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

Updated April 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 role 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 societe anonyme (SA) has a pre-emptive right to subscribe to any new share issuance in proportion to their existing holding. 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 The DPS can be maintained, waived individually by each shareholder, or withdrawn by collective decision.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.

In a societe anonyme (SA), withdrawal of the DPS is governed by articles L225-132 to L225-138 of the Code de commerce and falls within the exclusive competence of the extraordinary general meeting (AGE). The board cannot withdraw the DPS unilaterally — it must be authorised by the AGE, though the AGE may delegate the modalities of execution to the board.

In a societe par actions simplifiee (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.

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. Under article L225-135 al. 2 of the Code de commerce, the commissaire aux comptes must produce a report on the DPS withdrawal and the proposed issuance price. This report is mandatory, must be provided to shareholders before the vote, and constitutes 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 votes cast by shareholders present or represented at the AGE (article L225-135). 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 role is strictly to ensure shareholders have the information needed to vote with full knowledge of the economic consequences.

Issuance price rules. Article L225-136 requires that the issuance price be at least equal to the nominal (par) value of the share. In practice, it 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 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.

In certain DPS withdrawal operations — particularly when specific advantages are granted to identified third parties — French law requires the appointment of a commissaire aux avantages particuliers (special benefits auditor) under article L225-147 of the Code de commerce. This role is distinct from that of the regular statutory auditor.

The commissaire aux avantages particuliers is appointed, unless all shareholders agree 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 different 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 remuneration 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. The meeting votes separately on each particular advantage, and a subscriber who benefits from an advantage may not vote on the corresponding resolution.

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.

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

Discover our statutory audit and advisory services

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.

Want to secure a share issuance or capital raise involving DPS withdrawal? We can help you build it correctly from the outset.

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What majority is required to withdraw the DPS at a general meeting?

Withdrawal of the DPS requires a two-thirds majority of votes cast by shareholders present or represented at the extraordinary general meeting, under article L225-135 of the Code de commerce. In an SAS, the articles of association may provide for different conditions — more or less restrictive depending on the founders' intentions.

Does the statutory auditor need to approve the DPS withdrawal?

No — the auditor does not approve the withdrawal. They are required to produce a report on the proposed issuance price and its fairness to shareholders. This report is mandatory and must be made available to shareholders before the vote, but it is an independent assessment, not a validation of the operation.

What is the difference between withdrawal in favour of named persons and in favour of the public?

Withdrawal in favour of named persons targets a reserved capital increase for identified investors named in the resolution (funds, industrial partners, managers). Withdrawal in favour of the public opens the issuance to the market without a pre-identified beneficiary — this is reserved for companies making public appeals for capital and is subject to AMF oversight for listed entities.

Can a minority shareholder oppose a DPS withdrawal?

A minority shareholder can vote against the resolution at the AGM, but the decision is valid if the two-thirds threshold is reached. A judicial challenge remains possible in the event of procedural irregularity (missing report, breach of timelines, failure to meet quorum) or abuse of majority — where the withdrawal was decided in the exclusive interest of the majority shareholders to the detriment of the corporate interest.

When must a commissaire aux avantages particuliers (special benefits auditor) be appointed for a DPS withdrawal?

A commissaire aux avantages particuliers is required under article L225-147 of the Code de commerce when specific advantages are granted to certain subscribers: preferential issuance price, special rights (veto, priority liquidation), or a benefit in kind granted to a founder. They are appointed by the commercial court and produce an independent report that must be made available to shareholders before the AGE vote.