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Key Takeaways:
- The SAS corporate structure provides comprehensive protection of founders’ personal wealth.
- SAS offers unparalleled freedom and flexibility in setting up and running a company.
- The SAS structure is highly adaptable to future corporate developments.
- The SAS structure facilitates company financing and building up loyalty of key personnel.
- Investors, especially venture capitalists, often favor the SAS structure for its flexibility and discretion.
- Conversion from SAS to another corporate structure is usually easier than the reverse.
Introduction to the SAS Company
Société par Actions Simplifiée (SAS), or simplified joint-stock company, is a popular corporate structure in France akin to a limited company. The SAS structure appeals to many due to its inherent benefits such as protection of personal wealth, flexibility in the company’s formation and operation, and its adaptability to future corporate developments. It also enables easy financing of the company and provides an attractive option for potential investors. This article explores the meaning of an SAS company and why it is often the preferred choice for business entities in France.
Safeguarding Founders’ Personal Wealth
An SAS is a capital company where the liability is limited. This means that the founders do not risk their personal wealth when they invest in the company. Their risk is confined to their initial investments. This structure can be attractive to founders who want to protect their personal wealth while also investing in their new venture.
Freedom to Tailor the Company to Your Needs
One of the distinctive features of the SAS structure is the considerable freedom it affords to founders in setting up and running their company. The SAS structure allows for a company to be set up by a single person (termed as SASU – simplified single shareholder company) or multiple founders. Furthermore, it permits cash, in-kind, or industrial contributions and allows for the delegation of signing authority to other people or parties. Founders can regulate capital movements and define the conditions under which partners take collective decisions, providing a highly customizable framework that can be tailored to meet the specific needs of the company.
Adapting to Future Corporate Developments
The SAS structure’s inherent flexibility means it can easily adapt to the growth and future developments of the company. The structure enables an easy transposition of the economic power ratios between shareholders, giving more power to those who assume greater risks. Its governance can be altered to accommodate the interests of various stakeholders as the company evolves.
Facilitating Company Financing and Talent Retention
The SAS structure allows the issuance of financial securities as well as shares, offering a straightforward means to finance your company. This can also be an effective way to foster loyalty among your company’s members, by issuing share purchase warrants, founders’ warrants, free shares, etc.
An Investor-Friendly Structure
While financing rounds might not be the immediate goal for a startup, it is prudent to consider the preferences of potential investors. Many venture capitalists and investors favor the SAS structure due to its flexibility, the possibility of negotiating its shares, and the level of discretion it offers. The names of shareholders are not indicated in the publically available articles of association, unlike in the “Société à Responsibilité Limitée” (SARL), or limited liability company.
Transitioning from an SAS
Another important aspect to consider is the transition from one corporate structure to another. It is generally simpler to transform an SAS into another type of structure than vice versa, which typically requires the agreement of all partners.
Conclusion
The Société par Actions Simplifiée (SAS) is a compelling corporate structure choice for both startups and established companies in France. Its flexibility, protection of personal wealth, and adaptability make it an attractive option for founders and investors alike. While it offers many benefits, it’s crucial to understand the implications of this structure fully and to consider all factors, including the potential need for future transitions, before adopting the SAS structure.
