Regulated Transactions in a French SAS: What Article L 227-10 Covers — and What It Misses

Who Is Caught by the SAS Framework (Art. L 227-10)

Article L 227-10 covers two categories: (1) directors of the SAS — the president and any other person holding a management function; and (2) shareholders who hold, directly or indirectly, more than 10% of the voting rights. Shareholders at or below 10% are entirely outside the procedure — their transactions with the SAS are not regulated transactions regardless of nature or value. This is a sharp departure from the SARL framework, where every non-sole shareholder is subject to the procedure regardless of percentage.

The 10% threshold applies to voting rights, not share capital. Where preference shares with and without voting rights coexist, the calculation must be made by reference to voting rights, not economic participation.

Which Transactions Are Regulated — and the Two Key Exclusions

Article L 227-10 catches direct transactions between the SAS and a connected person — a contract, guarantee, financial facility, or any agreement in which a director or >10% shareholder has a personal interest. The covered person must be a direct party to the transaction or personally benefit from it. Two significant categories are explicitly outside the scope:

Indirect interest is not caught. Where a connected person benefits through an intermediary rather than as a direct party, article L 227-10 does not apply. This is a deliberate narrowing compared to the SA regime.

Parallel directorships are not caught. Where a director of the SAS is simultaneously a manager of another enterprise that contracts with the SAS, this is outside the scope of article L 227-10 — absent any contrary provision in the articles. A SAS can therefore contract with a company managed by one of its own directors without triggering any regulated transaction procedure under statute. For groups with interlocking directorships and regular intra-group commercial flows, this exclusion significantly reduces the compliance burden.

No Pre-Authorisation: The Core Procedural Difference

The most commercially important difference from the SA equivalent is the absence of any pre-authorisation requirement. In a SA, a regulated transaction must be authorised by the board before it is concluded. In the SAS, the transaction can be concluded first — the procedure is post-facto. The transaction is reported to shareholders by the statutory auditor (or by the president where no auditor exists), and shareholders then vote on retrospective approval. This means a SAS does not need to convene a governance meeting before signing a significant commercial contract simply because one party is connected to the company.

The mode of shareholder consultation is entirely free — no statutory notice period, quorum, or vote counting method is imposed (Art. L 227-9). The articles govern. Where the articles allow written consultation, email, or informal meeting, the approval process can be adapted to the company's operational pace. Companies that rely on this flexibility must ensure the procedure is actually run and that the result is clearly documented.

Consequences of Non-Approval

An unapproved regulated transaction in a SAS is not automatically null and void — it remains valid as a commercial matter and binds both parties. What the law provides is that the persons who were interested in the transaction bear personally the adverse consequences for the company that it produces. If the transaction was on commercially unfavourable terms, the company can claim the resulting loss from the connected person. The remedy is personal liability, not transaction nullity. A third-party counterparty who contracted on legitimate commercial terms need not worry about the transaction being unwound — the contract stands; the governance failure is an internal matter between the connected person and the company.

The Connected Director's Vote: Not Stripped by Statute

In the SAS regulated transactions framework, the director or shareholder who is a party to or beneficiary of the regulated transaction is not expressly deprived of the right to vote when shareholders deliberate on its approval. In the SA, the interested director is excluded from the board vote on authorisation. In the SAS, the connected person can legally participate in the approval vote — though the prudent course is to abstain, and many articles or shareholders' agreements include an express recusal or abstention obligation. Without such a provision, participation is legally permissible under article L 227-10. Companies that want genuine arm's-length approval must build that protection into the articles explicitly.

SAS vs SARL vs SA: Where the Differences Are Sharp

Extending the Framework Through the Articles

Nothing prevents a SAS from building a more demanding related-party transaction framework into its articles than the statute requires. Investors taking minority positions frequently negotiate for: pre-authorisation for specific transaction categories; broader coverage extending to indirect interests and parallel directorships that the statute leaves outside the procedure; and express recusal or abstention obligations on interested parties at the approval vote. These article-based enhancements bind the company as a matter of contract. The statute sets the floor; the articles set the ceiling. For a SAS with external investors, the ceiling is typically what matters commercially.

Conversely, a SASU (sole shareholder SAS) is the lightest-touch scenario: there are no minority shareholders to protect and the sole shareholder's decision-making is free of the conflict of interest concern the statute addresses. The SASU's sole shareholder who is also president simply records their decisions in a register.

Group Structures: The Practical Advantage

For groups of SAS companies with regular intra-group commercial flows — services agreements, management fees, intra-group loans, licences — the SAS framework's narrowness is a practical advantage. The exclusion of indirect interest and parallel directorships from article L 227-10 means the vast majority of routine intra-group transactions do not require any regulated transaction procedure, provided they are at arm's length and on normal commercial terms. For subsidiaries with minority external shareholders, the picture is different — the minority shareholders are the primary beneficiaries of the procedure, and its procedural gaps represent governance risks that well-advised minority investors will want addressed through article-based enhancements in their investment documentation.

This article is for general information only. It does not constitute legal advice. Regulated transaction requirements in the SAS depend on the specific facts of each transaction and the content of the articles. Always seek qualified legal advice.