Withdrawal of pre-emptive subscription rights in France: procedure, auditor report and minority shareholder protection

Withdrawal of pre-emptive subscription rights (DPS) is decided by the extraordinary general meeting, at a two-thirds majority of the votes cast (article L225-96 of the Code de commerce). It requires a board report and, where the company has a statutory auditor, an auditor's report on the issuance price (article L225-135).

Updated: May 2026 - The withdrawal of pre-emptive subscription rights (suppression du droit preferentiel de souscription, or DPS) is one of the most governance-sensitive operations in French corporate law. It enables faster fundraising and the entry of strategic investors, but it dilutes existing shareholders who do not participate. Understanding the legal framework, the mandatory procedure and the rôle of the statutory auditor is essential for any investor, PE fund or management team navigating a capital increase in France.

Under article L225-132 of the Code de commerce, each shareholder in a French société anonyme (SA) has a pre-emptive right to subscribe to any new issuance of shares for cash, in proportion to their existing holding. The right applies only to cash share issuances (augmentations en numéraire), not to increases carried out through contributions in kind (apports en nature). This right serves two functions: it allows shareholders to maintain their percentage ownership if they wish to participate, and it protects them against involuntary dilution.

The DPS is a detachable and transferable right. A shareholder who does not wish to exercise it can sell the right to a third party, which provides partial financial compensation for the economic dilution. The DPS can be maintained, waived individually by each shareholder, or withdrawn by collective decision. This article focuses on the withdrawal mechanism.

DPS withdrawal is not opportunistic : it must be motivated and documented. The main strategic contexts are:

Entry of an identified strategic or financial investor. When a venture capital fund, an industrial partner or a family office seeks to enter the share capital, it typically requires a reserved capital increase in its favour. The withdrawal of the DPS in favour of one or more named persons (personnes denominees) is the mechanism used.

IPO or private placement. A company conducting a public offering or a market placement withdraws the DPS in favour of the public (au profit du public). This is subject to AMF oversight for listed companies.

Management and employee incentive plans. The issuance of BSPCE (startup share warrants), BSA or free shares typically involves a partial or total withdrawal of the DPS in favour of the designated beneficiaries.

Rapid financing in a cash-constrained situation. A company needing urgent capital may prefer a reserved capital increase over a rights offering to all shareholders, for speed or confidentiality reasons.

Representative example (investor entry). A non-listed SA wants to bring in a fund for 800,000 € of new capital. The fund refuses an issuance open to all shareholders and insists on an increase reserved to it: the DPS must therefore be withdrawn in favour of a named person. In practice, three points concentrate the risk: the board report must justify the corporate interest of the transaction, the issuance price (and hence the premium) must reflect the real value of the company to head off any abuse-of-majority claim, and the statutory auditor's report, where one exists, must be available before the meeting. A shareholder holding 20% who does not participate will see their stake diluted in proportion to the new shares issued, which is exactly the effect the DPS was designed to prevent. This example is for illustration only and is not a real case.

In a société anonyme (SA), withdrawal of the DPS falls within the exclusive competence of the extraordinary general meeting (AGE); the governing rules run across articles L225-135 to L225-138-1 of the Code de commerce, while article L225-132 sets out the DPS itself. Only the AGE can decide the withdrawal, but it has two delegation tools: a delegation of powers (the AGE decides the increase and asks the board to settle its terms, article L225-129-1) and a delegation of authority (the AGE delegates to the board the power to decide the increase, within a maximum term of 26 months and an overall ceiling that it sets, article L225-129-2).

In a société par actions simplifiée (SAS), the framework is more flexible. The articles of association can define the conditions under which the DPS is suppressed, maintained or adjusted. Shareholder protection depends entirely on the quality of the constitutional documents.

Since ordinance no. 2020-1142 of 16 September 2020, listed companies fall under a dedicated chapter (articles L22-10-1 to L22-10-78), while non-listed companies remain under the L225-x articles. The table below sets out the three frameworks.

2026 watch points. The former floor price set at the volume-weighted average of the last three trading sessions, less a 10% discount, no longer applies to public offerings from 14 September 2024: the price is now freely set. That floor, in the form of the closing price of the last session less up to 10%, survives only for capital increases reserved for named persons. Many templates circulating online still use the old formula.

The procedure is rigorous. Failure to comply can render the capital increase void.

Step 1 : Convocation of the extraordinary general meeting. The withdrawal can only be decided by the AGE. The notice must respect statutory and legal timelines and must explicitly mention the DPS withdrawal resolution.

Step 2 : Board of directors report. The board (or supervisory board) must produce a specific report to shareholders explaining: the reasons for the withdrawal, the characteristics of the proposed issuance (amount, type of securities, identified beneficiaries or category of beneficiaries), and why the operation serves the corporate interest.

Step 3. Statutory auditor report. Where the company has a statutory auditor, the commissaire aux comptes must produce a report on the DPS withdrawal and the proposed issuance price under article L225-135 al. 3 of the Code de commerce. Since the Pacte Act no. 2019-486 of 22 May 2019, a company with no statutory auditor does not have this report to produce. When required, the report is mandatory, must be provided to shareholders before the vote, and is an independent assessment, not an approval.

Step 4. AGE vote at two-thirds majority. The resolution must be adopted by a two-thirds majority of the votes cast by shareholders present or represented at the AGE. This is the majority applicable to any extraordinary general meeting (article L225-96 of the Code de commerce); since ordinance no. 2020-1142 of 16 September 2020, it is calculated on votes cast, so abstentions and blank votes are excluded. This threshold is higher than for ordinary resolutions.

The commissaire aux comptes report on DPS withdrawal is an information document, not a validation. Its content is specified by article R225-115 of the Code de commerce.

The auditor must address:

• the method used by the board to determine the issuance price and its relevance given the company's characteristics and the nature of the operation;
• whether the issuance price is fair to shareholders, notably by comparing it to the intrinsic value of the share or its market price if the company is listed;
• the consequences of the issuance on shareholders' equity stake, particularly the impact on their pro-rata share of net assets.

The auditor does not opine on the strategic merits of the operation or on management's decision-making. The rôle is strictly to ensure shareholders have the information needed to vote with full knowledge of the economic consequences.

Issuance price rules. An issuance price can never be lower than the share's nominal (par) value: shares cannot be issued below par. This principle is separate from how the price is set. For a non-listed company that withdraws the DPS through a public offering, article L225-136 of the Code de commerce provides that the price (or the method for setting it) is fixed by the extraordinary general meeting, on a report from the board of directors or management board and on a special report from the statutory auditor. In practice, the price should reflect the real value of the company: an issuance price that is materially below fair value can constitute an abuse of majority if it benefits specific shareholders at the expense of others. The issuance premium (the difference between the issuance price and the nominal value) is recorded in equity (account 1041, issuance premiums) in the company's accounts.

Withdrawal in favour of named persons means the AGE identifies the beneficiaries in the resolution itself, or in a delegation to the board to do so within defined parameters. This is used for identified investor entries, BSPCE plans and employee reserved increases.

Withdrawal in favour of the public means the issuance is open to the market without pre-identified beneficiaries. This is reserved for companies making public appeals for capital and is subject to AMF oversight for listed entities.

DPS withdrawal exposes non-participating shareholders to dilution of both their economic stake and their voting rights. The practical consequences are:

• Dilution of percentage ownership: a shareholder holding 20% before the operation and not participating will see their percentage decrease proportionally to the number of new shares issued.
• Right to information: shareholders have a statutory right to receive the board report and the auditor report before the vote. This right is non-waivable.
• Judicial challenge: a minority shareholder can contest the decision before the commercial court if the procedure was irregular (missing report, vote below required threshold) or if the withdrawal constitutes an abuse of majority : an operation decided in the exclusive interest of the majority shareholders to the detriment of minority shareholders or the corporate interest.

DPS withdrawal does not, on its own, require the appointment of a commissaire aux avantages particuliers: the statutory trigger is the stipulation of a special advantage in favour of a subscriber (or a contribution in kind). Where such an advantage is granted, the appointment of a commissaire aux avantages particuliers (special benefits auditor) becomes mandatory under article L225-147 of the Code de commerce. A reserved cash capital increase (article L225-138) with no special advantage is not subject to it. This role is distinct from that of the regular statutory auditor.

The commissaire aux avantages particuliers is appointed, unless all shareholders agréé unanimously, by order of the president of the commercial court. They produce an independent report on the value and fairness of the specific advantages granted in the course of the operation: shares issued at preferential prices, special rights attached to the new securities, advantages granted to founders or investors.

When is this mission required? It becomes mandatory when:

• shares are issued on différent terms depending on the subscriber (distinct share classes, differentiated pricing);
• particular rights (veto rights, board seats, preferential liquidation) are granted to subscribers in the capital increase;
• a rémunération or in-kind advantage is granted to a founder or manager in connection with the operation.

Their report is appended to the minutes of the AGE. In practice, the meeting adopts a separate resolution for each special advantage; above all, the contributor or beneficiary of the advantage does not take part in the vote on the corresponding resolution, and their shares are not counted towards the majority (article L225-10 of the Code de commerce, applicable by reference from article L225-147).

This mechanism reinforces the protection of both existing shareholders and new subscribers: it guarantees that the terms of the operation have been subject to an independent review before being collectively validated.

Full withdrawal is not always necessary. Two alternatives deserve examination.

Maintaining the DPS with individual waivers. Each shareholder can individually waive their DPS in writing. This avoids the AGE procedure but requires all relevant shareholders to sign a waiver. It is practical in companies with a small number of shareholders.

Free share allocations as compensation. In some structures, DPS withdrawal is accompanied by a free share allocation to existing shareholders, partially compensating for the dilution. This is more complex to structure but can improve the operation's acceptability among minority investors.

Hayot Expertise advice: DPS withdrawal engages the company's governance as much as its financial strategy. A poorly motivated board report, an inadequately justified issuance price or a statutory auditor report produced outside the required timeline are all sufficient to expose the entire operation to challenge. We support directors and shareholders in structuring these operations, from the document calendar to the drafting of AGE resolutions.

See also better-fortune clause, converting a SARL into an SAS and special benefits auditor obligations.

Not every transaction justifies a full DPS withdrawal. The table below points to the most suitable mechanism for each situation.

The priority period deserves particular attention: unlike the DPS, it is neither tradable nor transferable. It is an intermediate protection, not a maintenance of the pre-emptive right.

We can help you structure the operation, prepare the mandatory reports and carry out the special benefits auditor mission if required.

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DPS withdrawal is a powerful tool for fundraising and investor entry in France : but it requires rigorous procedural compliance. The quality of the board report, the completeness of the statutory auditor's report, the two-thirds voting threshold and the justification of the issuance price are the four pillars of a well-secured operation. Shortcutting any of them creates unnecessary exposure.