[Business Case] Advising French Startup Founders on Company Formation and Shareholder Relationships

The Project

The founder of a French biotech startup developing an innovative medical device reached out to us during the creation of their company (a French SAS) to help structure agreements with minority co-founders.

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Our law firm advises start-up founders and investors on structuring their project.

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The Challenges

Although the founding shareholders shared a common vision for the project, their profiles (technical, commercial, and financial) and respective contributions differed significantly. Several key questions arose:

• How to equitably distribute capital and future value creation?
• How to ensure stable governance, with balanced powers, clear role definitions, and protection for minority shareholders?
• How to protect founding shareholders in the event of a departure?
• How to anticipate future fundraising rounds while framing investor entry?
• What constraints might apply to certain founders due to their other commitments (employment, exclusivity agreements), and how to ensure the company retains intellectual property rights developed by them?

Our Advice

To address these challenges, our law firm supported the startup’s founders in incorporating their company and structuring their project through several key steps:

• Framing Founder Discussions: Identifying critical issues and potential solutions based on their priorities.
• Drafting Legal Documentation: Formalizing agreements through the company’s bylaws and shareholders’ agreement, including:
  • Governance rules (voting rights, veto rights, etc.),
  • Conditions for shareholder entry and exit,
  • Preemption and approval clauses to prevent unwanted shareholders,
  • Drag-along and tag-along mechanisms,
  • Shareholder commitments (non-compete, confidentiality, etc.),
  • Rules for share valuation in buyback scenarios.

• Company Formation: Appointing initial directors and completing formalities.
• Transfer of Pre-Incorporation Acts: Ensuring acts undertaken by founders before incorporation were properly assigned to the company, and entailing reimbursment of founders for personal expenses incurred.

The Outcome

Our early-stage intervention laid a solid foundation, strengthening the company’s credibility and the robustness of the shared project as it seeks investors for rapid growth.

Additionally, we:

• Advised on structuring commercial activities,
• Guided clients in identifying other legal priorities, such as intellectual property protection and sector-specific regulations, and connected them with experts in these fields.

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Private Equity, Shareholder Advisory, Corporate Governance and Foreign Investments Control

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