SAS Capital Increase: Procedure, Premium and Dilution in 2026

Updated 12 May 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 half of the nominal value of subscribed shares (Article L225-144 of the Commercial Code applicable by reference), the balance being callable within five years of the registration of the increase. Deferred release must be managed technically: called but unpaid capital appears as a liability (account 109) and uncalled capital is shown as financial fixed assets in subscribers' books. 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) except where Article L227-1 paragraph 5 of the Commercial Code grants a derogation: the exemption is possible when no single contribution in kind exceeds €30,000 AND the total value of contributions in kind does not exceed 50% of the share capital after the operation. Outside these two cumulative conditions, appointment is mandatory and the auditor's liability runs for five years (Article L225-249). The auditor's report is annexed to the bylaws and filed with the commercial court. 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 the statutory auditor or, failing that, by an attestation from the chartered accountant. 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, capital increases by cash contribution benefit from exemption since 1 January 2019 (Article 810 bis of the General Tax Code). For contributions in kind, the regime varies: exemption where the contribution is pure and simple to a corporate-tax-paying company; flat duty of €375 (€510 if post-operation capital > €225,000) on contributions of real estate, goodwill or clientele made to a corporate-tax-paying company by an individual non-shareholder, with a three-year commitment to retain the shares. Without such commitment, the 5% transfer duty applies to the fraction exceeding the allowances.

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 (approval, inalienability, exclusion). 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 half 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 decision: the asset is transferred, the auditor's report dated and annexed. For incorporation of reserves, no external release is required — it is an internal accounting operation validated by the most recent closed balance sheet certified without reserve by the statutory auditor, if any.

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 25% of capital held by individuals. The exercise gain (difference between sale price and exercise price) is taxed at 12.8% income tax + 17.2% social contributions (30% flat tax) if the beneficiary has at least 3 years of seniority in the company; at 30% income tax if less than 3 years. 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 10% of capital, 30% if granted to 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 under the capital-gains regime at 30% (flat tax), with a 50% abatement below €300,000. 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#