Article L. 225-43. The current Article L. 225-43 prohibits, subject to its statutory exceptions, a director from borrowing from the company, obtaining an overdraft from it, or having the company guarantee or endorse personal commitments. Approval as a regulated agreement does not convert a prohibited personal loan or guarantee into a safe transaction. If a document falls within that prohibition, the remedy analysis is materially different and may include nullity and restitution.
The voting mechanics must be checked with care. In an SA, Article L. 225-40 contains a rule excluding the interested director from deliberation and voting. That rule should not be mechanically applied to an SAS, because Article L. 227-10 has its own wording and Article L. 227-1 excludes the SA provisions listed above. The SAS articles may impose a conflict procedure, enhanced majority, prior authorisation, information right, or exclusion from voting. The shareholder must read those clauses rather than assume that an SA rule governs. Article L. 227-5 confirms that the articles determine the conditions in which the SAS is managed.
The same reasoning applies to a société par actions simplifiée unipersonnelle, or SASU. Where there is only one shareholder, the regulated-agreement information is generally recorded in the decision register under the statutory rules. The absence of a meeting does not make the conflict disappear. A foreign corporate shareholder should ask for the decision, the report, the supporting schedules, and the register entry, and should compare them with the actual payments and services.
A useful classification test can be written as four questions:
- Who is on each side of the transaction, and did the president, another director, a shareholder above the 10% voting threshold, or a controlling company have an interest?
- Is the transaction genuinely ordinary for the French business, and are the terms supported by independent market evidence?
- Was the agreement reported and submitted under Article L. 227-10 and the company’s articles, with a clear description of the conflict and the economic rationale?
- Does the transaction fall within a special prohibition, such as a personal loan or guarantee made for a director?
The answer to those questions determines whether the dispute is principally about reporting, economic damage, an invalid act, a breach of the articles, or several grounds at once.
B. What evidence proves a damaging transaction with a foreign group company?
A foreign shareholder rarely wins this type of dispute with a suspicion alone. The strongest case is built as a dated chain: the relationship existed, the decision-maker knew or should have known about the conflict, the company received less than it gave or assumed an abnormal risk, the required corporate process was missing or defective, and the company suffered a quantifiable loss. The chain should be assembled before sending a threatening letter, because a sudden confrontation can lead to deleted emails, amended invoices, or a rushed transfer of assets.
Start with the corporate identity evidence. Obtain the latest extrait Kbis, meaning the official extract from the French Trade and Companies Register, the articles of association, amendments, shareholder register where available, beneficial-owner information, and the foreign group structure. The INPI guidance on beneficial owners explains that a beneficial owner is the individual who directly or indirectly exercises effective control and that the information is entered in the Registre national des entreprises, or RNE, maintained and distributed by the Institut national de la propriété industrielle, or INPI. The Kbis is a useful public snapshot, but it is not a complete history of control or informal decision-making.
Then obtain the transaction file. It should include the signed agreement, drafts, schedules, purchase orders, invoices, proof of delivery, time records, emails, board or management approvals, shareholder resolutions, CAC correspondence, accounting entries, bank statements, and any side letter. For a licence, add the ownership chain and valuation of the intellectual property. For a loan, add the interest rate, maturity, security, repayment history, and solvency analysis. For a transfer of customers or staff, add the list of transferred assets, the valuation method, and evidence of the receiving company’s benefit.
Next, build an independence test. Identify the French company’s actual need, the functions performed, the resources used, the risks assumed, and the alternatives available. Ask what an independent customer would have purchased, from whom, at what price, and on what terms. Where the transaction crosses a border within a group, the tax record is relevant evidence even though a tax analysis does not decide the corporate-law remedy. The 2025 transfer-pricing guide published by the French tax administration describes the need to document the group, the functions and risks, the transaction method, and the comparables. It also explains that intra-group services should answer a real need and should not duplicate work already performed by the French company.
That evidence can be decisive in a service-fee dispute. A foreign parent may say that it supplied strategy, marketing, engineering, or management. The French company should be able to identify the people who worked, the deliverables, the time spent, the benefit received, and the calculation method. A bare invoice with a percentage of turnover is weaker than a contract supported by deliverables, a functional analysis, and contemporaneous pricing. Conversely, an absence of a formal transfer-pricing file does not automatically prove a civil-law fault. It is one part of the evidence.
The financial loss must be calculated from the company’s position. Compare the amount paid with the value received, the price of an available substitute, the lost margin, the tax and social consequences, and the cost of reversing the transaction. Separate a real company loss from a shareholder’s indirect loss. A fall in the value of shares caused by the company paying an excessive fee normally tracks the company’s loss. It is usually pursued through the social action on behalf of the company, with any damages awarded to the company. A shareholder cannot simply convert every reduction in share value into a personal claim.
French case law illustrates why evidence and remedy must be separated. In Cour de cassation, Commercial Chamber, 26 February 2013, no. 11-22.531, the court applied the SAS rule that unapproved agreements continue to operate and examined whether defects in the report had caused a concrete loss of opportunity not to approve the agreement. The lesson is practical: a reporting defect needs to be connected to damage, not merely identified in the abstract.
In Cour de cassation, Commercial Chamber, 5 June 2019, no. 17-26.167, a dispute involving management-fee services turned on proof of the services and alleged double employment. The decision records the evidential finding aucun élément factuel probant n’atteste du double emploi allégué
. For an international group, that sentence points to the documents that matter: an invoice is not a substitute for proof that the service was actually delivered and did not merely repeat the director’s corporate mandate or the French team’s existing work.
A particularly useful SAS decision is Cour d’appel de Toulouse, 19 March 2024, RG no. 21/02675. Minority shareholders challenged agreements between an SAS and companies in which its director was also involved, including a foreign company. The court treated an agreement made on abnormal terms with a company directed by the same individual as a regulated agreement, but held that the SAS-specific consequence of non-approval was not automatic cancellation. It connected the claim to the director’s management liability and the applicable limitation period. This is a court-of-appeal ruling, not a universal binding rule, but it is a useful illustration of how the classification, damage, and limitation issues may be argued together.
The evidence must be usable in France. Preserve original files with their metadata, keep a clean chronology, and identify the custodian of each document. Emails and accounting records from a foreign jurisdiction should be translated accurately; depending on the document and procedural use, a sworn translation, apostille, or other authentication may be needed. Do not edit the original spreadsheet to improve the presentation. Keep the original, a working copy, and a schedule showing the source, date, author, currency, and relevance of every item.
A foreign shareholder should also identify what is missing. A missing CAC report, unexplained payment, unsigned side letter, unexplained change in bank details, unusual credit note, or unexplained difference between group and local ledgers can justify a targeted evidence application. It is safer to identify a short list of relevant documents than to ask a French court for every document held by the company. The request should explain why each category is connected to the proposed claim and why it cannot be obtained through ordinary corporate channels.
II. What remedies can a foreign shareholder use in France?
A. Can the shareholder demand documents, an expert assessment or urgent protection?
The immediate objective is often preservation, not a final judgment. If money is still leaving the French company, a group company is about to sell the disputed asset, or the company is approaching dissolution, delay can destroy the practical value of a later claim. A shareholder should record the concern in writing, request the relevant corporate documents under the articles, notify the CAC if there is one, and preserve independent evidence. The letter should be factual and specific: identify the agreement, the relationship, the amount, the missing process, and the documents requested. It should avoid stating that the contract is already void when the SAS rules do not support that conclusion.
Where the relevant proof is at risk, Article 145 of the French Code of Civil Procedure offers a pre-trial evidence route. Article 145 provides that, where there is a legitimate reason to preserve or establish before any trial the proof of facts that may determine the outcome of a dispute, legally admissible investigative measures may be ordered on application, either on petition or in urgent proceedings. The statutory formulation is S’il existe un motif légitime de conserver ou d’établir avant tout procès la preuve de faits
. The court is not a general discovery service. The applicant must show a credible future dispute, identify the evidence, explain its relevance, and propose a proportionate measure.
An Article 145 application can be tailored to a foreign-related-party dispute. It may seek preservation or examination of a defined set of payment records, invoices, group service deliverables, valuation materials, contract versions, meeting minutes, or electronic correspondence. If the relevant data sits with the foreign parent, the French court’s ability to reach it may be limited and the applicant may need a parallel request in the foreign jurisdiction. If the data sits with the French SAS, the French court can be asked to secure a targeted examination or expert measure, subject to confidentiality, privilege, personal-data, and business-secret safeguards.
Urgent relief before the president of the tribunal de commerce is another option when the dispute is commercial and the French company falls within that court’s jurisdiction. Under Article 872 of the Code of Civil Procedure, the president may order in urgent proceedings measures that do not face a serious objection or that are justified by the existence of a dispute. Under Article 873, the president may order protective or restorative measures, even where a serious dispute exists, to prevent imminent harm or end a manifestly unlawful disturbance; a provision or performance order may also be possible where the obligation is not seriously disputable.
Those provisions do not guarantee a freeze of a bank account or a ruling that the disputed agreement is invalid. The applicant must match the request to the urgency. Examples may include preserving accounting data, stopping a narrowly identified transfer where the legal conditions are met, securing access to a corporate record, appointing a judicial expert for a defined technical issue, or ordering a party to preserve electronic evidence. A request that would effectively decide the entire liability claim may be refused if it requires a detailed assessment of contested facts.
The company’s registered office matters. The greffe is the court registry and administrative office that receives and records many corporate filings; it is not itself the judge. The relevant tribunal de commerce is generally connected to the company’s registered office or to the applicable jurisdictional rule. A foreign shareholder living in London, New York, Dubai, or Singapore does not lose access to French proceedings, but must plan service of documents, powers of attorney, translations, hearing attendance, and the collection of evidence outside France. The company’s Kbis, available through public registers and formalities involving the INPI Guichet unique, helps confirm the registered office and current management, but it does not replace a review of the full corporate file.
Confidentiality should be addressed early. A related-party dispute may expose customer lists, technical information, employee data, source code, pricing models, or the foreign parent’s internal documents. Ask for confidentiality protections and limit the documents to the period, entities, accounts, and transaction necessary to establish the claim. A court is more likely to entertain a precise request supported by a chronology than a demand based on general distrust of the majority shareholder.
The shareholder should also distinguish a request for information from a request for an accounting conclusion. A French court may require an expert to quantify whether a price was excessive, but the expert normally needs a defined mission, a comparable population, and usable accounting records. The applicant should propose the question to be answered: for example, whether the French company paid for identifiable services, whether the fee duplicated local functions, or whether a transfer price falls outside a justified range. The court, not the shareholder’s consultant, decides the legal consequences.
If the transaction is connected with a foreign parent, the tax evidence may need coordinated treatment. The French tax administration’s official transfer-pricing guide describes the French principle of full competition, meaning that related entities should be priced as independent businesses would be for comparable functions and risks. The same guide describes documentation for significant groups and the importance of linking agreements, allocation keys, economic studies, and financial statements. That material can help an expert or court understand the transaction, but a tax-compliant price does not automatically defeat a corporate-liability claim, and a tax adjustment does not automatically prove civil-law invalidity.
A practical urgent file should contain five short bundles: the corporate identity and control chart; the agreement and approval history; the payment and accounting schedule; the preliminary loss calculation; and a statement explaining the imminent risk. Include a draft procedural request, a proposed expert mission if needed, and a plan for protecting confidential material. The foreign shareholder should not wait for a perfect loss calculation if evidence is disappearing, but should state what is established, what remains to be tested, and why the court’s assistance is needed now.
B. When can the shareholder bring a liability claim and recover compensation?
The central final remedy is often the social action: a claim brought by one or more shareholders in order to obtain compensation for damage suffered by the company. Article L. 227-8 makes the rules on liability of public limited company directors applicable to the president and directors of an SAS. Article L. 225-251 states that directors are liable individually or jointly, depending on the circumstances, for breaches of statutory or regulatory provisions, violations of the articles, and management faults. The relevant question is therefore not only whether the director had an interest, but whether the conduct caused compensable damage.
Article L. 225-252 allows shareholders, individually or in the prescribed group conditions, to bring the social liability action against the relevant company officers. The damages sought in that action repair the company’s full loss and are paid to the company. The shareholder must be ready for the company or its majority management to argue that the transaction was beneficial, that the price was justified, that the services were delivered, or that the loss is speculative. The claim should therefore identify the precise management fault, the counterfactual value, the causal link, and the amount claimed.
In Cour de cassation, Commercial Chamber, 10 February 2021, no. 18-24.302, concerning an SAS and the transfer of business opportunities to a company linked to its director, the court stated that la mise en oeuvre de la responsabilité du dirigeant à l’égard de la société est subordonnée à la preuve d’une simple faute de gestion
. The decision is a strong reminder that the applicant must establish a management fault and company damage. It does not mean that every disagreement over strategy is actionable. A court will examine the information available at the time, the director’s role, the conflict, the benefit to the connected entity, the approval process, and the economic consequences.
For a personal claim, the shareholder must show a loss distinct from the company’s loss. Article 1240 of the Civil Code states the general fault principle: a person who causes damage to another by fault must repair it. A distinct personal loss might involve a personal right being denied, a false statement made directly to the shareholder, or a separate contractual promise made to that shareholder. A mere reduction in the value of shares because the company was overcharged generally remains the company’s loss and should be addressed through the social action.
Do not confuse the SAS regulated-agreement procedure with the SA nullity regime. Article L. 225-38 and Article L. 225-42 belong to the SA framework, which includes a specific route for annulling certain unauthorised agreements that caused damage. Article L. 227-1 excludes those provisions from the SAS. A foreign shareholder should not claim that a three-year SA cancellation action automatically applies to an SAS merely because the transaction looks similar. The correct SAS analysis may be a liability action, a challenge to a resolution under the applicable current rules and articles, a contractual claim, or a prohibited-transaction claim.
This boundary has also been highlighted by the courts in SA litigation. In Cour de cassation, Commercial Chamber, 11 October 2023, no. 22-10.271, the court stated, in the SA context, that shareholders cannot bring the social action against interested persons who are not directors for the company on whose behalf the action is brought. That decision should not be lifted out of its SA setting, but it shows why the identity and legal capacity of every defendant must be analysed. In an SAS, Article L. 227-8, Article L. 225-251, and Article L. 225-252 form the principal director-liability route; a claim against a connected foreign company may require a separate contractual, tortious, restitution, or fraudulent-transfer analysis.
Limitation must be calculated from the right cause of action. Article L. 225-254, applied through the SAS liability framework, provides a three-year period for the liability action, running from the damaging event or, if concealed, its disclosure; a different period applies where the conduct is classified as a crime. The precise start date can be contested. In the Toulouse decision cited above, the court linked the minority shareholders’ complaint about non-approval to the date on which the agreements were presented to the shareholders. That is not a substitute for a case-specific limitation review. Preserve the earliest disclosure date, the meeting notice, the report, the minutes, and every later discovery that may show concealment or continuing damage.
A prohibited loan or guarantee requires a different urgent assessment. The shareholder should identify the statutory prohibition, the recipient, the company’s payment or guarantee, and the personal commitment supported. A regulated-agreement report cannot cure every prohibited act. If the legal requirements for nullity and restitution are met, the claim may focus on returning the money or restoring the company’s position rather than proving only a management loss. The exact transaction and statutory exception must be reviewed before pleading that remedy.
The articles of association may create additional tools. They may require prior approval for transactions above a threshold, impose a special majority, give a shareholder information rights, require an independent valuation, or regulate a conflict. A breach can support a claim about the validity of a resolution or a director’s liability, but the consequence depends on the wording, the mandatory statutory rules, the current law on social-decision nullities, and the nature of the breach. Article L. 227-9 identifies important collective decisions in an SAS, including approval of annual accounts and allocation of profits, while allowing the articles to define the company’s decision-making arrangements. The current Article L. 227-9 should be read in its current version rather than an older template copied from an online precedent.
In a cross-border case, the claim should map defendants and remedies in a table before filing:
| Problem identified | Likely legal direction | Where compensation or relief goes |
|---|---|---|
| Agreement was not reported or was reported inaccurately | Article L. 227-10 analysis, articles, and management liability if damage is proved | Usually the company through the social action |
| Ordinary transaction claimed, but terms or services are abnormal | Challenge the Article L. 227-11 exclusion and prove economic harm | Usually the company |
| Personal loan, overdraft, guarantee, or endorsement prohibited by law | Article L. 227-12 and Article L. 225-43; consider nullity and restitution | Company restoration, subject to the exact facts |
| Shareholder suffered a separate direct loss | Personal claim under the applicable contract or Article 1240 of the Civil Code | The shareholder, if the distinct loss is proved |
| Evidence is at risk before the merits claim | Article 145, or urgent relief under Articles 872 and 873 of the Code of Civil Procedure | Preservation or interim protection, not automatic final damages |
Before filing, prepare a one-page chronology with the date of appointment, shareholding changes, control events, contract negotiations, invoices, payments, reports, shareholder votes, first suspicion, disclosure, and proposed procedural steps. Add the currency conversion method and distinguish gross payments from net loss. If the foreign parent claims that the French company received strategic value, identify the measurable benefit and the independent evidence supporting it. If the shareholder claims that the French company was stripped of an opportunity, identify the opportunity, its owner, the date, and the value that could realistically have been realised.
The final claim should ask for relief that the evidence can support. It may seek an order requiring the director to compensate the company, restitution of a prohibited payment, a declaration about a resolution, an expert assessment, or costs. It should not ask the judge to cancel every group agreement or to infer fraud from the existence of a foreign parent. A foreign group structure is lawful in itself. The dispute turns on the conflict, the process, the economic substance, the conduct of the director, and the damage established by the record.
Conclusion
A foreign shareholder can challenge a related-party transaction in a French SAS, but the strongest argument is rarely “the shareholders did not approve it, so the contract is void.” The more reliable method is to classify the agreement under Articles L. 227-10 and L. 227-11, check the SAS articles and the control chain, test whether services and prices were real and normal, and quantify the company’s loss. Article L. 227-10 generally leaves a non-approved agreement in effect while exposing the interested person and, where appropriate, the directors to the consequences of damage. A prohibited loan or guarantee, a separate contractual defect, or a distinct personal loss may lead to a different remedy.
The practical sequence is to preserve the documents, request a focused corporate file, notify the CAC where relevant, consider Article 145 if evidence is at risk, use urgent proceedings only for a defined protective need, and then choose between a social liability action, a personal action, a restitution claim, or a challenge to a corporate resolution. The limitation date must be calculated from the correct cause of action, and foreign documents must be made usable in French proceedings. The company’s registered office, the articles, the French and foreign control records, and the payment trail should be reviewed together before litigation is launched.
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