SAS Status: Why It Fits High-Growth Startups Better Than Traditional Structures?

For any ambitious tech founder in France, the choice of a legal structure is one of the first and most consequential decisions. The conversation often quickly gravitates towards the SAS (Société par Actions Simplifiée), universally praised for its “flexibility.” While true, this common wisdom barely scratches the surface. Viewing the SAS merely as a flexible template is a missed opportunity; it’s akin to owning a high-performance race car and only ever driving it in first gear. The true power of the SAS lies not in its default settings, but in its potential for meticulous corporate architecture.

This article moves beyond the generic advice. We will treat the SAS not as a legal container, but as a strategic framework to be engineered for two primary goals: attracting investment and maximizing founder outcomes. This requires a shift in mindset. Every decision, from the president’s social security status to the fine print of a deadlock clause, is a calculated trade-off. It’s about understanding that the high social charges of the ‘assimilé salarié’ status can be a strategic asset, not just a cost. It’s about designing a shareholders’ agreement that doesn’t just prevent conflict but actively signals to investors that your company is a stable, well-managed entity ready for scale.

We will dissect the mechanisms that make the SAS the preferred vehicle for high-growth ventures. From structuring share classes for a lucrative exit to understanding the fiscal choices that impact net income, the goal is to equip you with a lawyer’s perspective. This is about building a corporate structure that actively enables, rather than simply permits, your startup’s ambition for hyper-growth.

This guide delves into the strategic intricacies of the SAS structure, providing a clear roadmap for founders. Below is a summary of the key areas we will explore to help you build a robust and scalable company from day one.

Why the ‘Assimilé Salarié’ Status of an SAS President Is Worth the High Charges?

One of the most debated aspects of the SAS structure is the social status of its president. Unlike the manager of a SARL who is often a ‘Travailleur Non Salarié’ (TNS), the SAS president is an ‘assimilé salarié’ (employee-like). This status comes with a significant financial implication: high social security contributions. The cost can be a deterrent for early-stage startups managing tight cash flow. For instance, a detailed analysis of social charges reveals a stark picture. For an annual gross salary of €41,000, social charges can amount to approximately €18,300, leading to a net salary of just €22,700. This represents an 81% charge rate on the net salary, a figure that understandably gives founders pause.

However, viewing this purely as a cost is a strategic error. The ‘assimilé salarié’ status is an investment in stability, credibility, and long-term security. The key benefits provide a compelling return on this investment. First, it grants access to the general social security regime, which includes comprehensive health coverage and sick leave benefits, provided a minimum gross monthly salary is met. Second, it allows for the validation of retirement quarters, building a pension foundation from the outset. For a founder dedicating years to their venture, this is not a trivial matter.

Beyond personal security, this status carries significant weight with external financial institutions. When seeking a mortgage or personal loan, presenting formal payslips as an ‘assimilé salarié’ provides far greater credibility than the more volatile income declarations of a TNS. This can make a material difference in a founder’s personal life. Finally, this structure provides resilience. During periods of no remuneration (e.g., pre-revenue phase), the president can still maintain social protection. When the company secures funding and can afford to pay a salary, the compensation can be scaled seamlessly without any change in legal or social status. It’s a structure built for growth.

How to Write a Shareholders’ Agreement That Prevents Deadlocks in an SAS?

The great flexibility of the SAS is a double-edged sword. While it allows founders to design bespoke governance, it also creates fertile ground for disputes if not managed with foresight. A deadlock between 50/50 co-founders can paralyze a company, making it unable to make critical decisions. The shareholders’ agreement (‘pacte d’associés’) is the primary instrument to preemptively architect solutions for these high-stakes disagreements. It’s a private contract that should be seen as a mandatory insurance policy against internal implosion.

Rather than simply stating that partners must agree, a robust agreement defines precise, escalating mechanisms to resolve a stalemate. These clauses are highly attractive to investors, as they demonstrate maturity and reduce operational risk. The choice of mechanism involves a trade-off between speed, cost, and the preservation of the relationship. It’s crucial to select the one that best fits the founders’ relationship and the company’s culture.

A comparative analysis of common deadlock resolution mechanisms shows the different strategic options available. Each has distinct implications for the future of the partnership and the business itself, as detailed in an analysis of shareholder agreement provisions.

Mechanisms like “Russian Roulette” or “Texas Shoot-Out” are swift but destructive, typically forcing one partner to buy out the other. They are effective end-game solutions. Conversely, mandating a formal mediation period is slower and more costly but is designed to salvage the working relationship. A casting vote for a chairman is immediate but can breed long-term resentment if one partner feels consistently overruled. The key is to define these rules clearly, *before* a dispute arises.

SASU to SAS: When Is the Right Time to Open Your Capital to New Partners?

Many French tech companies begin their journey as a SASU (Société par Actions Simplifiée Unipersonnelle), the single-shareholder variant of the SAS. This provides the founder with total control and simplicity in the early days. However, the ambition for high growth inevitably leads to a critical question: when is the right moment to transition from a SASU to a SAS by opening up the company’s capital? The answer is not tied to a specific date or revenue milestone, but rather to strategic needs: capital and competence.

The primary trigger is the need for funding. Bootstrapping can only take a company so far. To accelerate product development, scale marketing, and hire top talent, external investment is necessary. This means issuing new shares to investors—be they business angels, venture capital funds, or even key employees—and thus, transforming the SASU into a multi-shareholder SAS. The SAS is specifically designed for this evolution, making the process of raising funds far more fluid than in other structures like the SARL. This is a core reason for its dominance in the tech ecosystem.

As Marie Dupontier, Partner at Lexcom Avocats in Paris, points out, the SAS is the default for a reason:

The SAS has become the structure of choice for most technology startups and scale-ups in France precisely because its flexibility allows for easier capital raising and adaptation to business evolution.

– Marie Dupontier, Partner at Lexcom Avocats in Paris

The second trigger is the need for strategic expertise. A founder might decide to bring on a co-founder with complementary skills or an experienced industry veteran as a strategic advisor. Granting them equity aligns their interests with the company’s long-term success and is a powerful incentive. This is the moment the “U” in SASU is dropped. The success of this model is evident, as market analysis shows that over 819 SaaS companies in France are Series A+ funded, all of which have navigated this transition from a closed to an open capital structure.

The Accounting Obligation That Surprises Most New SAS Founders

While the SAS is celebrated for its statutory freedom, it operates within a strict and non-negotiable accounting and legal framework. Many first-time founders are surprised not by the existence of these rules, but by their immediacy and the potential for personal liability if they are ignored. The “move fast and break things” ethos of tech development does not apply to corporate compliance. The most significant surprise often comes from the rules surrounding the company’s share capital.

Upon registration of the SAS, founders making cash contributions must deposit at least half of the total amount immediately into a dedicated company bank account. This is not a suggestion; it’s a legal prerequisite for the company’s official registration. The remaining capital must then be fully paid up within a maximum of five years. This requirement for immediate, tangible capital injection can catch unprepared founders off guard. Furthermore, any loans from founders to the company (‘comptes courants d’associés’) must be formally documented to be legally sound and to avoid tax complications later.

Beyond capital, a set of recurring obligations demands rigorous discipline. Filing annual accounts with the commercial court clerk is mandatory, as is maintaining a dedicated bank account separate from any personal accounts. These aren’t just best practices; they are legal requirements. Other hidden costs often surprise founders, such as the fees for drafting articles of association with a lawyer (typically €1,500-€2,000) or the mandatory publication of a legal announcement (€193 in 2024), all of which are detailed in guides on French company formation.

Ignoring these rules can lead to serious consequences, including the dissolution of the company or the personal liability of its directors. For founders, the key takeaway is that operational agility must be built upon a foundation of unwavering compliance.

How to Structure Your SAS Shares to Maximize Gains Upon Exit?

For most tech founders, the ultimate goal is a successful exit—whether through an acquisition by a larger company or an Initial Public Offering (IPO). The financial outcome of this exit is not determined on the day of the sale; it is architected years in advance through the structuring of the company’s shares. The SAS offers an unparalleled toolbox for this purpose, allowing founders to create different classes of shares with varying rights, a feature almost impossible to replicate in a SARL.

The most powerful tool is the ability to issue preference shares (‘actions de préférence’). Unlike ordinary shares which grant one vote and a proportional right to dividends, preference shares can be customized. For example, founders can grant themselves shares with multiple voting rights to retain control even after several funding rounds dilute their ownership percentage. Conversely, investors might demand preference shares that give them priority on payouts in an exit scenario (liquidation preference) or anti-dilution protection.

Another crucial instrument for a high-growth startup is the BSPCE (‘Bons de Souscription de Parts de Créateur d’Entreprise’). These are stock warrants that can be granted to employees, allowing them to subscribe to shares at a price fixed in advance. BSPCEs are an extremely tax-efficient way to attract, motivate, and retain top talent. For a potential acquirer, a company with a motivated team holding BSPCEs is a more attractive target than one facing a talent exodus post-acquisition. By carefully designing different share classes and implementing a robust employee incentive plan, founders can protect their control, motivate their team, and ultimately sculpt the waterfall of proceeds in a future sale to maximize their final gain.

Startup Capital: How Much Equity Should You Give Up for €50k Pre-Seed?

The first external funding round is a moment of both excitement and anxiety for a founder. A €50,000 pre-seed investment can be the fuel that transforms an idea into a minimum viable product (MVP). But it comes at a cost: equity. The central question is, how much is fair? There is no magic formula, but in the French tech ecosystem, a pre-seed round of this size typically involves giving up between 5% and 15% of the company’s equity. Giving away more than 20% at this early stage is a significant red flag and can make future funding rounds much more difficult.

The exact percentage depends entirely on the company’s pre-money valuation—the value of your startup before the investment. A €50k investment for 10% equity implies a pre-money valuation of €450,000 and a post-money valuation of €500,000. To justify this valuation, you need to demonstrate more than just an idea. Key factors include:

• The experience and complementarity of the founding team.
• The existence of a functional prototype or MVP.
• Early signs of traction (e.g., a user waitlist, initial customer feedback, a letter of intent).
• The size and growth potential of the target market.

This is another area where the SAS structure shines. Its capacity to easily issue new shares and accommodate investors makes it the standard for any startup with venture capital ambitions. An overwhelming majority of French venture-backed startups utilize SAS structures precisely because they are built for this kind of transaction. Investors are familiar and comfortable with its mechanisms, which reduces friction during negotiations and due diligence. Attempting to raise venture capital with a SARL structure, for example, is almost unheard of and would likely require a costly and time-consuming conversion to an SAS.

Drafting Corporate Statutes: The Clause That Saves Founders From Deadlock

While the shareholders’ agreement is the private contract governing founder relationships, the corporate statutes (‘statuts’) are the company’s public constitution. They are filed with the commercial court and are accessible to third parties, including future investors and partners. It is a common mistake to use a generic, boilerplate template for the statutes, thinking that the real details will be handled in the shareholders’ agreement. This can be a critical error, particularly regarding deadlock prevention.

The statutes themselves should contain a foundational deadlock-prevention framework. Including such a clause in the public-facing statutes sends a powerful signal of stability and good governance. While the highly specific and sometimes sensitive mechanisms (like a “Russian Roulette” clause) are better kept in the private shareholders’ agreement, the statutes can and should outline a clear, mandatory escalation process. This demonstrates to the outside world that the company has a built-in resilience to internal conflict.

A well-drafted deadlock clause in the statutes should focus on process and procedure. It creates a structured pathway that forces founders to address disagreements constructively before they escalate into a full-blown crisis. Essential elements to include are:

• A formal ‘Deadlock Notice’: A requirement for one party to formally notify the other in writing, clearly identifying the specific issues that constitute the deadlock.
• Mandatory Negotiation Period: A fixed period (e.g., 30 days) during which the partners are legally obligated to negotiate in good faith to find a resolution.
• Escalation Mechanism: A provision that if negotiation fails, the matter is automatically escalated to a pre-appointed mediator or a non-executive board member for a binding or non-binding recommendation.
• Continuation of Operations: A critical clause stating that during the entire dispute resolution process, the day-to-day operations of the company will continue unaffected.

By embedding this procedural framework directly into the statutes, founders create a buffer that protects the company itself from their disputes. It ensures that a disagreement doesn’t immediately halt the business, giving time and structure for a resolution to be found.

Which Fiscal Regime to Choose to Maximize Net Income for Solo Founders?

For a founder, especially a solo founder of a SASU, one of the most impactful financial decisions is the choice of tax regime. By default, an SAS is subject to Corporate Tax (‘Impôt sur les Sociétés’ or IS). However, founders have the option, under certain conditions, to elect for the company’s profits to be taxed under the Personal Income Tax regime (‘Impôt sur le Revenu’ or IR) for a maximum of five years. This choice has significant consequences for the founder’s net income, particularly in the early, often unprofitable, years.

Opting for the IR can be tempting. If the company is running at a loss, that loss can be offset against the founder’s other personal income, potentially reducing their overall tax bill. If the company is slightly profitable, and the founder is in a low personal income tax bracket, the IR regime might result in less tax paid than the standard IS rate. This can be a valid short-term tactic to maximize cash in the founder’s pocket during the bootstrapping phase. This is especially relevant in France where 65% of new businesses established in 2022 were SAS, with many starting as single-founder SASUs.

However, for a founder with high-growth ambitions and plans to raise capital, this short-term gain often comes at a long-term strategic cost. Sticking with the default IS regime from day one is almost always the recommended path. Firstly, it allows for the reinvestment of profits back into the company at a more favorable tax rate than if they were distributed and taxed at high personal income tax rates. Secondly, and most critically, it aligns the company with the expectations of future investors.

As French tax experts often note in their analysis of fiscal optimization:

Being under the Corporate Tax (IS) regime is generally more attractive for future investors and acquirers.

– French tax experts, Analysis of SAS fiscal optimization

Investors and VCs are accustomed to the IS regime. It provides a cleaner, more predictable financial structure for valuation and due diligence. A company under the IR regime can appear less mature or less serious about scaling, potentially adding a layer of friction to fundraising negotiations. Therefore, the strategic choice for an ambitious founder is clear: forgo the potential short-term benefit of the IR and build the company on the solid, investor-friendly foundation of the IS regime.