Using a French SAS as a Holding Company

Why the SAS Is France's Holding Vehicle of Choice

Every significant French group — whether a family business organising its succession, a private equity fund structuring its investment, or a foreign multinational establishing a French presence — gravitates toward the SAS as its primary holding vehicle. The SAS can have a legal entity as its president; it can create unlimited categories of shares with differentiated economic and voting rights; it sets governance rules in the articles that reflect specific power relationships rather than a statutory default; it can be a single-shareholder entity (SASU); and it offers the full menu of securities instruments — preference shares, convertible bonds, warrants, free share allocations, stock options — essential for group structures.

The Legal Entity President: How Group Management Works (Art. L 227-6)

In every other French company form — SARL, SA, SNC — the management officer must be an individual. Only the SAS permits a company to serve as president of another company. When a SAS appoints a legal entity as president, the entity exercises the function through its own legal representative — the individual who legally represents the parent company. That individual does not hold a personal mandate in the subsidiary; they act as the delegate of the entity that holds the mandate. This means governance relationships between parent and subsidiary are expressed through the corporate appointment, not through the individual appointment of a person who happens to run both companies.

For groups with many subsidiaries, a single holding SAS can serve as president of all its operating subsidiaries simultaneously. Management transitions — replacing the individual who represents the holding company — do not require amendment of any subsidiary's articles or corporate decisions, because the mandate belongs to the holding entity, not the individual. This governance efficiency compounds over the life of a group with active management transitions.

Decision-Making Architecture and Minority Investor Protections

In a group context, shareholder-reserved decisions typically include: approval of annual accounts; capital changes; acquisition or disposal of significant participations; major transactions above defined thresholds; approval of intra-group regulated transactions; dissolution and major restructuring. Below these thresholds, the president's authority is typically unrestricted — limitations in the articles cannot be invoked against third parties acting in good faith. Where a holding SAS has minority investors, the articles must define: enhanced information rights; consent rights on decisions that directly affect the minority's economic position; transfer restrictions on the controlling shareholder during agreed lock-up periods; and exit mechanisms (put options, tag-along rights, drag-along rights). None of these protections exist by default — they must be written into the articles or a shareholders' agreement, and both instruments must be consistent.

Preference Shares in Group Structures (Arts. L 228-11 to L 228-19)

The SAS's preference share toolkit is particularly valuable in holding and investment structures. The law allows the creation of shares with any combination of financial and governance advantages relative to ordinary shares, subject to two mandatory limits: shares without voting rights cannot represent more than half the company's capital; and no clause can entirely exempt a shareholder from participating in losses (clauses léonines prohibited). In a typical growth-capital or private equity investment, preference shares carry priority dividend rights — either a fixed preferred return or a cumulative priority distribution — ahead of ordinary shares held by founders and management, and may also carry priority return of capital on exit. The articles must specify whether the preferred return is cumulative, capped, and whether it converts to ordinary rights at exit.

Cross-Group Preference Rights (Art. L 228-13)

Preference shares issued by one SAS in a group can carry rights exercisable in another group company, provided that company is either a parent (holding more than 50% of the issuing SAS) or a subsidiary (where the issuing SAS holds more than 50% of the other company's capital). This allows a holding SAS to issue shares that give a management team economic exposure directly to a subsidiary's performance rather than at consolidated group level. The mechanism requires approval from both companies' shareholders and must comply with the special advantages procedure (including evaluation by a commissaire aux avantages particuliers or the statutory auditor).

Subsidiary Domiciliation at Group Level (Art. R 123-170)

A SAS holding company that occupies premises can domicile its subsidiaries at the same address without a formal domiciliation contract or prefectoral authorisation. The normal rules requiring authorisation apply to collective domiciliation services offered to third parties — they do not apply within an affiliated group. A simple attestation confirming that a subsidiary is authorised to use the address for its registered office is sufficient for RCS purposes. A 2024 ANSA ruling confirms that a subsidiary presided over by the holding company can also use the holding company's president's home address if the holding company is itself domiciled there.

Intra-Group Financing: Shareholder Loans and Current Accounts (Art. L 227-12; CGI Art. 212)

Groups routinely use intra-group financing through the shareholders' current account (compte courant d'associé). A key SAS-specific rule: a SAS can lend to a shareholder — whether individual or corporate — but this is prohibited where the borrower is an individual who is also a director (dirigeant) of the SAS (Art. L 227-12). The prohibition runs from the company to its individual directors, not from individual shareholders to the company. A corporate shareholder — a holding SAS — can receive advances or loans from a subsidiary SAS without restriction. Structuring group financing through corporate entities rather than channelling it through individual directors avoids the prohibition entirely.

Interest deductibility on current account advances from the borrowing entity's taxable income is conditional on the lending entity's capital being fully paid up (CGI Art. 212). Where a SAS's capital remains partially unpaid, interest paid on current account advances — even by unrelated shareholders — cannot be deducted from taxable profit. Ensure capital is fully called up before intra-group financing arrangements are put in place.

Securities and Financing at Group Level

A SAS can issue bonds (obligations) provided its capital is fully paid up and it has had at least two sets of approved accounts (Arts. L 228-39, L 228-40). The SAS can also issue convertible instruments, warrants, free share allocations (Art. L 225-197-1 by reference to L 227-1), and stock options (Art. L 225-177 by reference to L 227-1). A single SAS can simultaneously maintain ordinary shares, preference shares, convertible bonds, free shares, and stock options — each with different priority in the economic waterfall, different governance rights, and different tax treatment. The articles must define the interaction between all categories, particularly how a sale event, a capital increase, or a liquidation affects each class.

This article is for general information only. It does not constitute legal advice. Group structure design involves complex interactions between company law, tax law, and investment law that require fact-specific analysis. Always seek qualified legal advice before establishing or restructuring a group in France.