{"id":2115404,"date":"2026-09-02T13:10:51","date_gmt":"2026-09-02T11:10:51","guid":{"rendered":"https:\/\/kohenavocats.fr\/2026\/09\/02\/foreign-shareholder-challenge-exclusion-clause-french-sas-vote-procedure-remedies\/"},"modified":"2026-09-02T13:10:51","modified_gmt":"2026-09-02T11:10:51","slug":"foreign-shareholder-challenge-exclusion-clause-french-sas-vote-procedure-remedies","status":"publish","type":"post","link":"https:\/\/kohenavocats.fr\/en\/2026\/09\/02\/foreign-shareholder-challenge-exclusion-clause-french-sas-vote-procedure-remedies\/","title":{"rendered":"Can a Foreign Shareholder Challenge an Exclusion Clause in a French SAS? Vote, Procedure and Remedies"},"content":{"rendered":"

A foreign shareholder can be forced to confront a difficult question when a French company announces an exclusion: is the clause itself valid, was the decision taken through the procedure written in the articles, and will the shareholder receive a properly calculated price? The answer is not determined by nationality. It turns on the French SAS\u2019s articles, the evidence of the vote, the precise statutory trigger and the valuation mechanism. An SAS is a soci\u00e9t\u00e9 par actions simplifi\u00e9e<\/em>, or simplified joint-stock company. Its registration extract is commonly called a Kbis, and its registration is recorded in the RCS, the registre du commerce et des soci\u00e9t\u00e9s<\/em>, or Trade and Companies Register. The relevant registry office is the greffe<\/em> of the competent commercial court.<\/p>\n

This article addresses a foreign shareholder who wants to challenge an exclusion clause in an SAS, rather than a founder who is simply moving to France or buying French property. It explains how to read the clause, preserve the right to participate and vote, test the resolution, challenge the transfer price and choose a practical court strategy. The legal analysis is based on the current French Commercial Code and Civil Code, together with the Court of Cassation decisions identified below. The official French business formalities portal<\/a>, the Institut national de la propri\u00e9t\u00e9 industrielle (INPI)<\/a> and the official Service-Public guidance on company articles<\/a> are useful for administrative checks, but they do not replace a review of the signed articles and the exclusion record.<\/p>\n

I. When can a foreign shareholder challenge the legal basis and vote?<\/h2>\n

A. Does Article L. 227-16 allow exclusion, and what must the SAS articles say?<\/h3>\n

The starting point is the exact wording of the articles of the SAS. Article L. 227-16 of the French Commercial Code<\/a> provides: Dans les conditions qu’ils d\u00e9terminent, les statuts peuvent pr\u00e9voir qu’un associ\u00e9 peut \u00eatre tenu de c\u00e9der ses actions. Ils peuvent \u00e9galement pr\u00e9voir la suspension des droits non p\u00e9cuniaires de cet associ\u00e9 tant que celui-ci n’a pas proc\u00e9d\u00e9 \u00e0 cette cession.<\/q> In English, the articles may provide, under conditions they determine, that a shareholder must transfer its shares, and may suspend that shareholder\u2019s non-economic rights until the transfer occurs. The provision is powerful, but it is not a blank cheque. The words \u201cunder conditions they determine\u201d make the drafting and application of the clause central to the dispute.<\/p>\n

Article L. 227-5<\/a> confirms the constitutional role of the articles: Les statuts fixent les conditions dans lesquelles la soci\u00e9t\u00e9 est dirig\u00e9e.<\/q> Article L. 227-9<\/a> adds that the articles determine the decisions that must be taken collectively and the forms and conditions in which they are taken. Those rules allow an SAS to build a bespoke governance system, but they also give the shareholder a document against which every step can be tested. The company should be able to identify the clause, the triggering event, the person or body authorised to initiate the process, the notice required, the voting threshold, the treatment of the affected shareholder, the valuation method and the mechanics of the transfer.<\/p>\n

A clause that says only \u201cthe shareholders may exclude any shareholder whose presence is no longer desirable\u201d creates obvious litigation risk. The phrase may leave unanswered whether a disagreement, a breach of a shareholders\u2019 agreement, a change of control of a corporate shareholder, a loss of a professional qualification or a competing activity is sufficient. A clause can use a broad commercial concept, but the company still has to apply the agreed trigger in good faith and show how the facts satisfy it. A foreign shareholder should therefore compare the notice with the clause word by word: the stated ground, the dates, the alleged conduct, the decision-maker and the proposed effective date all matter.<\/p>\n

The articles must also be separated from a shareholders\u2019 agreement. A shareholders\u2019 agreement can regulate undertakings between its signatories, including information, transfer and dispute arrangements. Article 1103 of the Civil Code<\/a> states that Les contrats l\u00e9galement form\u00e9s tiennent lieu de loi \u00e0 ceux qui les ont faits.<\/q> Article 1104<\/a> requires contracts to be negotiated, formed and performed in good faith and makes that rule mandatory. A contractual breach may support a damages claim or another contractual remedy, but it does not automatically give the company the power to exclude a non-signatory shareholder or to bypass a statutory voting rule. The first practical question is therefore whether the exclusion right appears in the filed articles, not merely in an English-language investment document.<\/p>\n

Several neighbouring provisions should not be confused with Article L. 227-16. Article L. 227-13<\/a> allows the articles to make shares inalienable for no more than ten years. Article L. 227-14<\/a> allows them to make a transfer subject to the company\u2019s prior approval, and Article L. 227-15<\/a> says that a transfer made in breach of the statutory clauses is null. Those provisions can affect an exit or an attempted transfer, but they are not interchangeable with a clause compelling a shareholder to sell. A company that cites an approval clause as if it were an exclusion clause may be relying on the wrong legal mechanism.<\/p>\n

Article L. 227-17<\/a> deals with a specific change of control of a corporate shareholder. It permits the articles, in defined conditions, to require notice of the control change and to provide for suspension of non-economic rights and exclusion. That is different from saying that every foreign parent, fund or founder can be removed whenever the French subsidiary\u2019s board prefers a new ownership profile. The notice should identify whether the company is relying on a change-of-control provision, a misconduct trigger, a deadlock mechanism or another clause. The difference can alter the required facts, the notice period and the voting rule.<\/p>\n

The adoption and amendment rule is another frequent source of error. Current Article L. 227-19<\/a> distinguishes clauses. It provides: Les clauses statutaires vis\u00e9es aux articles L. 227-13 et L. 227-17 ne peuvent \u00eatre adopt\u00e9es ou modifi\u00e9es qu’\u00e0 l’unanimit\u00e9 des associ\u00e9s. Les clauses statutaires mentionn\u00e9es aux articles L. 227-14 et L. 227-16 ne peuvent \u00eatre adopt\u00e9es ou modifi\u00e9es que par une d\u00e9cision prise collectivement par les associ\u00e9s dans les conditions et formes pr\u00e9vues par les statuts.<\/q> Thus, an Article L. 227-16 exclusion clause is not subject to a universal statutory unanimity rule under that provision. The company must nevertheless prove that the collective decision followed the voting conditions and form in force when the clause was adopted or amended. An attempted amendment by a director alone is a different problem from an amendment properly approved by the required collective vote.<\/p>\n

For a foreign shareholder, document control is especially important. Obtain the version of the articles filed before the dispute, the version presented at the relevant meeting, any amended version, the Kbis and the decisions or filings at the greffe. The INPI and formalities portals can help locate corporate filing information, but a public extract will not necessarily reveal every contractual detail. Ask for the signed version, not a translation prepared after the conflict began. Preserve the original language, the translation, the date and the source of every document. A difference between \u201cmay be excluded\u201d and \u201cmust transfer its shares,\u201d or between a simple majority and a two-thirds threshold, can change the outcome.<\/p>\n

Drafting also matters for an international group. A corporate shareholder may need a board or shareholder authorisation before it can respond, instruct counsel or transfer shares. A founder outside France may need a power of attorney, a certified translation or an apostille for certain documents. Those practical steps do not suspend a contractual deadline automatically. The company should give a realistic time to respond, and the shareholder should immediately reserve its rights if the notice is too short, incomplete or sent to the wrong address. The response can be concise: identify the clause, deny or qualify the allegations, request the supporting documents, demand participation in the decision and state that no acceptance of the transfer or price is intended.<\/p>\n

Good drafting does not eliminate abuse. Article 1833 of the Civil Code<\/a> states that a company must have a lawful purpose, be formed in the common interest of its shareholders and be managed in its corporate interest while taking account of social and environmental issues. That provision is not a general veto over every exclusion, but it is a reminder that a decision should be connected to the company\u2019s interest and the agreed governance arrangement. An exclusion used as a pretext to acquire a foreign founder\u2019s shares cheaply, punish a legitimate vote or remove a shareholder who asked for accounts may be attacked through several complementary arguments: defective trigger, bad faith, breach of the articles, improper vote, abuse of power and inadequate price.<\/p>\n

Before concluding that an exclusion is valid because the articles contain the word \u201cexclusion,\u201d test five questions:<\/p>\n