Your French company needs fresh money and you live abroad. Wiring funds from your foreign account is not enough: under French law, money paid in only becomes capital through the formal augmentation de capital procedure, decided collectively, documented in writing, paid through a supervised circuit, and filed with the company register before it takes effect against third parties. Without that procedure, your transfer is merely a shareholder loan, repayable on demand, and it buys you no new shares and no extra votes.

This guide explains, for the SAS (société par actions simplifiée, the flexible simplified joint-stock company) and the SARL (société à responsabilité limitée, the limited liability company), who decides the increase, how preferential subscription rights (DPS, droit préférentiel de souscription) protect existing shareholders, how cash and assets actually travel from abroad through the deposit certificate (certificat du dépositaire) to the updated Kbis company extract, and what protects a foreign minority shareholder when the majority uses the increase to dilute or evict them. Two published rulings of the Court of Cassation, quoted below word for word, set hard limits that every foreign investor should know. If the company does not exist yet, start with our step-by-step guide to setting up a company in France as a foreign founder, from the bank account to the Kbis, VAT and first hire.

I. Who Decides a Capital Increase and Who Gets to Subscribe When Shareholders Live Abroad

A. How the Extraordinary Meeting Votes and How Preferential Subscription Rights Work

The decision to increase the capital belongs to the shareholders collectively, not to the president or manager alone. The Commercial Code provides that L’assemblée générale extraordinaire est seule compétente pour décider, sur le rapport du conseil d’administration ou du directoire, une augmentation de capital immédiate ou à terme (article L. 225-129 of the Commercial Code): only the extraordinary general meeting (AGE, assemblée générale extraordinaire), acting on a management report, can order an immediate or future increase. The same article adds that L’augmentation de capital doit être réalisée dans le délai de cinq ans à compter de cette décision ou de cette délégation, so a vote in principle does not stay open forever and must be executed within five years. For a foreign shareholder, the first consequence is practical: distance never excuses absence. The meeting can allow remote participation and videoconference if the articles of association (statuts) permit it, votes can be cast by proxy (pouvoir) or by correspondence, and the minutes (procès-verbal) must record the majority required by law and by the articles. A shareholder who learns of the meeting after the new shares are issued has already lost the most valuable window for action, because subscription periods are short and the filing that follows quickly makes the increase enforceable against everyone.

Voting thresholds differ sharply between the two vehicles foreign investors use most, and the difference decides who can impose or block dilution. The SAS is built for contractual freedom: Une société par actions simplifiée peut être instituée par une ou plusieurs personnes qui ne supportent les pertes qu’à concurrence de leur apport (article L. 227-1 of the Commercial Code), and most rigid meeting rules of the classic public limited company simply do not apply to it, leaving the articles free to set quorums and majorities. A foreign minority shareholder in an SAS must therefore read the articles before anything else, because the articles alone fix the threshold at which their stake can be diluted, and a shareholders’ agreement (pacte d’associés) can add anti-dilution clauses, pre-emption rights, or consent requirements that the statute does not provide. In a SARL, the statute is stricter and more protective: Toutes autres modifications des statuts sont décidées par les associés représentant au moins les trois quarts des parts sociales (article L. 223-30 of the Commercial Code). Since a capital increase amends the articles, it needs at least three quarters of the parts sociales, and any clause demanding even more remains valid. A foreign majority holder who assumes that owning most of the capital is enough can fail at this wall in a SARL, while in an SAS the same holder can often push the increase through alone if the articles allow it.

Once the increase is voted, the central protection of the existing shareholders is the preferential subscription right. The statute states that Les actions comportent un droit préférentiel de souscription aux augmentations de capital (article L. 225-132 of the Commercial Code): each shareholder may subscribe to new cash shares in proportion to their existing stake, so that a shareholder who follows the increase keeps exactly the same percentage afterwards. This right, the DPS, can be exercised, sold, or individually waived, since Les actionnaires peuvent renoncer à titre individuel à leur droit préférentiel. For a foreign shareholder, the DPS is both a shield and a deadline. It is a shield because, as long as it is maintained, the majority cannot reserve the new shares for itself; anyone who wants to take a larger slice must buy the unused rights or obtain a formal waiver. It is a deadline because the subscription period is fixed by the meeting, often just a few weeks, and the notice must actually reach the shareholder abroad. A waiver signed without understanding the issue price is the most common way foreign minority shareholders lose half their company in one meeting: renouncing the DPS for free, without negotiating the price of the new shares, hands the majority the dilution it wanted. Never sign an individual waiver by email from abroad without knowing the subscription price, the number of new shares, and the resulting percentages, and never confuse a waiver of the DPS with an agreement to the increase itself.

The meeting can also suppress the DPS entirely, but only through a supervised procedure with written reports. The Commercial Code provides that L’assemblée qui décide ou autorise une augmentation de capital peut supprimer le droit préférentiel de souscription pour la totalité de l’augmentation de capital ou pour une ou plusieurs tranches de cette augmentation (article L. 225-135 of the Commercial Code), and adds that Elle statue sur rapport du conseil d’administration ou du directoire, with a report from the statutory auditor (commissaire aux comptes, CAC) where one exists. In practice, this means a reserved increase, where all new shares go to a named investor, requires the meeting to be given a management report explaining the reasons, the issue price and its justification, and the impact on existing shareholders, plus the auditor’s opinion on the fairness of the figures. A foreign shareholder who receives only a bare convocation with no reports has received a warning signal: the file is incomplete, the price justification is missing, and any suppression voted on that basis is fragile. Each subscription is then evidenced individually, because Le contrat de souscription à des titres de capital ou à des valeurs mobilières donnant accès au capital est constaté par un bulletin de souscription, établi dans les conditions déterminées par décret en Conseil d’Etat (article L. 225-143 of the Commercial Code). The bulletin de souscription is the personal contract by which each subscriber commits: identity, number of shares, price, release terms. Signed from abroad, it should be returned with proof of sending, and a subscriber who wires money without signing it has paid without subscribing, which is precisely the trap that turns intended capital into a mere loan.

B. How Foreign Shareholders Pay From Abroad: Cash, Deposit Certificate, Contributions in Kind and Filing

Cash subscriptions from abroad follow a supervised payment circuit that surprises many foreign investors. The funds must be deposited with a qualified depositary, a bank, the Caisse des dépôts et consignations, or a notary (notaire), which issues the deposit certificate (certificat du dépositaire, also called attestation de dépôt des fonds) listing each subscriber and each amount. Only then can the company record the increase and file it. Banks in France apply strict anti-money-laundering checks to non-resident subscribers: passport, proof of address abroad, company documents of the foreign parent with a recent extract equivalent to the Kbis, and evidence of the origin of funds, often with sworn translations into French. The friction is real and should be planned for, because the subscription period keeps running while the bank reviews the file. Where a French bank refuses or stalls, the alternatives provided by law remain available: deposit with a notary or with the Caisse des dépôts, both of which foreign subscribers can instruct through a representative in France holding a written power of attorney (pouvoir). Our companion analysis of what to do when a French bank refuses your company account, from the capital deposit to forcing a solution from abroad describes these fallback routes in detail, and the same reflexes apply here: never let a single bank’s refusal stop the subscription period, and always keep written proof of every deposit attempt. One absolute precondition governs all cash increases in companies limited by shares: Le capital doit être intégralement libéré avant toute émission d’actions nouvelles à libérer en numéraire (article L. 225-131 of the Commercial Code). If the existing capital is not fully paid up, the new cash shares cannot legally be issued, and a foreign parent that believed the subsidiary was fully funded discovers the blockage at the worst moment. Checking the liberation status before voting the increase is a five-minute verification that saves months of corrective filings.

Foreign investors often prefer contributing assets rather than cash: equipment shipped from the parent, a patent portfolio, a business (fonds de commerce), or the conversion of an existing shareholder loan into shares. French law treats these contributions in kind (apports en nature) with special suspicion, because their value is declared by the contributor and directly sets how many shares they receive. The safeguard is mandatory: En cas d’apports en nature ou de stipulation d’avantages particuliers, un ou plusieurs commissaires aux apports sont désignés à l’unanimité des actionnaires ou, à défaut, par décision de justice (article L. 225-147 of the Commercial Code). The contributions auditor (commissaire aux apports), an independent professional, is appointed either unanimously by the shareholders or by the court on petition, and Ces commissaires apprécient, sous leur responsabilité, la valeur des apports en nature et les avantages particuliers. Their report must be made available to the shareholders before the meeting, and the meeting that approves the valuation completes the operation, since Si l’assemblée approuve l’évaluation des apports et l’octroi d’avantages particuliers, elle constate la réalisation de l’augmentation du capital. For a foreign contributor, three consequences follow. First, an asset located abroad must be valued with evidence a French auditor can verify: purchase invoices, independent appraisals, transfer pricing documentation where the asset moves between group companies. Second, unanimity on the auditor’s appointment is required, which gives even a small foreign minority shareholder leverage to demand a serious professional rather than the majority’s adviser. Third, if the meeting reduces the valuation, the contributor must expressly approve the reduction or walk away; inflated valuations imposed on silent minorities are exactly what the courts punish, as shown in Part II.

Once subscribed and paid, the increase must be made public to take full effect. The president or manager records the completion (constatation de la réalisation), amends the articles to show the new capital, and files the package through the Guichet unique, the single online portal that replaced the former separate filing centres, for registration with the registre du commerce et des sociétés (RCS, the trade and companies register) kept by the greffe, the registry of the local Commercial Court. The filing bundle typically includes the minutes of the meeting, the amended articles, the deposit certificate or the contributions auditor’s report, the list of subscribers, and a declaration of any regulated formalities. The greffe reviews the file, registers the new capital, issues an updated Kbis extract showing the new amount, and the notice is published in the BODACC gazette. Until registration, the increase binds the subscribers among themselves but remains fragile against third parties, and banks, landlords, and public buyers read only the Kbis. Foreign directors should therefore count the filing time into their planning: a few days if the file is complete, several weeks if the greffe issues a rejection (rejet) for a missing certificate or an inconsistent valuation, with each correction restarting the review. Companies registered in Paris file with the greffe of the Paris Commercial Court, one of the busiest registries in France, where incomplete foreign documents, untranslated powers of attorney, or deposit certificates that do not match the subscriber list are the standard causes of rejection; having a correspondent in the Paris region who can refile corrected pages the same day is a practical advantage, not a legal requirement. The updated Kbis is the finish line: only when it shows the new capital can the company prove to its bank that the funds may be released from the blocked deposit account into operating cash.

II. How a Foreign Minority Shareholder Fights Dilution and Eviction

A. Zero-Reduction and Reserved Increases: What the Integrale Ruling Forbids

The most brutal dilution technique in French practice is the coup d’accordéon, the accordion squeeze: first reduce the capital to zero on the ground that losses have consumed it, wiping out the existing shareholders, then immediately increase it again with new shares subscribed only by the majority, so that the minority disappears in a single meeting. For a foreign minority shareholder who cannot attend, the operation can look irreversible by the time the new Kbis is issued. The Commercial Chamber of the Court of Cassation condemned this manoeuvre in a published ruling that every foreign investor in a French SAS should know: decision of 4 January 2023, appeals nos. 21-10.609 and 21-12.515, concerning the SAS Intégrale (Court of Cassation, Commercial Chamber, 4 January 2023, nos. 21-10.609 and 21-12.515). In that case, the extraordinary meeting of 30 June 2015 had voted a reduction of the capital to zero together with an increase through new shares with the preferential subscription right maintained, then recorded that the president had subscribed the entire increase alone and become the sole shareholder. A minority shareholder challenged the operation in emergency proceedings and obtained suspension of the resolutions recording the completion, but the court of appeal declared his later nullity action inadmissible, reasoning that he had lost his shareholder status in the meantime. The Court of Cassation quashed that reasoning and laid down the principle in these exact terms: «Il résulte de ces textes que la réduction à zéro du capital d’une société par actions n’est licite que si elle est décidée sous la condition suspensive d’une augmentation effective de son capital amenant celui-ci à un montant au moins égal au montant minimum légal ou statutaire». In plain terms, a reduction to zero is lawful only if it is decided subject to the condition that an effective increase brings the capital back to at least the legal or statutory minimum. Where the recording resolutions of the increase were suspended by a court order, the increase was not effective, and the reduction to zero could not legally produce effects on its own, for that would leave the company with no capital at all.

The ruling then draws the consequence that matters most to an evicted foreign shareholder: standing to sue survives the manoeuvre. The Court held that the court of appeal, having found that the increase through subscription of new shares was suspended and therefore not effective, should have deduced that the zero-reduction resolution could not legally take effect, and it censured the lower court in these words: «ce dont elle aurait dû déduire que la résolution décidant de la réduction à zéro du capital de la société ne pouvait, sauf à priver cette société de tout capital, légalement produire effet», adding that it made no difference that suspension of the reduction itself had not been ordered in the emergency proceedings. Because the reduction could not take effect, the claimant had kept his shareholder status on the date he filed his nullity action, and his action was admissible. Three lessons follow for shareholders living abroad. First, act in emergency proceedings (référé) as soon as the suspect meeting is convened or held: suspending the recording resolutions freezes the operation before the new Kbis crystallises the new shareholding, and French commercial courts can be seized quickly, including at the request of a foreign claimant represented locally. Second, never accept the argument that you are no longer a shareholder and therefore cannot challenge anything; that circular reasoning is precisely what the Court of Cassation rejected, provided the increase was not effective. Third, attack the chain at its weakest accounting link: a reduction to zero requires losses that genuinely justify it, an auditor’s verification where one is appointed, and a real, funded, completed increase behind it. An accordion with no genuine new money behind the second fold is not a rescue, it is an eviction, and the Intégrale ruling gives the evicted shareholder the standing and the legal ground to say so in court.

B. Inflated Contributions in Kind: Valuation, Auditor and Fraud Remedies

The second classic dilution route runs through overvalued contributions in kind. Instead of reducing the capital, the majority has the meeting approve the contribution of an asset, a business, a patent, or a claim, at an inflated value, and the contributor receives so many new shares in exchange that the other shareholders, including the foreign minority, shrink to insignificance. The contributions auditor is supposed to prevent this, but the auditor values on the basis of documents supplied largely by the contributor, and a minority shareholder living abroad may never see the underlying appraisals before the vote. The Court of Cassation answered this configuration in another published ruling: Commercial Chamber, 30 September 2020, appeal no. 18-22.076 (Court of Cassation, Commercial Chamber, 30 September 2020, no. 18-22.076). Majority shareholders had approved the contribution of a distribution business to the company with 2,803 new shares issued to one heir in exchange, and the inheriting minority shareholder alleged a fraudulent collusion (collusion frauduleuse) that diluted her stake through undervaluation of the company and a correlative grant of numerous new shares. The court of appeal dismissed her claim on the ground that she had not proved the company drew insufficient advantage from the contribution. The Court of Cassation quashed the decision, holding that reasoning of that kind could not exclude the existence of a fraudulent collusion harming the minority shareholder, and it faulted the lower court for failing to investigate «si l’opération d’apport orchestrée par les […] n’avait pas conduit, par la sous-évaluation de la société et l’octroi corrélatif d’actions nouvelles nombreuses à M. E… Y…, à priver illégitimement N… Y…, associée minoritaire, d’une partie de ses droits en diluant sa participation au capital de la société […]», that is, whether the operation had illegitimately deprived the minority shareholder of part of her rights by diluting her stake. The visa for the ruling is the civil liability principle that fraud corrupts everything (fraude corrompt tout), applied to company operations: a majority that engineers dilution through a rigged valuation commits a civil fault and owes damages, whatever the apparent regularity of the votes.

For a foreign shareholder, this ruling converts into a concrete method usable from abroad. Before the meeting, demand the contributions auditor’s report in full and in time, with the valuation methods, the comparable transactions, and the description of the contributed asset; a report communicated the day before the vote, or a valuation with no verifiable evidence for an asset located outside France, justifies voting against and recording the reasons in writing. Check the appointment itself: the auditor must be designated unanimously or by the court, so a minority shareholder who never agreed to the auditor and never petitioned the court can challenge the whole chain. At the meeting, vote against the valuation, have the dissent recorded in the minutes, and refuse any individual waiver of preferential rights tied to the operation. After the meeting, three remedies exist on different clocks. The nullity action (action en nullité) attacks resolutions adopted in breach of mandatory rules, such as a suppression of preferential rights without the required reports or a valuation approved without a proper auditor; it must be filed within the short limitation periods of company litigation, so a foreign claimant should instruct counsel in France immediately rather than negotiating for months. The liability action (action en responsabilité) seeks damages from the majority shareholders and managers for fraud or breach of the duty of loyalty, following exactly the path the 2020 ruling kept open, and it allows recovery of the economic value destroyed by the dilution even where the resolutions themselves survive. The expert investigation (expertise de gestion or expertise in futurum) can freeze and document the evidence, including the real value of the contributed asset and the flow of the new shares, before documents disappear. Throughout, keep every convocation, every report, every bulletin, and every proof of payment or transfer: French company judges decide dilution cases on paper, and the shareholder who produces a complete file from abroad wins more often than the majority that relied on distance to keep the minority quiet.

Conclusion

A capital increase in a French SAS or SARL is a collective, documented, and filed operation, and each of those three adjectives is a checkpoint for a shareholder living abroad. Collective, because only the extraordinary meeting can order it, with thresholds that differ between the contractual SAS and the three-quarters SARL, and with preferential subscription rights that let every shareholder who follows the increase keep their exact percentage. Documented, because subscriptions require individual bulletins, cash requires a depositary certificate, and contributions in kind require an independent auditor whose report must be read before the vote, never after. Filed, because only registration with the company register and the updated Kbis make the new capital enforceable, and the filing is where incomplete foreign documents get rejected. The two published rulings quoted in this article draw the outer boundary: a reduction to zero without a genuinely completed increase behind it cannot strip shareholders of their status, and a rigged in-kind valuation that dilutes the minority is a fraud that engages the majority’s liability. A foreign investor who votes in time, subscribes in writing, pays through the supervised circuit, verifies the auditor, and files completely does more than comply with French formalities. They make their stake incontestable, from the first bulletin signed abroad to the new Kbis that proves it in Paris.