Practical note · Mehdi El Jamali · Paris Bar lawyer
This note concerns companies governed by French law. The approval rule described applies specifically to a SAS; rules differ by legal form and transaction structure.
An investor, partner or team member wants to acquire an equity stake. The investment and ownership percentage naturally dominate discussion. But prepare for the decisions that follow: financing, recruitment, development or an eventual exit.
Clarify the project and transaction structure
Is this a purchase of existing shares, a capital increase or both? Define the purpose and have the structure reviewed before committing to documents.
First check whether approval is required. If the company is a French SAS and the transaction involves a share transfer, its articles may require prior approval. Read the shareholders’ agreement and other commitments before promising the transfer. Entry through a capital increase is a different mechanism requiring its own decisions and checks.
Separate ownership from the role in the business
Will the new shareholder have an operational role? Be consulted on investments? Receive particular information? Separate these questions from ownership percentage to avoid differing understandings.
Ownership percentage does not answer every question. Every shareholder has the right to participate in collective decisions. This does not establish which decisions they can block or their weight in each vote. Examine the rules applicable to the company, its articles and rights attached to the shares before agreeing the new shareholder’s powers.
Prepare for decisions that may divide you
Consider further financing, a change in strategy or an offer to buy the company. Who must decide? How will disagreements be discussed? What will the proposed rules mean for the company’s ability to act?
For example, requiring the new shareholder’s agreement for every investment may protect you on major expenditure but slow ordinary purchases. Define thresholds and the decisions concerned before choosing the mechanism.
Plan changes to the relationship
An operational shareholder leaves, someone wants to sell, or control changes: prepare for foreseeable situations. Check consistency between the articles, shareholders’ agreement and transaction documents, particularly transfer conditions and pricing mechanisms.
Entry into the capital needs preparation for signing and for what follows. Legal advice helps translate a shared project into understandable rules suited to the business.