On November 15, 2024, the Plenary Assembly of the Cour de Cassation issued a landmark decision (case no. 23-16.670) regarding majority requirements in the general meetings of Simplified Joint-Stock Companies (named SAS). This ruling resolves a long-standing debate between the contractual freedom of SAS articles of association and adherence to fundamental principles of collective governance.

The question was simple yet highly discussed : Can SAS articles of association allow a decision to be adopted with fewer votes in favor than against? The Cour de Cassation has now definitively answered.

The Context of This Decision

The articles of association or statutes of the SAS in question stipulated that resolutions could be adopted by a one-third majority of the voting rights of shareholders present or represented. Based on this, a capital increase was approved with 46% of the votes in favor, despite 54% of votes against. Minority shareholders contested the validity of this resolution, arguing that it violated the principle of majority.

For some, such clauses were justified by the statutory flexibility that defines SAS, a popular legal structure for its adaptability to business needs. Indeed the SAS is now the most popular form of entity in France. This is mainly due to the possibility it offers of adapting each company to the needs of the shareholders.  

Others argued that it was fundamentally against collective decision-making principles to allow a resolution to be passed with fewer votes in favor than against.

This issue sparked a lengthy legal proceeding, with courts oscillating between these positions. The Plenary Assembly’s decision, accompanied by live-streamed deliberations, underscores the significance of this issue.

The Decision of the Cour de Cassation

The Cour de Cassation began by reiterating key legal principles:

• Article 1844, paragraph 1 of the French Civil Code: « Every shareholder has the right to participate in collective decisions.« 
• Article 1844-10, paragraphs 2 and 3 of the Civil Code: « Any clause in the articles of association contrary to an imperative provision of Title IX of Book III of the Civil Code is deemed void. Decisions taken in violation of such a provision may be annulled. »
• Article L. 227-9 of the French Commercial Code: « SAS articles of association determine the decisions to be taken collectively by shareholders and their conditions. However, matters such as capital increases, mergers, and dissolution must always involve collective shareholder decisions. »

Building on these principles, the court provided the following reasoning:

« 10. A collective decision of shareholders can only be considered adopted if it secures the highest number of votes in its favor.
11. Any other rule would imply that a single vote could simultaneously approve two contradictory decisions.
12. The contractual freedom governing SAS must respect the rule stated in paragraph 10.
13. It follows that a collective decision in an SAS can only be validly adopted if it secures at least a simple majority of votes cast. Any contrary provision in the articles of association is deemed void.« 

Key Takeaways from the Decision

The ruling unequivocally establishes that a simple majority of votes cast is the minimum requirement for the adoption of collective decisions in an SAS. The Cour de Cassation has prohibited clauses that set a lower threshold in the articles of association.

This decision imposes a clear limit on the contractual freedom of SAS articles of association, reinforcing protections for minority shareholders. It prevents atypical rules from allowing a minority to impose decisions against the will of the majority.

Practical implications for companies

SAS’s should therefore check whether their Articles of Association comply with the solution adopted on 15 November. If not, it is preferable to amend them to avoid debates and disputes.

If the Articles of Association of an SAS contain such a majority requirement, the clause will be disregarded, but decisions taken previously could be annulled.

The shareholders’ meeting could therefore have to vote again to regularise resolutions that are potentially null and void because they were adopted by a minority of shareholders.

This ruling defines a limit to contractual autonomy within SASs. The purpose of this limit is to protect shareholders by requiring at least a simple majority to pass a resolution at a general meeting.

By Olivier Vibert, Attorney, Paris