Since 2024, the simplified joint stock company (SAS) has overtaken the limited liability company (SARL) as the preferred corporate form in the French economic and entrepreneurial landscape.

Indeed, as of August 28, 2024, data from the Statistical Observatory of the National Center of Commercial Court Clerks (CNGTC) shows that the number of SAS companies has risen to 1,637,074, while on the same date the country had 1,633,254 SARL companies.

In addition, two-thirds of commercial companies in France are believed to be SAS companies.

Freedom is the flagship of this good fortune, as is often the case with great successes.

This freedom, rightly or wrongly recognized in SAS companies, stems from the great flexibility that the law grants to partners. With a few exceptions, they are free to organize the operation of the company by agreement.

In this game, practitioners compete in imagination by tailoring the terms of entry and exit for partners and managers and adjusting the distribution of economic interests and political power between them on an ad hoc basis.

This allows the SAS to welcome a larger number of investors and to better anticipate and prepare for its foreseeable evolution.

But once the articles of association have been negotiated, drafted, and signed, and the SAS has been formed, how far does this freedom extend, particularly if it proves necessary to adapt to changes that arise at some point during the company’s lifetime?

More specifically, can you derogate from the articles of association of your SAS by means of an extra-statutory act, for example by means of a shareholders’ agreement or a decision of the general meeting?

The question could also be phrased differently: Should priority be given to the strictness of the articles of association or to the binding contractual force of a document signed subsequently by all the shareholders, which is more suited to recent or imminent changes in the company and its environment?

In principle, company law is somewhat rigid when it comes to the primacy of the SAS’s articles of association over any other extra-statutory act, even if it is adopted subsequently and unanimously by the shareholders.

In this regard, Article L. 227-5 of the French Commercial Code states that :

“The articles of association shall lay down the conditions under which the company is managed.”

This article is generally interpreted in an exclusive manner.

In other words, the freedom of the shareholders lies in the fact that it is up to them to determine the content of the rules of organization and operation to be included in the articles of association. Once these statutory rules have been laid down, neither a pact nor a unanimous decision by the shareholders can derogate from them.

However, in practice, it is not uncommon for solutions to be more mixed, with case law sometimes upholding rules that are clearly contrary to the articles of association.

Come to think of it, this discrepancy is due to the hybrid nature of the company.

Indeed, while it has an institutional nature that makes it a legal person governed by company law, it is above all a contract governed by general contract law.

By way of illustration, let us consider two recent judgments.

A ruling by the Paris Court of Appeal on November 16, 2023 (CA Paris 16-11-2023 no. 22/10344: RJDA 6/24 no. 347) and a ruling by the Commercial Chamber of the Court of Cassation on July 9, 2025 (Cass. com., July 9, 2025, no. 24-10.428).

In the ruling of November 16, 2023, the case brought before the Court of Appeal concerned a simplified joint stock company (SAS) whose articles of association stipulate that the Chief Executive Officer may be dismissed “at any time and without just cause” by decision of the company’s President.

The partners then met and adopted a decision to appoint the Chief Executive Officer.

In this decision, in addition to the appointment, the partners approved a mandate agreement under which the dismissal of the Chief Executive Officer could take place at any time, but was subject to the authority of the partners as a whole.

Furthermore, under this agreement, dismissal could not occur without cause, but only in the following limited cases:
– gross or serious misconduct;
– failure to achieve commercial or financial objectives;
– disagreement or conflict with the President.

The agreement also stipulates that dismissal shall not give rise to compensation for the Chief Executive Officer.

The appointment decision, adopted unanimously by the partners, is therefore, in many respects, contrary to the provisions of the articles of association.

At one point, the Chairman, relying on the articles of association, dismissed the Chief Executive Officer, outside the circumstances provided for in the mandate agreement.

The issue at stake in the case is therefore whether or not this dismissal, decided by the Chairman alone, in accordance with the articles of association but in violation of the mandate agreement and the collective decision of the partners who approved it, is valid.

The Paris Court of Appeal ruled in favor of the Chief Executive Officer, finding that the conditions and procedures for dismissal had not been complied with, not only with regard to the competent body but also with regard to the circumstances for dismissal provided for in the mandate agreement.

The Court justified its position as follows:

“This decision (to appoint the CEO and approve the aforementioned agreement), taken unanimously by the shareholders at a general meeting, demonstrates the express desire of the shareholders to derogate from the articles of association by means of a collective decision taken under the conditions required to amend the articles of association. Without disregarding the principle of the primacy of the articles of association over any extra-statutory act in that they establish the rules of operation of the SAS, this decision is binding on the company even if the articles of association have not been amended.”– Paris Court of Appeal 16-11-2023 no. 22/10344: RJDA 6/24 no. 347

While reiterating the principle of the primacy of the articles of association over any extra-statutory act for the SAS, a primacy that it claims not to disregard, the Court of Appeal admits that an extra-statutory act (collective decision and contractual stipulations) contrary to the articles of association may prosper, without having to make a prior amendment to the articles of association, subject to certain conditions.

This decision by the Paris Court of Appeal is all the more surprising as it contradicts a previous ruling by the Commercial Chamber of the Court of Cassation dated October 12, 2022 (Court of Cassation No. 21-15.382, Commercial Chamber, October 12, 2022).

In that ruling, the Court of Cassation had decided, in similar circumstances, that collective decisions by shareholders can only add to the articles of association of an SAS and can never contradict or derogate from them.

It is worth noting that although the Paris Court of Appeal’s decision departs from the usual case law of the Court of Cassation with regard to SAS companies, it reiterates the Court of Cassation’s position with regard to SARL companies and general partnerships (SNC).

For a long time now, the Commercial Chamber of the Court of Cassation has recognized the validity of unanimous decisions by partners that derogate from the articles of association for SARLs and SNCs, while it has always refused to allow this for SASs.

In this regard, with regard to SARLs and SNCs, it is worth noting the following decisions:
– Court of Cassation No. 01-03.496, Commercial Chamber, October 5, 2004;
– Court of Cassation No. 14-13.744, Commercial Chamber, May 12, 2015;
– Court of Cassation No. 22-10.646, Commercial Chamber, October 11, 2023

A very recent ruling, dated July 9, 2025, seems to indicate a shift in the case law of the Commercial Chamber of the Court of Cassation on this issue for SAS companies.

In this case, which was the subject of an appeal, the trial judges had given precedence to the company’s articles of association over a contrary decision by the partners.

The decision will be overturned by the Court of Cassation, which will rule that the shareholder decision, contrary to the articles of association, constitutes extra-statutory provisions containing a personal commitment by its signatories, separable from the articles of association.

It is worth noting that the Court of Cassation based its position on the former Article 1134 of the French Civil Code on the binding force of contracts, which stated that :

“Legally formed agreements are binding on those who have entered into them.”

 

More specifically, the Court of Cassation ruled that:

“In view of Article 1134 of the Civil Code, in its wording prior to that resulting from the “Ordonnance” of February 10, 2016:
12. Under the terms of this text, legally formed agreements are binding on those who have entered into them.

13. In order to dismiss the claim for payment brought by Mr. [O] against the company Troizef and MM [B] and [L], the judgment holds that Article 2.1 of the investment protocol of May 31, 2016, is not applicable in that it is contrary to Article 16 of Sogecler’s articles of association, which stipulates that the managing director may be dismissed without any compensation.

14. In ruling thus, when this extra-statutory provision contains only a personal commitment by the signatories to the investment protocol to take the necessary steps to ensure that the decision to appoint Mr. [O] as managing director of Sogecler provides for the payment of a lump-sum indemnity in the event of his dismissal or reduction of his powers before the expiry of a two-year period, so that it is not contrary to Article 16 of Sogecler’s articles of association, the Court of Appeal violated the above-mentioned text.”

Conclusion:

Ultimately, the law makes the articles of association of an SAS a firmly established foundation outside of which no contrary contractual provision, even if unanimously agreed upon by the shareholders, can prevail. Long-standing case law has remained broadly consistent with this position. However, judges are increasingly accepting certain extra-statutory acts on the basis of the contract, while continuing to loudly and clearly affirm the permanence of the principle of the primacy of the SAS articles of association.

One cannot help but feel a sense of legal uncertainty, especially since, to date, it is still difficult to say with certainty the exact scope—and perhaps the meaning—of this discrepancy in the legal system.

In any case, caution remains the best policy, and as is often the case in such matters, it is better to be safe than sorry, taking care to draft the articles of association and extra-statutory clauses carefully and, if necessary, seeking the assistance of a legal professional who is well versed in the intricacies of such matter and its daily developments.

By Me Pierre-Stanley PÉRONO