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Company Law (en cours)

Assimilated to a sale, the transfer of shares necessarily requires that a price be paid in return. In accordance with Article 1591 of the Civil Code, the sale price must be determined and designated by the parties . However, it is not sufficient for the parties to set a price for the transfer to be valid. It is also necessary that its determination is not subject to the power of one of them. Thus, …

Invalidity for indeterminacy of price.

Assimilated to a sale, the transfer of shares necessarily requires that a price be paid in return. In accordance with Article 1591 of the Civil Code, the sale price must be determined and designated by the parties . However, it is not sufficient for the parties to set a price for the transfer to be valid. It is also necessary that its determination is not subject to the power of one of them. Thus, a share transfer agreement is only complete if it allows, based on the stipulations it contains, the price to be determined by elements that do not depend on the will of only one of the parties . This is the case when the agreement refers to an objective criterion independent of the sole will of the parties, such as the actual value of the undertaking and the evolution of its results . The same applies to the mechanism established by an alternative offer clause, known as the "American clause," whereby, in the event of a serious and persistent disagreement likely to cause paralysis of the company, each partner may propose to the other to transfer their entire stake at the price and conditions defined in the offer .

On the other hand, a transfer of shares is void if the transferee has the ability to influence the determination of the price after the sale .

A transfer of shares concluded without a determined price is subject to invalidity. However, the share transfer agreement may not include the immediate indication of the price, provided that it is determinable. According to case law, the transfer price of shares stipulated in a letter of intent, whose determination requires a new agreement of the parties' wills, is neither determined nor determinable, so it constitutes only a simple agreement in principle and its author does not immediately become the owner of the disputed shares . The price of a share transfer is also not determinable when its determination is subject not only to the subsequent establishment of the company's balance sheet but also to the intervention of a new act of will by the promisor . Similarly, a promise to purchase shares that sets a price for only some of them, while the price for others is neither determined nor determinable , or that only provides a ceiling applicable to certain scenarios , is tainted with invalidity. Finally, the invalidity of a share transfer for failure to definitively set their price may be pronounced due to the ambiguity and obscurity of the terms of the agreements concluded between the parties .

On the other hand, the sale price of shares in a company subject to insolvency proceedings is determinable at the time of contract conclusion, stipulated to be equal to the company's secured liabilities, when the transferee has declared being aware of the bankruptcy filing, has been able to review the statement of claims filed with the registry prior to the act, and the price they accepted will be the one set at the end of the claims verification process, based on elements independent of the parties' will . The same applies when the price is decided by mutual agreement, notwithstanding the imprecision of the ancillary clause that provides for its indexation without indicating the methods of combining the selected indices . The sale price of shares is also not indeterminate solely because it depends on the non-dismissal for gross misconduct of the transferor/employee, as such an event does not depend solely on the will of the transferee/employer, but on objective circumstances that can be judicially controlled .

Finally, the action for invalidity of share transfers concluded for an undetermined price, which only aims to protect the private interests of the transferors, falls under the regime of actions for relative invalidity and is subject to a five-year limitation period . The creditor also has the Paulian action, which can be exercised even when the transfer was consented to at the normal price, as long as it has the effect of removing an asset from their reach by replacing it with funds more easily concealable. The success of this action is not contingent upon proving the debtor's impoverishment .

Cass. com., 13 March 2024, LawLex202400002394JBJ, RJDA 2024, holding that pursuant to Article 1591 of the Civil Code, the sale price must be determined and designated by the parties, so that a court of appeal cannot, to determine the additional price of a transfer of shares, take into account the valuation of the disputed company's securities over a thirty-day period following the date of their first continuous listing on the Euronext market, without establishing that such was the common intention of the parties.

Cass. com., 25 September 2012, LawLex202300000261JBJ, considering that a contract for the transfer of ownership interests is not complete due to the absence of stipulations allowing the price to be determined, when it refers to subsequent events such as the acquisition of a real estate complex or the consideration of financial and accounting results without specifying a date.

Cass. com., 7 December 1976, LawLex202300000259JBJ.

Cass. 3e civ., 16 July 1974, LawLex202300000319JBJ.

Cass. com., 10 July 2024, LawLex202400005212JBJ.

Cass. com., 22 March 2016, LawLex202200000811JBJ, D. 2016, 1037, chron. THREARD, ARBELLO, LE BRAS et GAUTIER.

Cass. com., 26 January 2025, LawLex202500000867JBJ.

Cass. com., 10 March 1998, LawLex202200000804JBJ.

Cass. com., 12 February 2025, LawLex202500000999JBJ, RJDA, June 2025, No 323/327, p. 49.

Cass. 1re civ., 12 November 1974, LawLex202300000258JBJ.

Cass. com., 6 November 2012, LawLex202300000262JBJ, in this case, the shares were subject to a subsequent transfer to a third party; 5 April 2005, LawLex202300000306JBJ, considering that a share transfer is imperfect due to the lack of agreement on the transfer price, in cases where the amount allocated to the transferor includes, in addition to the transfer price of the shares, the amount of indemnities owed by the company, if the transfer deed does not allow for an objective determination of these elements without requiring a new agreement of will; 14 December 1999, LawLex202200000802JBJ, indicating that the amount of a transfer of shares is not determinable when the final price setting requires the contradictory establishment of the balance sheet on the eve of the regularization of the transfer and consequently, a new agreement of will by the parties.

Cass. com., 13 January 1971, LawLex202300000257JBJ.

Cass. com., 9 October 2012, LawLex202300000309JBJ. - Similarly, Cass. com., 23 January 1990, LawLex202300000382JBJ specifying that in the absence of agreement on some of the elements intended to allow the calculation of the price of the shares, the price of the contemplated transfer is neither determined nor determinable, so that the transfer must be annulled.

Cass. com., 21 September 2022, LawLex202200011213JBJ.

Cass. com., 5 May 1970, LawLex202300000256JBJ; 19 December 2006, LawLex202300000263JBJ, holding that a promise to transfer shares is void if it contains a provision stipulating that, in the absence of agreement between the parties, the transfer price will be set by third parties according to rules lacking sufficient consistency.

Company Law (en cours)

290. Invalidity for indeterminacy of price.

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290. Invalidity for indeterminacy of price.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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