Share Tokenization in France: Legal Framework and 2025 Outlook

Introduction

Transform your company shares into tokens for greater liquidity and flexibility.

The tokenization of company shares represents one of the most promising blockchain applications for French businesses. By transforming traditional ownership titles into programmable digital tokens, this technology opens unprecedented opportunities in terms of liquidity, fractionalization, and shareholder management. But where does French law stand in 2025? This guide analyzes the current legal framework and concrete opportunities.

What you will learn:

• The legal framework for tokenization in France (blockchain ordinance, PACTE law)
• Eligible company types and technical requirements
• The complete procedure for tokenizing your shares
• Tax and accounting implications
• Perspectives opened by MiCA and the DLT pilot regime

Table of Contents

1. Understanding Share Tokenization
2. French Legal Framework
3. Eligible Companies and Conditions
4. Tokenization Procedure
5. Technical Aspects and Blockchain Choice
6. Tax Regime for Tokenized Shares
7. Token Transfer and Trading
8. Governance and Shareholder Rights
9. Perspectives: MiCA and DLT Pilot Regime
10. Case Studies and Experience
11. FAQ

1. Understanding Share Tokenization

Representing ownership titles through digital tokens on blockchain.

Definition and Fundamental Principles

Share tokenization consists of representing a company's ownership titles (shares, SARL units, SCI units...) in the form of digital tokens registered on a blockchain or distributed ledger (DLT - Distributed Ledger Technology).

Essential characteristics:

Token vs Financial Security Distinction

It is crucial to understand that the token is not the title itself, but its digital representation:

"The token is the technical vehicle; the ownership title remains the underlying legal reality." — AMF Report on Digital Assets, 2024

This distinction has important implications:

• The token facilitates title circulation
• Attached rights (voting, dividends) derive from the title, not the token
• Legal validity depends on compliance with legal formalities

Advantages of Tokenization

For companies:

• Modernization of shareholder management
• Automation of securities operations
• Reduction of administrative costs
• Access to new investors

For investors:

• Increased liquidity (secondary market potential)
• Investment fractionalization
• Transaction transparency
• Easier access to SME/mid-cap capital

2. French Legal Framework

The 2017 blockchain ordinance: France as a European pioneer.

The 2017 Blockchain Ordinance: Founding Text

France was a pioneer in Europe with Ordinance No. 2017-1674 of December 8, 2017, allowing the registration of certain financial securities in a shared electronic recording device (DEEP - Dispositif d'Enregistrement Électronique Partagé).

Founding texts:

Article L. 211-3 of the Monetary and Financial Code

This article constitutes the legal basis for tokenization:

"Registration in a shared electronic recording device constitutes account entry. A Council of State decree sets the conditions under which this registration is carried out." — Article L. 211-3 CMF

Securities Covered by the DEEP Regime

The DEEP regime applies to unlisted financial securities:

Eligible securities:

• SAS shares (Simplified Joint-Stock Company)
• Unlisted SA shares (Public Limited Company)
• Collective investment fund units
• Debt securities (unlisted bonds)
• SCA shares (Partnership Limited by Shares)

Securities excluded from native DEEP regime:

• SARL units (specific regime to be established)
• SCI units (hybrid status)
• Securities listed on a regulated market

The Decree of December 24, 2018

Decree No. 2018-1226 specifies technical conditions:

DEEP requirements:

1. Owner identification: the device must allow identification of securities owners
2. Nature and number of securities: precise recording of characteristics
3. Registration integrity: protection against unauthorized modifications
4. Traceability: accessible operation history
5. Security: protection against unauthorized access

3. Eligible Companies and Conditions

SAS, SA, and SARL: which legal forms can tokenize?

Comparative Table by Corporate Form

Focus SAS: The Ideal Form

The SAS offers the greatest flexibility for tokenization:

SAS advantages for tokenization:

• Maximum statutory freedom
• Freely transferable shares (unless stated otherwise)
• No minimum capital
• Modernizable share register

Recommended statutory provisions:

Article X - Share Registration on DEEP

The Company's shares may be registered in a shared
electronic recording device (DEEP) compliant with
Articles L. 211-3 et seq. of the Monetary and Financial
Code and Decree No. 2018-1226 of December 24, 2018.

The President designates the technical provider in charge
of DEEP administration. Operating conditions are specified
in internal regulations.

The Special Case of SARLs

SARL units are not "financial securities" within the meaning of the CMF, but "corporate rights." However, tokenization remains possible:

Legal approach for SARLs:

1. Contractual representation: the token represents a contractual right over the units
2. Supplementary register: the DEEP supplements (does not replace) the partner register
3. Approval maintained: the approval clause remains applicable
4. Notification: transfers must still be notified to the company

⚠️ Warning: SARL tokenization requires specific legal support to secure the structure.

SCI and Real Estate Tokenization

SCI unit tokenization is attracting growing interest for democratizing real estate investment:

Specific issues:

• SCI units = corporate rights (not financial securities)
• Partner approval generally mandatory
• Tax implications (real estate capital gains)
• Interest in real estate asset fractionalization

Recommended structure: SCI → held by → SAS holding → tokenized shares

4. Tokenization Procedure

The five key steps to tokenize your shares in full compliance.

Step 1: Prior Legal Audit

Before any tokenization, a comprehensive audit is required:

Audit checklist:

• Verification of corporate form and eligibility
• Bylaws analysis (transfer clauses, approval, preemption)
• Share register examination
• Identification of all shareholders/partners
• Verification of absence of pledges or collateral
• Company tax compliance
• Due diligence on existing shareholders

Step 2: Bylaws Amendment

Tokenization generally requires a bylaws amendment:

Typical EGM resolution:

The Extraordinary General Meeting, having reviewed the President's report, decides:

1. To authorize the registration of the Company's shares in a shared electronic recording device (DEEP) in accordance with Articles L. 211-3 et seq. of the Monetary and Financial Code;

2. To delegate to the President the power to choose the technical provider, define operating conditions, and take all measures necessary for implementing this decision;

3. To amend Article [X] of the bylaws accordingly.

Step 3: Technical Provider Selection

The choice of DEEP provider is crucial:

Selection criteria:

Active providers in France (2025):

• Tokeny (Luxembourg, active in France)
• Nomadic Labs (Tezos infrastructure)
• ConsenSys (Ethereum)
• Société Générale Forge (institutional)
• Spiko (crowdfunding)

Step 4: Securities Migration

Migration to DEEP must be rigorously documented:

Migration process:

1. Paper register closure: fixed at certain date
2. Initial registration: creation of tokens representing securities
3. Holder allocation: token allocation to wallets
4. Migration minutes: complete documentation
5. Shareholder notification: official communication

Step 5: Legal Formalities

Mandatory formalities:

• Filing amended bylaws with the commercial registry
• BODACC publication (if capital modification)
• K-bis update
• Tax administration notification (if applicable)

5. Technical Aspects and Blockchain Choice

Ethereum, Tezos, or private blockchain: which technology to choose?

Blockchains Used for Tokenization

Comparison of major blockchains:

Token Standards for Financial Securities

ERC-1400: The Security Token Standard

ERC-1400 is specifically designed for financial securities:

interface IERC1400 {
    // Controlled transfer functions
    function transferWithData(address to, uint256 value, bytes data);
    function transferFromWithData(address from, address to, uint256 value, bytes data);

    // Partition management (share classes)
    function balanceOfByPartition(bytes32 partition, address tokenHolder);
    function transferByPartition(bytes32 partition, address to, uint256 value, bytes data);

    // Transfer control
    function canTransfer(address to, uint256 value, bytes data) returns (bool, bytes32, bytes32);

    // Issuance and redemption
    function issue(address tokenHolder, uint256 value, bytes data);
    function redeem(uint256 value, bytes data);
}

Key ERC-1400 features:

• Controlled and conditional transfers
• Share class management (partitions)
• Automatic compliance verification
• Token freeze capability
• On-chain KYC/AML support

Smart Contracts and Automation

Smart contracts enable automation of:

Automatable operations:

6. Tax Regime for Tokenized Shares

Tokens follow the tax regime of the underlying securities.

Tax Qualification of Tokens

The tax administration considers that tokens representing company shares follow the tax regime of the underlying securities:

"A token representing a share of a French company is fiscally treated as a share." — BOI-RPPM-PVBMI, administrative doctrine

Capital Gains on Disposal

Regime applicable to individuals:

Holding period allowances (scale option):

• 50% after 2 years of holding
• 65% after 8 years of holding
• Increases for SMEs less than 10 years old

Dividends and Income

Dividends distributed via tokens follow the standard regime:

Dividend taxation:

• PFU at 30% (default option)
• Or progressive scale with 40% allowance

Special case of yield tokens: If the token generates intrinsic income (staking, etc.), possible classification as BNC or investment income.

Reporting Obligations

Mandatory declarations:

⚠️ Important: Holding tokens on a foreign platform may trigger the 3916-bis obligation even if the tokens represent French securities.

7. Token Transfer and Trading

Simplified transfers but statutory clause compliance mandatory.

Transfer Procedures

Tokenized share transfers must comply with standard rules:

For SAS:

1. Verification of statutory clauses (approval, preemption)
2. Execution of transfer smart contract
3. Automatic registration in DEEP
4. No notification formality

For SARL:

1. Prior approval procedure (if applicable)
2. Token transfer
3. Notification to company (Article 1690 Civil Code)
4. Partner register update

Secondary Market Platforms

The security token secondary market is taking shape:

Authorized platforms in France:

DLT Pilot Regime (2023-2026): European Regulation (EU) 2022/858 allows operating DLT market infrastructures with targeted regulatory exemptions.

Approval Clauses and Tokens

Tokenization does not eliminate approval clauses:

Technical implementation:

// Simplified on-chain approval clause example
function requestTransfer(address to, uint256 amount) external {
    require(balanceOf(msg.sender) >= amount, "Insufficient balance");

    // Create approval request
    transferRequests[requestId] = TransferRequest({
        from: msg.sender,
        to: to,
        amount: amount,
        approved: false,
        timestamp: block.timestamp
    });

    emit TransferRequested(requestId, msg.sender, to, amount);
}

function approveTransfer(uint256 requestId) external onlyApprover {
    TransferRequest storage request = transferRequests[requestId];
    require(!request.approved, "Already approved");
    require(block.timestamp < request.timestamp + APPROVAL_DELAY, "Deadline expired");

    request.approved = true;
    _transfer(request.from, request.to, request.amount);

    emit TransferApproved(requestId);
}

8. Governance and Shareholder Rights

On-chain voting and automated dividend distribution now possible.

Exercise of Voting Rights

Tokenization enables modernization of voting rights:

On-chain voting: advantages

• Total traceability and transparency
• Automated counting
• Reduced GM costs
• Facilitated participation (remote voting)

Technical implementation:

Dividend Distribution

Automated dividend distribution is a major use case:

Automated process:

1. GM decision: vote on distribution
2. Snapshot: cap table photo at ex-dividend date
3. Calculation: amount per token (smart contract)
4. Distribution: automatic payment (stablecoin or transfer)
5. Attestation: receipt generation

Advantages:

• Elimination of calculation errors
• Instant payment
• Tax traceability
• Reduced administrative costs

Dematerialized General Meetings

Electronic voting at GMs is governed by Article L. 225-107 of the Commercial Code:

Validity conditions:

• Statutory provision
• Certain identification of participants
• Vote integrity
• Confidentiality (secret ballot if applicable)

"The bylaws may provide that shareholders can participate and vote at meetings by means of videoconference or telecommunications allowing their identification." — Article L. 225-107 Commercial Code

9. Perspectives: MiCA and DLT Pilot Regime

The European framework opens new opportunities for DLT infrastructures.

MiCA Regulation and Security Tokens

The MiCA regulation (Markets in Crypto-Assets) does not directly cover security tokens, which remain under MiFID II:

MiCA / MiFID articulation:

DLT Pilot Regime

Regulation (EU) 2022/858 creates a regulatory "sandbox" for DLT market infrastructures:

Three types of infrastructures:

1. DLT MTF: multilateral trading facility on DLT
2. DLT SS: settlement system on DLT
3. DLT TSS: combined system

Possible exemptions:

• Easing of certain MiFID II obligations
• Direct registration without central intermediary
• Token settlement (including e-money tokens)

Pilot regime thresholds:

• Maximum capitalization: €6B (shares) / €1B (bonds)
• Total market value: €9B

2025-2027 Outlook

Expected developments:

10. Case Studies and Experience

Three concrete examples of successful tokenization in France.

Case 1: Deeptech Startup Tokenizing its Capital

Context: A biotech startup (SAS, €5M valuation) wants to tokenize its capital to facilitate successive funding rounds.

Solution implemented:

• Statutory amendment authorizing DEEP
• Ethereum choice with ERC-1400 standard
• Tokenization of 100% of capital (1 share = 1 token)
• Smart contract integrating approval clause and vesting

Results:

• Real-time cap table accessible to investors
• 80% reduction in transfer processing time
• Facilitated Series A (simplified due diligence)

Case 2: Family SCI and Real Estate Fractionalization

Context: An SCI holding a Parisian building (value €3M) wants to allow family members to invest modest amounts.

Solution implemented:

• Creation of an SAS holding owning 100% of the SCI
• Tokenization of SAS shares
• Division into 10,000 tokens (€300 per token)
• Smart contract with family preemption right

Results:

• Democratized access to family investment
• Facilitated succession (token donation)
• Simplified entry/exit management

Case 3: Industrial SME and Employee Shareholding

Context: An industrial mid-cap (SA, 200 employees) wants to modernize its employee share plan and simplify management.

Solution implemented:

• Tokenized free shares
• Vesting period managed by smart contract
• Automatic dividend distribution
• Employee portal with custodial wallet

Results:

• Increased employee engagement (real-time visibility)
• Management costs reduced by 60%
• Automated tax compliance

11. FAQ

Legal Questions

Q: Does tokenization replace the legal register?

A: For securities eligible for DEEP (SAS shares, unlisted SA), blockchain registration constitutes account entry. The DEEP becomes the official register. For SARLs and SCIs, the traditional register must be maintained in parallel.

Q: Is an approval clause still applicable?

A: Yes, tokenization does not eliminate statutory clauses. Smart contracts can even automate the approval procedure. Approval refusal remains possible and enforceable.

Q: Can a company with pledged securities be tokenized?

A: Technically yes, but the pledge must be reproduced on the DEEP. The pledgee must be informed and their consent may be required depending on pledge terms.

Technical Questions

Q: What happens if the blockchain disappears?

A: The 2018 decree requires sustainability guarantees. In practice, a migration procedure to another blockchain or return to traditional register should be contractually provided.

Q: Can the token be permanently lost?

A: Not for well-designed security tokens. ERC-1400 and equivalent standards provide administrator recovery mechanisms for lost key cases. The issuer retains control.

Q: Does each shareholder need a wallet?

A: Not necessarily. Custodial solutions allow shareholders to hold their tokens without directly managing a wallet. This is the preferred approach for non-specialists.

Tax Questions

Q: Is token disposal taxed differently?

A: No, disposal of a token representing a share is fiscally identical to disposing of the share itself. The 30% flat tax or progressive scale applies normally.

Q: Must tokens be declared on form 3916-bis?

A: If tokens are held on a foreign platform, yes. Form 3916-bis applies to digital asset accounts held abroad, even if they represent French securities.

Q: Are tokenization costs deductible?

A: For the company, setup costs can be capitalized (software) or expensed depending on their nature. Precise accounting treatment must be defined with the accountant.

Conclusion

Share tokenization in France benefits from a pioneering but still evolving legal framework. While SAS and unlisted SA can fully exploit the DEEP regime, other corporate forms require adjustments.

Key points to remember:

1. Solid legal framework: the 2017 blockchain ordinance and 2018 decree offer a clear legal basis
2. SAS preferred: the corporate form most suited to tokenization
3. Technical rigor: the choice of DEEP provider and token standard is crucial
4. Unchanged taxation: tokens follow the tax regime of underlying securities
5. European perspectives: the DLT pilot regime opens new opportunities

Recommendations before tokenizing:

✅ Conduct a comprehensive legal audit ✅ Adapt bylaws with specific clauses ✅ Choose a recognized technical provider ✅ Inform all existing shareholders ✅ Anticipate taxation and declarations ✅ Plan clear DEEP governance

Share tokenization is no longer a distant prospect but an operational reality for French companies wishing to modernize their shareholder management and access new financing methods.

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Article updated December 2025. Information presented is educational and does not constitute personalized legal or tax advice. Consult a qualified professional before any tokenization operation.