You live in London, New York, Dubai or Singapore, and your French business is about to take a decisive turn: a business angel wants to buy into your company, a co-founder wants out, or you realise the company form you registered in a hurry no longer fits. The question you ask at that moment is almost always the same: should this company be a SAS (société par actions simplifiée, the flexible joint-stock company), a SARL (société à responsabilité limitée, the limited liability company with parts rather than shares), or should you simply operate through a branch of your foreign company? The answer determines who can enter and leave the capital, how fast decisions are taken, what happens when shareholders fall out, and how much a mistake costs to repair. French law gives the SAS and the SARL the same core promise — shareholders only bear losses up to the amount of their contributions — but everything else differs: governance, transfer of securities, investor clauses, and the procedure for changing form later. This article explains, for a foreign owner managing from abroad, how the two vehicles differ when investors arrive or shares change hands, and how to register the right one — or transform the wrong one — without flying to France every week. It assumes you already understand the basic formation steps, bank account, Kbis extract (the official company identity certificate issued by the greffe, the court clerk’s office) and VAT registration, described in our general guide to setting up a company in France as a foreign founder; here we focus on the strategic choice and its repair.

I. How SAS and SARL Differ When a Foreign Founder Brings Investors or Sells Shares

A. Why the SAS Suits Foreign Founders Who Plan to Raise Money, Distribute Roles Freely and Let Shareholders Enter or Leave

The SAS is defined by Article L227-1 of the Commercial Code, which states: “Une société par actions simplifiée peut être instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leur apport.” A simplified joint-stock company can be formed by one or more persons whose liability is limited to their contributions. When there is a single shareholder it is called a SASU (société par actions simplifiée unipersonnelle). The decisive feature for a foreign founder is not limited liability — the SARL offers that too — but contractual freedom. Article L227-5 of the Commercial Code provides: “Les statuts fixent les conditions dans lesquelles la société est dirigée.” The articles of association set the conditions under which the company is managed. In plain terms, you write your own governance: a president (président) alone, a president with one or several general managers (directeurs généraux), a supervisory board, bespoke voting majorities, veto rights for the foreign parent, remote decision-making by videoconference or written consultation. The SARL cannot match this freedom, because its operating rules are largely imposed by statute.

Representation toward third parties follows the same flexible logic. Article L227-6 of the Commercial Code states: “La société est représentée à l’égard des tiers par un président désigné dans les conditions prévues par les statuts.” The company is represented vis-à-vis third parties by a president appointed under the conditions laid down in the articles. The president holds the widest powers to act in the name of the company within the limit of the corporate purpose, and the company is bound even by acts beyond that purpose unless it proves the third party knew or could not have been unaware of the excess. For a founder living abroad, this matters twice: you can appoint yourself president and keep full signing authority, or appoint a trusted local president while reserving strategic decisions to yourself through the articles; and banks, landlords and suppliers know exactly who binds the company. Internal limits on the president’s powers are unenforceable against third parties, so counterparties deal with confidence while shareholders organise control internally. The articles can also provide that one or more persons bearing the title of general manager or deputy general manager exercise the powers entrusted to the president, which allows a foreign owner to split representation and day-to-day management cleanly.

Collective decisions work the same way. Article L227-9 of the Commercial Code opens with the principle that “Les statuts déterminent les décisions qui doivent être prises collectivement par les associés dans les formes et conditions qu’ils prévoient.” The articles determine which decisions must be taken collectively by the shareholders, in the forms and conditions they provide. Certain attributions — capital increases, reductions, mergers, demergers, dissolution, transformation, appointment of statutory auditors, annual accounts and profits — must be exercised collectively, but the quorum, majority, notice and remote-voting mechanics are yours to draft. A founder in another time zone can therefore provide for fully written consultations, electronic signatures and short notice periods for urgent matters, while reserving enhanced majorities for sensitive operations such as admitting a new investor or selling the business. Case law polices only the outer boundary: every shareholder keeps an irreducible right to participate. Article 1844 of the Civil Code states: “Tout associé a le droit de participer aux décisions collectives.” Every shareholder has the right to take part in collective decisions. The Cour de cassation drew the consequence for exclusion clauses in a leading ruling, Commercial Chamber, 29 May 2024, appeal no. 22-13.158, available at the official Cour de cassation decision page: “Il résulte de la combinaison de ces textes que si les statuts d’une société par actions simplifiée peuvent prévoir l’exclusion d’un associé par une décision collective des associés, toute stipulation de la clause d’exclusion ayant pour objet ou pour effet de priver l’associé dont l’exclusion est proposée de son droit de voter sur cette proposition est réputée non écrite.” The combination of these provisions means that while SAS articles may provide for the exclusion of a shareholder by collective decision, any term of the exclusion clause whose object or effect is to deprive the shareholder whose exclusion is proposed of the right to vote on that proposal is deemed unwritten. In practice, your SAS can contain an exclusion clause — essential when a co-founder breaches commitments — but the targeted shareholder must be allowed to vote on his own exclusion, and the price mechanism for his bought-back shares must be fair and preferably expert-based. Draft the clause accordingly from day one, before any dispute, because courts will strike down shortcuts taken in the heat of a conflict.

Investor entry is where the SAS truly earns its reputation. Shares (actions) transfer in principle freely, subject only to clauses you choose: prior approval (agrément), pre-emption rights, drag-along and tag-along, inalienability for a capped period, and the exclusion mechanism of Article L227-16 of the Commercial Code, which provides: “Dans les conditions qu’ils déterminent, les statuts peuvent prévoir qu’un associé peut être tenu de céder ses actions.” Under conditions they determine, the articles may provide that a shareholder can be required to transfer his shares. A foreign founder negotiating with a business angel or a venture fund can therefore offer preferred shares with specific financial rights, staged entry tied to milestones, and a shareholders’ agreement (pacte d’associés) enforceable alongside the articles. Convertible instruments — convertible bonds (obligations convertibles), BSA (bons de souscription d’actions, share subscription warrants often used to reward founders and early hires) and the widely used BSA AIR (accord d’investissement rapide, the French fast-track seed instrument) — attach naturally to a SAS, whereas they fit a SARL awkwardly or not at all. If your horizon includes fundraising, employee share incentives or an eventual sale, the SAS is almost always the right starting point, and choosing a SARL first usually means paying later for a transformation.

One final practical point for founders handling everything from abroad: the SAS president who receives no remuneration pays no French social security contributions on that mandate, and the foreign-resident president of a French SAS is affiliated in France only on French-source professional income under the applicable treaty and EU coordination rules, with the URSSAF (unions de recouvrement des cotisations de sécurité sociale et d’allocations familiales, the social security collection agencies) as the collecting body. The position is therefore cheap to hold while the company ramps up, which is one reason foreign-owned holding and operating structures in France are overwhelmingly SAS. Our detailed analysis of director status, pay and liability is available in our guide for foreign directors of French companies.

B. When the SARL Protects a Closed Circle, Why Its Approval Lock Matters and What Selling Shares Really Costs

The SARL is defined by Article L223-1 of the Commercial Code: “La société à responsabilité limitée est instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leurs apports.” A limited liability company is formed by one or more persons who bear losses only up to their contributions. With a single shareholder it is called an EURL (entreprise unipersonnelle à responsabilité limitée). The SARL issues parts sociales (corporate units), not actions, and its philosophy is the opposite of the SAS: protection of a stable, closed circle of shareholders rather than fluid capital. For a family business, a two-partner consultancy, a restaurant or a craft company where the founders intend to stay together and keep outsiders out, that rigidity is a virtue. For a startup chasing investors, it is usually a trap.

The lock has a name: agrément, the prior approval procedure. Article L223-14 of the Commercial Code states: “Les parts sociales ne peuvent être cédées à des tiers étrangers à la société qu’avec le consentement de la majorité des associés représentant au moins la moitié des parts sociales, à moins que les statuts prévoient une majorité plus forte.” Units may be transferred to third parties outside the company only with the consent of the majority of shareholders representing at least half of the units, unless the articles require a higher majority. The procedure is strict: the planned transfer is notified to the company and to each shareholder, and if the company has not announced its decision within three months of the last notification, consent is deemed granted. If approval is refused, the shareholders must, within three months of the refusal, acquire or procure the acquisition of the units at a price set under the conditions of Article 1843-4 of the Civil Code — in practice an expert valuation — unless the seller gives up the sale. The Cour de cassation enforces these time limits rigorously. In Commercial Chamber, 2 April 2025, appeal no. 23-23.553, published at the official Cour de cassation decision page, the Court recalled: “Selon l’article L. 223-14 du code de commerce les parts sociales d’une société à responsabilité limitée ne peuvent être cédées à des tiers étrangers à la société qu’avec le consentement de la majorité des associés représentant au moins la moitié des parts sociales”. Under Article L. 223-14 of the Commercial Code, the units of a limited liability company may be transferred to third parties outside the company only with the consent of the majority of shareholders representing at least half of the units. The dispute concerned the interplay between the three-month approval period and extended written-consultation deadlines during the Covid-19 health emergency, and the Court’s message is clear: miss the notification and deadline mechanics, and consent is deemed acquired — or the refusal procedure collapses. A foreign seller negotiating from abroad must therefore calendar every notification date, confirm receipt by each shareholder and by the company, and track the three-month periods day by day; our guide on closing or selling a French company from abroad details the full exit sequence including tax.

Day-to-day governance is equally statutory. Article L223-29 of the Commercial Code provides: “Dans les assemblées ou lors des consultations écrites, les décisions sont adoptées par un ou plusieurs associés représentant plus de la moitié des parts sociales.” At meetings or in written consultations, decisions are adopted by one or more shareholders representing more than half of the units. If that majority is not reached, and unless the articles say otherwise, the shareholders are convened or consulted a second time and decisions are taken by a majority of votes cast regardless of turnout — and decisions taken in breach of these rules can be annulled at the request of any interested party. You cannot quietly rewrite these thresholds the way a SAS can; the statute sets the floor. Management belongs to one or more gérants (managers), whose appointment, powers and dismissal follow statutory rules, and the gérant who is also a minority shareholder enjoys dismissal protections unknown in a SAS, where a president is removable ad nutum (at will) under the conditions of the articles. For a foreign founder this rigidity cuts both ways: a local co-manager cannot be removed overnight, which protects each side but slows down crisis management.

There are genuine reasons to choose the SARL despite all this. The format signals stability to French banks, artisans and public procurement bodies; the model articles for a single-shareholder SARL managed by its owner simplify formation; transfers between existing shareholders, spouses, parents and children are free of the approval lock, which suits family transmission; and the majority shareholder cannot force through every structural change without respecting statutory minority protections, including actions against abusive profit hoarding in reserves. But the founder who chooses a SARL while dreaming of venture capital will discover three hard limits: no preferred shares with differentiated financial rights, no simple mechanism for warrants and convertible instruments, and an investor who knows that any future entry of a third party requires the agrément procedure with its three-month clocks and expert-pricing backstop. Sophisticated French and foreign funds therefore routinely make their term sheets conditional on transformation into a SAS before they wire a euro. If fundraising is even a realistic option within three years, start as a SAS and spare yourself the conversion bill — or budget for it consciously, as explained in Part II.

A word on the branch alternative, because foreign groups ask about it constantly. A succursale (branch) is not a separate legal person: the foreign company acts directly in France through a registered establishment, with no French share capital, no French shareholders’ meeting and no Kbis in the same sense — instead the branch is registered on the French registers and the foreign parent remains fully liable for French commitments. That absence of liability shield, combined with the practical difficulty of opening bank accounts, hiring and evidencing limited risk to French counterparties, makes the branch suitable mainly for a testing phase or for regulated groups that need a light footprint before incorporating. Three of our earlier publications already compare branches and subsidiaries in detail, and no purpose is served by repeating them here: for a founder building a business with employees, contracts and investors, the real choice is SAS versus SARL, and the branch is at most a waiting room.

II. How a Foreign Owner Registers the Right Vehicle and Fixes a Wrong Choice From Abroad

A. Registering Your SAS or SARL From Abroad: Articles, Capital Deposit, Single Filing and Beneficial Owners

French company law starts from a written-articles rule that applies to every company. Article 1835 of the Civil Code requires that “Les statuts doivent être établis par écrit. Ils déterminent, outre les apports de chaque associé, la forme, l’objet, l’appellation, le siège social, le capital social, la durée de la société et les modalités de son fonctionnement.” Articles must be drawn up in writing and determine, besides each shareholder’s contributions, the form, purpose, name, registered office, share capital, duration and operating terms of the company. For a SAS this statutory skeleton is filled by your bespoke clauses — governance, share classes, approval, pre-emption, exclusion, buy-back pricing, remote decisions — while for a SARL the statute supplies most of the flesh automatically. In both cases, have the draft reviewed before signature: once filed, defective clauses are enforceable against you, and the defective exclusion clause struck down in the 29 May 2024 ruling above is a textbook example of what not to sign.

Legal personality — and with it the liability shield — begins at registration. Article L210-6 of the Commercial Code states: “Les sociétés commerciales jouissent de la personnalité morale à dater de leur immatriculation au registre du commerce et des sociétés.” Commercial companies enjoy legal personality from their registration on the Registre du commerce et des sociétés (the trade and companies register, now mirrored in the Registre national des entreprises, the single national business register). Acts done in the name of the company while it is being formed bind indefinitely and jointly those who performed them, unless the company after due formation and registration takes over the commitments, which are then deemed assumed from the outset. Never sign a commercial lease, a major supply contract or a hiring promise in the company’s name before registration without a proper takeover clause (clause de reprise des actes accomplis pour le compte de la société en formation) listed in an annex to the articles. Founders acting from abroad through a power of attorney (procuration) should ensure the attorney signs expressly on behalf of the company in formation and that the shareholders formally take over the acts at the first meeting after registration.

The filing itself goes through a single doorway. Article L123-33 of the Commercial Code organises the one-stop principle: the company declares its creation by filing a single electronic file with the single body designated for that purpose — in practice the Guichet unique (single window) operated by the INPI (Institut national de la propriété industrielle, the French intellectual property and business-formalities office), which routes the file to the greffe, tax and social bodies. The file includes the articles, the registered-office occupancy proof (titre d’occupation: lease, sublease with owner consent, or domiciliation contract with an authorised provider), the capital deposit certificate (certificat de dépôt des fonds) issued by a bank, notary or the Caisse des dépôts, the identity and criminal-record declarations of the managers, and the declaration of beneficial owners. Foreign founders stumble most often on three items: the occupancy proof, rejected when a home address abroad or a vague domiciliation letter is offered; the capital deposit, frozen when the bank’s KYC (know-your-customer) checks on a non-resident shareholder stall; and the beneficial-owner declaration. On the last point, Article L561-46 of the Monetary and Financial Code requires companies to declare to the Registre du commerce et des sociétés, through the single body, the information on their beneficial owners (bénéficiaires effectifs) — identification details, personal domicile and the terms of control exercised. File it at creation and update it within thirty days of any change in control or shareholder structure; an investor entry that is not reflected in the RBE (registre des bénéficiaires effectifs, the beneficial-owner register) exposes the company to rejection of later filings and, in serious cases, criminal sanctions. Our walkthrough of INPI rejections and how a foreign founder still obtains the Kbis and our analysis of refused bank accounts and the Banque de France right-to-account procedure cover the two most frequent blockages step by step.

Tax follows form automatically, then optionally. Under Article 206 of the General Tax Code, SAS and SARL are as a rule liable to corporate income tax (impôt sur les sociétés), while a SARL formed between family members and a young SAS or SARL meeting strict conditions may elect temporarily for partnership-style transparent taxation (régime des sociétés de personnes) — five financial years maximum for non-family companies. The election is irrevocable in some configurations and has direct consequences for a non-resident shareholder taxed in his home state under the applicable treaty, so model the choice with the treaty in hand before filing anything. VAT (taxe sur la valeur ajoutée) registration, the SIREN/SIRET numbers (the national business identification numbers issued by INSEE, the statistics institute) and employer registrations with the URSSAF flow from the same single filing; a company that will invoice, import or hire should verify within days of receiving the Kbis that each administration has actually opened its account. Our first-year guides explain import VAT and reverse charge for foreign-owned companies and how a first-year loss is carried forward and refunded.

B. Transforming a SARL Into a SAS, Changing Course After an Investor Arrives and Handling Disputes From Abroad

Transformation (transformation: changing company form without creating a new legal person) is the standard repair, and the most travelled road runs from SARL to SAS. The operation requires a shareholders’ decision taken under the majority rules applicable to the most serious SARL decisions, an auditor’s report on the company’s situation (rapport du commissaire à la transformation) verifying that net assets cover the capital, new SAS articles adopted unanimously where the law so requires, and a full modificative filing on the Guichet unique: updated articles, minutes, auditor’s report, new RBE declaration if control changed, and publication in a legal-notices journal (journal d’annonces légales, the gazette where corporate events must be advertised) followed by BODACC (Bulletin officiel des annonces civiles et commerciales, the official bulletin publishing company registrations and events) notation via the greffe. Legal personality continues — contracts, leases, loans and employment relationships survive — but everything textual changes: bank signature cards, the Kbis description, intra-group agreements referencing parts sociales, and pledges over units (nantissement de parts sociales), which must be re-documented as pledges over shares. Budget several weeks and coordinate the shareholders’ meeting with the investor’s timetable, because funds will not wire until the SAS articles carrying their preferred rights are registered and the fresh Kbis is issued. Run the transformation before signing the investment protocol, not after: post-closing conversions multiply conditions precedent and price-adjustment disputes.

The reverse road, SAS to SARL, is rarer but real: founders who will never raise capital, who want the statutory approval lock to keep the circle closed, or who prefer the SARL’s manager-centred governance and its more protective dismissal regime for a minority co-manager. The mechanics mirror the above — decision, auditor’s report, new articles, filing, publication — with one specific vigilance point: every bespoke SAS clause that has no SARL equivalent dies in the conversion. Drag-along, tag-along, exclusion for breach, preferred financial rights and warrant programmes must be renegotiated as shareholders’ agreements or abandoned, and any consent already given by investors under the SAS regime must be re-secured. Map each clause to its post-conversion fate in a conversion table annexed to the transformation minutes; clauses forgotten in the move are the raw material of litigation two years later, when the excluded co-founder discovers that the exclusion clause did not survive the change of form.

Disputes follow predictable scripts, and each has a remote-handling protocol. A refused approval (refus d’agrément) in a SARL triggers the three-month buy-back procedure at expert price under Article 1843-4 of the Civil Code; contest the expert’s mission scope early, in writing, because courts rarely revisit a valuation conducted adversarially and without procedural objection — the 2 April 2025 ruling above shows how strictly deadlines are applied. An exclusion in a SAS triggers review of the clause’s validity under the 29 May 2024 standard: the targeted shareholder votes, the price must be determinable, and suspension of non-pecuniary rights pending transfer must stay within what Article L227-16 of the Commercial Code authorises. A deadlock between two equal shareholders (blocage) has no statutory tie-breaker in either form, which is why well-drafted SAS articles include buy-sell (clause d’offre alternative, often called shotgun or Texas shoot-out), mediation windows and casting-vote mechanics — and why SARLs without such contractual patches end in court-appointed provisional administrators (administrateur provisoire). From abroad, organise evidence early: certified translations of foreign identity documents, apostilles where required, powers of attorney with wet or qualified electronic signatures accepted by the greffe, and a French address for service (domicile élu) at your lawyer’s office so that no deadline is missed while mail crosses borders. If an unpaid French customer or a contested social-security bill complicates the picture in parallel, our guides on recovering unpaid invoices through injonction de payer and référé-provision and on answering a URSSAF formal demand from abroad apply alongside the corporate work.

Finally, calendar the annual backbone however the dispute ends: approval of the accounts within six months of year-end, filing with the greffe within one month of approval (two months electronically), publication, and the general-meeting minutes recording allocation of profits and any dividend. Our guide to approving accounts and bringing dividends home from abroad gives the full sequence. A transformation, an investor entry or a shareholder exit never suspends this calendar — missed filings draw registry injunctions (injonction de déposer) and, in prolonged silence, personal liability actions against managers. The foreign owner who keeps one compliance calendar, one evidence file per shareholder event, and one lawyer holding powers of attorney can run the entire transformation without boarding a plane.

Conclusion

Choose the SAS when your horizon includes investors, share transfers, differentiated financial rights or an eventual sale: its contractual freedom, free transferability of shares and compatibility with warrants and convertible instruments repay the drafting effort many times over. Choose the SARL when the circle is meant to stay closed — family business, stable partnership, protected craft — and accept the approval lock and statutory governance as the price of that stability. In both cases, draft shareholder entry and exit before they are needed, file the beneficial-owner declaration at every change, and treat the three-month approval clocks and the annual accounts calendar as hard law rather than guidance. And if the form already registered is the wrong one, transform early: a SARL-to-SAS conversion completed before the investor wires funds is routine paperwork, while the same conversion negotiated after closing becomes a deal risk. The company form is not a tattoo; it is a tool, and French law provides the procedure to change it — provided the articles, the filings and the deadlines are handled with the precision the Cour de cassation demands.

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