The bylaws of a SAS (“société par actions simplifiée”) may provide for a prior approval clause.
A prior approval clause (“clause d’agrément”) is a clause which subjects the transfer of shares by a shareholder to the prior approval of the shareholders’ assembly or another corporate body.
In the event that the bylaws do not contain a prior approval clause, the sale of shares of the company will be free (subject to pre-emption and/or tag-along rights, if any).
If the bylaws contain a prior approval clause, the bylaws must specify whether this clause applies:
- only in the event of sale of shares to third parties, or also in the event of sale of shares to other shareholders
- only to the sale of shares, or also to the sale of other securities (such as warrants giving right to shares, convertible bonds, bonds, etc.)
- only in the event of sale of shares or securities, or also in the event of any kind of transfer of such shares or securities or rights attached thereto (donation, transfer of bare-ownership or usufruct, transfer of preferential subscription rights which attach to shares, etc.)
The transfer of shares of a specified category or those held by certain shareholders may be excluded from the prior approval clause and therefore remain free.
In a SAS, the prior approval of a potential purchaser may be granted by the president of the company, its director general, the shareholders’ assembly or even a third party. In all events, the person(s) or corporate body competent to grant such approval must be specified in the bylaws.
A prior approval clause must be drafted with great caution as, once included in the bylaws, it may no longer be modified unless all shareholders of the company unanimously consent to such a modification. Similarly, a prior approval clause may not be included in the original bylaws unless all shareholders accept to include such clause.
