Shareholders' agreement or articles: which clause goes where

Quick answer. The articles of association are public and binding on everyone, including third parties: place there what must apply to the company and its future partners (object, capital, governance, transfer approval). The shareholders' agreement is a confidential contract between signatories: place there what must stay private and flexible (transfer promises, fine allocation of roles, exit, non-compete). A misplaced clause loses its force or exposes your arrangements to public view.

When you set up a company with partners, the question of the legal support arises quickly: should everything go into the articles, or should you also draft a shareholders' agreement? Many founders reason by default, sign standard articles and discover too late that a key clause is either unenforceable or published on a register any competitor can consult. The choice of support is not a matter of form: it decides the strength of your agreement and what stays confidential.

This article offers a decision grid rather than a ready-made answer. We compare the logic of the articles with that of the agreement, then detail clause by clause where to place each stipulation, with the traps we most often see in business-creation files. As a firm registered with the Ile-de-France Order of Chartered Accountants, we regularly support founders on this trade-off, ahead of signature.

The articles are the founding act of the company. They are mandatory, filed at incorporation and accessible to anyone consulting the register. They bind the company, its directors and all partners, present and future, who adhere to the corporate pact simply by entering the capital.

The shareholders' agreement, by contrast, is optional. It is a contract concluded between all or some of the partners, outside the articles. It is not published, it stays confidential, and it binds only its signatories. A new partner is not bound by it until they expressly adhere to it.

Our take. The right reflex is neither to pile everything into the articles for simplicity, nor to push everything into the agreement to stay discreet. It is to ask, clause by clause: do I need this rule to bind a future partner I do not yet know, or merely to bind us, the current founders? The answer points to the right support.

The whole trade-off lies in a tension between two qualities you cannot fully combine.

The strength of the articles is enforceability. A clause in the articles binds everyone, including a third party who acquires shares. Its weakness is publicity: it is visible to all, hence unsuited to what must stay confidential (the valuation used, promises between founders, the allocation of tasks).

The strength of the agreement is confidentiality and flexibility: you amend it without publicity formalities and you can place fine arrangements there. Its weakness is scope. Breach of an agreement is in principle sanctioned by damages on the basis of contractual liability, not by automatic cancellation of the transaction. A transfer concluded in breach of an agreement often remains valid as against a good-faith third party: the breaching signatory pays, but the transaction stands.

The underrated risk. Many founders believe an agreement protects as strongly as the articles. That is false for enforceability. If the priority is to prevent a transfer from happening (not merely to be compensated afterwards), the clause belongs in the articles, not in the agreement. The sanction is not at all the same.

Some statements are required by law and have no place elsewhere: form, name, registered office, object, duration, capital, allocation of securities, management rules. Beyond this mandatory core, several clauses gain from being in the articles precisely because you want them to bind every future partner.

• The transfer-approval clause. It subjects a new partner's entry to the others' consent. To bind a third-party acquirer, it must be in the articles.
• The lock-up clause. It prohibits transferring securities for a set period. In a SAS, the law frames it (statutory basis); in a SARL, the freedom is narrower.
• The exclusion clause. It allows a partner to be forced to sell their securities in defined cases. In a SAS, it has a recognised statutory basis; its use requires strict conditions.
• The change-of-control clause. It targets a corporate partner whose control changes hands. To take full effect, it gains from being in the articles in a SAS.

In a SAS, the Commercial Code expressly recognises the statutory basis of these clauses (lock-up, approval, exclusion, change of control, in articles L227-13 to L227-19). This is one of the form's great strengths: you can tailor governance directly in the articles.

The special case of approval in a SARL#

The SARL deserves a clarification, because the transfer of shares to a third party is already framed there by law (article L223-14 of the Commercial Code). That text sets a legal approval majority and a three-month deadline for the company to decide; absent a reply within that period, approval is deemed granted.

The statutory room for manoeuvre exists, but it is bounded. The articles may toughen the rule by requiring a stronger majority than the legal one: the law expressly allows this (the decision is taken by the legal majority, unless the articles provide for a stronger majority). The three-month deadline, however, is of public order: it cannot be lengthened, and any clause that would soften approval below the legal minimum protection is deemed unwritten. In other words, in a SARL you may reinforce the protection of the existing partners, but you can neither lengthen the deadline given to the company to reply nor drop below the legal floor.

Trade-off. Want to lock a third party's entry in a way binding on everyone? Statutory clause. Want only to organise a pre-emption right between founders, without making it public? Agreement clause, supplemented if needed by a transfer promise. The two supports can be combined: articles for enforceability, agreement for the confidential detail.

The agreement is the tool for arrangements you want to keep confidential, easy to amend, and limited to the signatories. Several clauses naturally find their place there.

• Tag-along and drag-along undertakings. They organise partners' liquidity on a majority sale. They go in the agreement to keep thresholds and price floors confidential.
• Good leaver and bad leaver. They adjust the buy-back terms of a founder's securities depending on the circumstances of departure. A sensitive subject, extra-statutory by nature.
• Founders' vesting. The progressive acquisition of securities over time is better handled in the agreement, where you can detail the schedule without publishing it.
• Allocation of roles and non-compete between partners. Who does what, who refrains from what: personal undertakings that need not appear on the register.
• Fine governance rules. Committees, reinforced information rights, deadlock-resolution mechanisms: the agreement allows tailored machinery, amendable without publicity formalities.

For the detail of these stipulations, see our article on the 15 vital clauses of a shareholders' agreement, and for the content of the founding act, our guide to drafting solid SAS articles.

In practice. A single idea often plays out across both supports. Example: approval sits in the articles (to bind everyone), while the founders' pre-emption right and the price formula stay in the agreement (to remain confidential and adjustable). The right structure articulates the two; it does not choose one against the other.

Here is a starting grid, to adapt to your legal form and your project. It shows the natural support and the reason for the choice.

This grid points a direction, it does not decide for you. The right reflex is to start from each need, then check the enforceability sought and the level of confidentiality wanted before fixing the support.

A misunderstanding keeps coming back in creation files: believing the articles must be filed at the registry within one month of signature. That idea blends two distinct procedures.

The one-month deadline from signature concerns the fiscal registration of the articles at the tax service (the departmental registration service, SDE or SPFE). Above all, that registration is mandatory only in certain cases: contribution of real estate, of a business as a going concern, or of company shares, or an act drawn up by a notary. For a standard creation without a contribution subject to a particular formality and by private deed, registration is not mandatory and that one-month deadline does not apply.

The filing of the articles and the incorporation of the company are carried out via the INPI single window (formalites.entreprises.gouv.fr). That procedure does not answer to a legal deadline of the one-month-after-signature type, and it does not require a registered copy of the articles where fiscal registration is not needed. In practice, you incorporate as soon as the file is complete, without waiting.

What to watch. If your formation includes a contribution of real estate, of a going concern or of company shares, or if the act goes through a notary, anticipate the fiscal registration and its one-month deadline. In other standard creation cases, do not hold up your incorporation chasing a registration that is not required. This is a frequent source of needless delay.

Two founders consult us before setting up their SAS. They have prepared standard articles and a draft agreement that repeats, word for word, a transfer-approval clause. The trap is twofold: the approval clause, to bind a future acquirer of securities, must sit in the articles, not the agreement. Conversely, their arrangement on the valuation of securities on departure, which they had written into the articles, was about to become public. We move the approval into the articles (enforceability) and the valuation into the agreement (confidentiality). The final structure says the same thing, but each clause finally produces the intended effect.

A few markers to keep in mind this year.

• A clause poorly suited to the legal form may be deemed unwritten: drafting freedom is wide in a SAS, more constrained in a SARL.
• The agreement does not override the articles: in case of contradiction, the articles generally prevail as against third parties. Keep the two documents consistent.
• The duration of the agreement must be set: an open-ended agreement can be terminated unilaterally, which weakens your protections.
• The articles-versus-agreement trade-off is prepared ahead of the choice of form: it is part of the legal advice attached to the creation engagement. For the general framework, see how to choose the right legal form, and the issues specific to start-ups in the co-founders' agreement.

This grid points a direction; it does not replace an analysis of your project. The right reflex is to cross-reference the need for enforceability, the level of confidentiality and the chosen legal form, document in hand.