SAS Capital Increase: Procedure, Premium and Dilution in 2026

A capital increase in an SAS (simplified joint-stock company) is decided collectively by the shareholders, under the majority rules freely set by the articles of association, which are then amended. It can be made in cash, in kind, by capitalising reserves or by converting debts. For cash contributions, at least a quarter of the nominal value and the whole share premium must be paid up on subscription, and the balance within five years. The share premium, the gap between subscription price and nominal value, follows from the pre-money valuation. The change is then published in a legal notices journal and filed with the INPI one-stop shop (guichet unique).

Updated 19 February 2026. A capital increase in a French société par actions simplifiée (SAS) is not an isolated legal act: it is an economic, tax and governance operation that durably reshapes the cap table. Series A funding, conversion of shareholder loans, entry of a seed fund, family transmission, recapitalisation after losses — all these situations rely on the same technical building blocks. For a Paris-based director, the challenge is to arbitrate between modalities (cash, kind, incorporation of reserves, debt conversion), calibrate the issue premium, control dilution and chain the filings without procedural breaks. This article gathers the substantive rules and the step-by-step procedure we apply at Cabinet Hayot Expertise.

Financing growth versus reinforcing equity

A common reflex is to confuse a cash need with a capital need. A capital increase is only relevant when the company requires equity opposable to third parties — banks, key accounts, public tenders — not when a simple shareholder loan would do. Whenever a bank demands an equity/total balance sheet ratio above 25% to release a credit line, or when a public client requires evidence of capitalised solvency, the capital increase becomes the right tool. Conversely, for a short-term cash need of less than 12 months, a shareholder current account compensated at the maximum deductible rate (Article 39-1-3° of the General Tax Code, average rate of variable-rate loans over two years) remains more flexible.

Investor entry, shareholder exit, debt conversion

The capital increase is the natural vehicle for an investor entry: business angel at €50,000, seed fund at €1.5M, Series A at €4-10M. It also allows conversion of shareholder debt into capital (current account or convertible bond) to clean up the balance sheet before an M&A operation. For a shareholder exit, the mechanic typically combines a capital reduction not motivated by losses (share buy-back for cancellation) with a parallel capital increase for an acquirer: the mechanic is detailed in our SARL or SAS comparative analysis.

Preparing a sale or M&A operation

12 to 18 months before a sale, the capital increase can serve to clean the balance sheet, integrate a key asset (patent, goodwill) or dilute a blocking minority shareholder. The pre-money valuation set on that occasion becomes a benchmark for future negotiations: an investor exiting at €8M post-money in N-1 will find it hard to demand a valuation below €10M in N. This anticipation is prepared upstream with a Paris-based outsourced CFO able to orchestrate cap table, due diligence and reporting.

Cash contribution increase

The cash contribution remains the simplest route. Subscribers deposit funds on a blocked account (bank or notary) before the collective decision. For a SAS, the immediate release must cover at least a quarter of the nominal value of subscribed shares and the whole share premium (Article L225-144 of the Commercial Code applicable by reference), the balance being paid up within five years of the day the increase became final. Deferred release must be managed technically: subscribed but uncalled capital appears on the asset side (account 109) and called but unpaid capital as a receivable on shareholders (account 4562). As long as the entire capital is not paid up, the company cannot launch a new cash increase.

Contribution in kind and contributions auditor

Contribution in kind consists of transferring an asset to the company (goodwill, patent, shares, equipment, real estate) in exchange for new shares. The SAS must appoint a contributions auditor (commissaire aux apports) (Article L225-147 of the Commercial Code, applicable by reference from Article L227-1). The exemption of Article L227-1 paragraph 5 (no contribution in kind above €30,000 and unvalued contributions not exceeding half of the share capital) only applies at incorporation: in a capital increase, only the limited cases of Article L225-147-1 allow the auditor to be dispensed with. The auditor's report is made available to shareholders at the registered office at least eight days before the decision (Article R225-136). Our file on the contributions auditor in SAS or SARL details thresholds and the engagement workflow.

Incorporation of reserves or conversion of debt

Incorporation of reserves transforms an equity line (legal reserve beyond 10% of capital, statutory reserves, retained earnings, prior issue premiums) into share capital. No cash enters the company: it is an accounting entry that consolidates third-party reading of the balance sheet. The decision is taken under the majority defined in the SAS bylaws. Debt conversion (shareholder current account, supplier debt, bond debt) requires the claim to be liquid, certain and due; it is evidenced by a certificate from a notary or from the company's statutory auditor or, if none has been appointed, from a statutory auditor appointed for that purpose (Article L225-146 of the Commercial Code). Converting a current account into capital removes the right to repayment on demand — a point often underestimated by directors.

Calculating the issue premium

The issue premium is the difference between the subscription price of a new share and its nominal value. On a SAS with €10,000 capital divided into 10,000 shares of €1 nominal value, a €2M round at €8M pre-money valuation implies €10M post-money. The new investor subscribes 2,500 new shares (20% of the 12,500-share post-money capital) at a unit price of €800, i.e. €1 nominal + €799 issue premium per share. Total premium amounts to €1,997,500, booked to account 1041 (issue premium). It remains available to absorb future losses, distribute an exceptional dividend (with a different tax treatment from a dividend on profit) or be subsequently incorporated into capital.

Pre-money valuation methods (DCF, multiples, comparables)

Pre-money valuation is built through triangulation. DCF (discounted cash flow) projects free cash flows over 5 to 7 years discounted at the weighted average cost of capital (WACC), typically 12-18% for an SME and 20-30% for a pre-profitable startup. Comparable transaction multiples apply to EBITDA (5 to 10x for B2B services, 8 to 15x for recurring SaaS) or revenue (1 to 3x for early-stage SaaS). Stock-market comparables provide the upper bound. For a deeptech startup without revenues, the dominant methods remain the Berkus method or scorecard valuation, capped at €2.5M pre-money for pre-seed and €8-12M for seed in Paris in 2026.

Accounting and tax treatment of the premium

The issue premium is recorded in equity at account 1041. It is not subject to corporate income tax at entry — it is a contribution, not income. On the registration duty side, contributions are registered free of charge since the 2019 Finance Act (Article 810 of the General Tax Code). Exception: a contribution of real estate, goodwill, clientele or a lease right made to a corporate-tax-paying company by a person not subject to corporate tax is treated as a transfer for consideration (Article 809 of the General Tax Code), taxed at 2.20% for real estate (5% with the departmental and municipal additional taxes) and under the goodwill transfer scale for goodwill or clientele. It becomes free of charge again if the contributor undertakes to keep the shares received for three years, except for real estate contributed outside the contribution of a whole business.

Calculating dilution and impact on control

Dilution is calculated as ownership percentage before and after the operation. On the SAS above (10,000 shares, founders at 100%), entry of an investor subscribing 2,500 shares brings founders to 80% of capital. If the investor also requires a share reserve for a BSPCE plan of 10% of fully-diluted cap table, founders drop to roughly 72%. The psychological 50% +1 threshold (simple majority in extraordinary general meeting depending on bylaws) must be protected as long as the project is not mature. SAS statutory minority blocking thresholds are freely set by the bylaws — the major difference with classic corporate forms, since Article L227-9 leaves founders free to define quorum and majority.

Liquidation preference, anti-dilution, ratchet

The French market standard in 2026 for a Series A is a 1x non-participating liquidation preference: the investor first recovers their ticket then switches to pro-rata distribution with founders if more favourable. 1x participating with 3x cap clauses have become rare outside turnaround situations. The standard anti-dilution clause is weighted-average broad-based (weighted formula factoring in share count and issue price), much more measured than full ratchet, which mechanically aligns the previous investor's price with that of a down-round. Our analysis of the 15 vital shareholders' agreement clauses maps the complete menu.

Drag-along, tag-along, founder vesting

The drag-along clause allows a qualified majority — typically 66% or 75% of post-money capital — to force a full sale upon an acquisition offer. The tag-along clause protects minorities by opening their right to sell their shares on the same terms as the selling majority. Founder vesting over 4 years with a 1-year cliff is the standard: a founder leaving before 12 months returns 100% of their shares; thereafter, they vest monthly at 1/48 of the allocation. Reverse vesting (shares already held but subject to repurchase on departure) is legally more robust in France than pure prospective vesting.

Collective decision (EGM or written consultation) and bylaws amendment

In an SAS, decision conditions are freely set by the bylaws, subject to unanimity required under Article L227-19 for certain clauses (inalienability, change of control of a shareholder). The capital increase decision can therefore be taken at a general meeting, by written consultation or by unanimous shareholder deed, depending on bylaws. The bylaws must then be amended to reflect the new share capital, new distribution and, where applicable, new share classes (preference shares under Articles L228-11 et seq.). A minute and a restated version of the bylaws are signed.

Releasing contributions: 2026 rules and timetable

For cash, at least a quarter of the nominal value, with the whole share premium, is released at subscription and deposited on a blocked account, the balance being callable within 5 years by decision of the chairman. For contributions in kind, release is full and immediate as of the issue of the shares: the asset is transferred, the auditor's report dated and made available to shareholders. For incorporation of reserves, no external release is required: it is an internal accounting operation.

Court registry, INPI and legal gazette filings

Within one month of the decision: publication of a notice in a legal gazette (indicative cost €150 to €220 in Paris in 2026, regulated annual tariff); filing at the INPI one-stop window (formalites.entreprises.gouv.fr) of the file including minutes, restated bylaws, depositary attestation for cash, contributions auditor's report for kind, M2 form. The registry records the modification and issues an updated Kbis within 5 to 10 business days. Modification registration at the commercial register costs €192.01 in 2026 (regulated tariff). To frame these filings without procedural breaks, see our Paris incorporation and modification support.

BSPCE: eligibility, 2026 exercise gain taxation

BSPCE (founder share warrants, Article 163 bis G of the General Tax Code) are reserved for unlisted companies less than 15 years old (or listed on a growth market with market cap < €150M), subject to corporate income tax, with at least 15% of capital held by individuals (25% for warrants granted before 2026). The exercise gain (difference between the value of the shares on the exercise date and the exercise price) is taxed at 12.8% income tax + 18.6% social contributions (31.4% flat tax) if the beneficiary has worked in the company for at least 3 years at the date of sale; at 30% income tax, plus social contributions, if less than 3 years. The gain on sale above the value on the exercise date follows the capital gains regime. The BSPCE remains the most tax-efficient instrument to align employees and founders, as detailed in our 2026 BSPCE / AGA / stock-options comparison.

AGA: attribution and transfer conditions

Free share grants (Article L225-197-1 of the Commercial Code) require an EGM decision authorising the envelope (global cap of 15% of capital, raised up to 40% when the grant benefits all employees). The vesting period is at least 1 year, followed by a retention period whose cumulative minimum vesting + retention is 2 years. The acquisition gain is taxed as employment income, after a 50% abatement up to €300,000 a year, and under ordinary salary rules above that (Article 80 quaterdecies of the General Tax Code). AGA fit better than BSPCE for mature structures or companies with significant capital where dilution must be controlled.

BSA and convertible bonds

BSA (share subscription warrants) are tradable warrants, freely transferable, without seniority constraints or legal cap. They serve to compensate an external consultant, advisor or strategic partner. Exercise-gain taxation is less favourable than BSPCE (standard capital-gains regime). Convertible bonds (CB) allow an investor to advance funds repayable but converted into shares at the next round, with a discount (typical 20%) or a valuation cap. They are common for bridge financings between seed and Series A.

The trade-off in practice — increase vs debt vs quasi-equity

At Cabinet Hayot Expertise in Paris, the first trade-off offered to a director is rarely "capital increase yes or no", but capital increase versus bank debt / BPI loan / current account / convertible bond. For a €500,000 need over 24 months with double-digit growth, a BPI Création loan + personal contribution can be less dilutive and faster than a seed round. For a €2M need destined to conquer a new geographical market, the increase becomes unavoidable. The decision rests on three axes: cost of capital (expected investor IRR vs interest rate), speed of execution (3 weeks for a BPI loan vs 4-6 months for Series A), and consequences on governance.

The underestimated risk — mis-calibrated agreement clauses and silent dilution