SAS vs. SARL: French Legal Structures for Acquisitions

Choosing between a SAS (Société par Actions Simplifiée) and a SARL (Société à Responsabilité Limitée) is one of the most important decisions when structuring a business acquisition in France. Each structure has distinct advantages for governance, taxation, and flexibility, and the right choice depends on your deal structure and growth plans.

According to INSEE, the SAS has become France's most popular business formation, accounting for over 65% of new company registrations in 2024. For acquisition-by-entrepreneurship (reprise d'entreprise) transactions, the dominance is even stronger: Bpifrance reports that the vast majority of acquisition-financed deals use a holding SAS as the acquisition vehicle.

The SAS has become the dominant structure for acquisitions in France:

• Share type: Actions (shares). Easily transferable, no notarial deed required for transfers.
• Minimum capital: €1 (no practical minimum requirement)
• Governance: Highly flexible. Governed by the statutes (articles of association) with minimal legal constraints.
• President: Must have a Président (CEO equivalent). Can add other officers (DG, DGD) as needed.
• Board: No board of directors required, but can create one. Full freedom to design governance in the statutes.
• Share classes: Can create multiple share classes with different voting rights, dividend preferences, and transfer restrictions.
• Social charges on dividends: Dividends are NOT subject to social charges (only 17.2% prélèvements sociaux + 12.8% flat tax or progressive income tax).
• Transfer tax: 0.1% on share transfers (cession d'actions).

The SARL is France's equivalent of a limited liability company:

• Share type: Parts sociales (ownership interests). Transfer requires notarial deed and partner approval.
• Minimum capital: €1 (no practical minimum requirement)
• Governance: More rigid. Governed by the French Commercial Code with less flexibility.
• Manager: Must have one or more Gérants (managers). Can be majority or minority shareholders.
• Social charges on dividends: For majority Gérant, dividends above 10% of capital + current account are subject to social charges (~45%).
• Transfer tax: 3% on ownership transfers (cession de parts), with a €23,000 deduction.
• Maximum partners: Limited to 100 associates.

• Investor-friendliness: SAS is strongly preferred. Investors can receive preferred shares, and governance can be tailored in the statutes. SARL is too rigid for typical investor structures.
• Transfer cost: SAS share transfers cost 0.1% vs. 3% for SARL, a massive difference on larger deals.
• Exit flexibility: SAS shares are more liquid and easier to transfer, facilitating future exits.
• Social charge optimization: SAS dividends avoid social charges; SARL majority Gérant dividends face ~45% charges on amounts exceeding the 10% threshold.
• Governance design: SAS allows total freedom (drag-along, tag-along, vesting, board composition); SARL is constrained by code.

As the Francis Lefebvre Mémento Sociétés Commerciales emphasizes, the SAS's governance flexibility is its defining advantage: the statutes function as a private "constitution" that can replicate nearly any governance arrangement found in Anglo-Saxon shareholder agreements, including drag-along rights, tag-along protections, and vesting schedules.

The most common structure for search fund acquisitions in France:

1. Create a holding SAS: The acquisition vehicle (holding company)
2. Investor equity into the holding SAS: Using ordinary and preferred shares
3. Bank debt at holding level: Bpifrance and commercial bank loans in the holding SAS
4. Acquire target shares or assets: The holding SAS buys the target (often another SAS or SARL)
5. Intégration fiscale: Tax consolidation between holding and target if the holding owns 95%+ of the target

• Corporate tax (IS): 25% standard rate; 15% on first €42,500 for qualifying SMEs
• Dutreil Pact: 75% exemption on gift/inheritance tax for business transfers (applies to both SAS and SARL shares)
• Participation exemption: 95% of capital gains on qualifying participations exempt (only 12% of gains effectively taxed as a "quote-part de frais et charges")
• Interest deductibility: Acquisition debt interest deductible (subject to 30% EBITDA cap and other anti-abuse rules)
• Flat tax (PFU): 30% flat tax on dividends (12.8% income tax + 17.2% social levies), same for both SAS and SARL

When combined with intégration fiscale (French tax consolidation) between the holding SAS and the operating company, acquisition debt interest becomes deductible against operating profits, a critical tax benefit that mirrors the German Organschaft concept.

• SAS is the clear choice for search fund acquisitions: better governance flexibility, lower transfer taxes, and no social charges on dividends
• SARL may work for very small owner-operated acquisitions without outside investors
• The holding SAS + operating subsidiary structure enables tax consolidation and clean governance
• Transfer tax alone (0.1% SAS vs. 3% SARL) makes a significant difference on exit valuations
• Always engage a French M&A attorney (avocat spécialisé en droit des affaires) for the acquisition structure

Yes. SARL-to-SAS conversion is a well-established process in France, requiring a unanimous decision of the associates (or two-thirds majority depending on the articles), appointment of a commissaire à la transformation, and new statutes. The transformation triggers no capital gains tax if done as a change of legal form rather than a dissolution/recreation. Many acquirers buy a SARL target and convert it to a SAS within 6-12 months to gain governance flexibility.

For a majority Gérant (managing partner holding more than 50% of voting rights), dividends exceeding 10% of the sum of share capital, share premium, and current account are subject to social charges of approximately 45% (cotisations sociales TNS). This can significantly reduce net returns compared to a SAS Président, whose dividends are only subject to the 17.2% prélèvements sociaux plus income tax. On a €100,000 dividend distribution, the difference can exceed €25,000.

Since the PACTE law of 2019, a commissaire aux comptes is only mandatory for a SAS that exceeds two of the following three thresholds: €8 million in revenue, €4 million in total assets, or 50 employees. Most search fund-sized acquisitions fall below these thresholds, making the audit optional and reducing annual compliance costs. However, if the SAS heads a group that meets the thresholds on a consolidated basis, the audit obligation applies.