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Company Law (en cours)

The price revision clause, also referred to as a value guarantee, is very similar to the liability guarantee stricto sensu. However, it formally differs due to its impact on the transfer price.
By this clause, the transferor undertakes to indemnify the transferee  in the event of the subsequent occurrence of certain events whose origin is prior to the transfer, namely: an increase in liabilities,  …

Value/reconstitution guarantee.

The price revision clause, also referred to as a value guarantee, is very similar to the liability guarantee stricto sensu. However, it formally differs due to its impact on the transfer price.

By this clause, the transferor undertakes to indemnify the transferee  in the event of the subsequent occurrence of certain events whose origin is prior to the transfer, namely: an increase in liabilities, an increase in liabilities correlated with a decrease in assets, or a negative change in net position. The primary objective of the clause is actually to guarantee the value of the transferred shares. The price revision clause, which may lead to a reduction in the transfer price , cannot in any case result in compensation exceeding it . Therefore, a stipulation under which the transferor is obliged to pay the transferee compensation with a ceiling higher than the transfer price of the shares for damages resulting from the depreciation of the shares following the revelation of social debts related to their management period  does not constitute a price revision clause.

The validity of the price revision clause follows the same pattern as other guarantees. Indeed, it must not lead to an indeterminacy of the transfer price, under penalty of causing the annulment of the transfer. However, case law considers that the existence of a price revision clause does not in itself render the transfer price of shares undeterminable, as long as it has a fixed character below losses or profits exceeding a certain amount . Similarly, the transfer price of shares is not indeterminate when the parties have clearly set the transferee's obligations regarding the price amount, which, although subject to the establishment of an adjusted balance sheet to be prepared according to usual accounting methods and corresponding to the management period of the company by the transferors themselves, does not depend on the will of one of the parties, but on a purely accounting determination by a professional .

The implementation of the clause is the sole responsibility of the transferee, when the transferor has made their person a determining condition of their consent, notwithstanding the transfer of their shares to a sub-purchaser EN.

Cass. com., 11 March 2008, LawLex202300001080JBJ, holding that in the absence of a stipulation for the benefit of a third party made in favor of the transferred company, a liability assumption guarantee concluded between the transferor and the transferee, designated as the beneficiary of this guarantee, is a price guarantee agreement benefiting the latter, independently of the transfer of its shares, and not a liability guarantee.

Cass. com., 21 October 1997, LawLex202300001075JBJ, considering that the transferred company cannot rely on a clause specifying that the amounts due under the guarantee subscribed by the transferor legally constitute a reduction in the sale price of the shares, since this constitutes a price revision clause that benefits only the transferee.

Cass. com., 18 December 2001, LawLex202300001079JBJ.

Cass. com., 28 January 1992, LawLex202300001081JBJ.

Cass. com., 5 December 2000, LawLex202300001084JBJ.

Cass. com., 16 January 2001, LawLex202300001085JBJ.

Cass. com., 20 October 2015, LawLex202300000474JBJ, revisiting the solution adopted in the same case by Cass. com., 9 October 2012, LawLex202300000472JBJ. - Also see Cass. com., 3 April 2007, LawLex202300001082JBJ, holding that the value guarantee of the elements contained in the price benefits only the transferee even if they are no longer the holder of the shares; CA Paris, 18 November 2014, LawLex202300001083JBJ.

Company Law (en cours)

298. Value/reconstitution guarantee.

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298. Value/reconstitution guarantee.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise