All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

The transfer of shares, which is treated as a sale,  necessarily requires a price in return. This price must be determined and specified by the parties . Indeed, the invalidity of a transfer of shares for lack of price determination must be declared when the price provided by the agreements is only provisional and requires the combination of several elements . Also, a transfer of shares is imperfe …

Determination by the parties or by a third party

The transfer of shares, which is treated as a sale,  necessarily requires a price in return. This price must be determined and specified by the parties . Indeed, the invalidity of a transfer of shares for lack of price determination must be declared when the price provided by the agreements is only provisional and requires the combination of several elements . Also, a transfer of shares 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, without the transfer deed allowing it to be determined objectively, and without a new agreement of will being necessary to set the amount of these two elements . Similarly, a promise to purchase shares that sets a price for only some of them, while the price for the others is neither determined nor determinable, is tainted with invalidity . Conversely, the price of a promise to transfer shares is determinable if it is set by reference to the amount of shareholders' equity on a precisely specified date, to the exclusion of any other complementary valuation element . However, it is not enough for the parties to set a price for the transfer to be valid. Indeed, the setting of this price must not be subject to the exclusive will of one of them . Nevertheless, a promise to transfer shares does not rely on a potestative condition in favor of the transferee when, although the option exercise is left to their discretion, it remains subject to the fulfillment of external factors independent of their sole will .

In accordance with Article 1843-4 of the Civil Code, the price of a transfer of shares can be determined by an expert in case of disagreement between the parties. Indeed, in cases where the law refers to this Article to set the price of a transfer of an associate's shares, the value of these shares is determined, in case of dispute, by an expert appointed either by the parties or, failing agreement between them, by a decision of the president of the competent Judicial Court or Commercial Court, who rules according to the expedited procedure on the merits and without possible appeal. The appointed expert is required to apply, when they exist, the rules and methods for determining the value provided by the company's statutes or by any agreement binding the parties. In cases where the statutes provide for the transfer of an associate's shares or the buyback of their shares by the company without their value being determined or determinable, it is determined, in case of dispute, by an expert appointed under the same conditions. The appointed expert is required to apply, when they exist, the rules and methods for determining the value provided by any agreement binding the parties. In the absence of agreement on some of the elements intended to allow the calculation of the price of the shares and the appointment by the parties themselves, the only ones authorized to do so, of an expert to evaluate the goods in stock, the price of the proposed transfer is neither determined nor determinable and the transfer must be annulled . Similarly, a promise to transfer shares must be annulled when it provides that in the absence of agreement between the parties, the transfer price will be set by third parties according to rules lacking sufficient precision and not guaranteeing that it will be estimated based on elements external to the will of the transferee .

Finally, in all other cases, the determination of the price may be left to the arbitration of a third party . However, this party must not be dependent on either of the parties .

Civil Code, Art. 1591. See for illustrations, Cass. com., 21 September 2022, LawLex202200011213JBJ, specifying that the shareholders' agreement providing for the transfer of shares cannot be subject to enforcement measures when the price of these shares cannot be determined other than by terms that merely cap the amount in certain circumstances.

Cass. com., 5 May 1970, LawLex202300000256JBJ.

Cass. 1re civ., 2 December 1997, LawLex202200008801JBJ, affirming that if the price of the transfer of shares can be left to the arbitration of a third party, it is important that the common agent of the contracting parties is not dependent on one of the parties, having served as a financial consultant to the latter during the two years preceding the sale and received fees in that capacity.

Cass. com., 5 April 2005, LawLex202300000306JBJ.

Cass. com., 9 October 2012, LawLex202300000309JBJ.

Cass. com., 3 February 2015, LawLex202300000260JBJ.

Cass. 1re civ., 12 November 1974, LawLex202300000258JBJ, holding that the transfer of shares in a joint stock company is void if the transferee has the ability to influence the determination of part of the additional price to be paid after the sale.

Cass. com., 28 May 2025, LawLex202500004445JBJ.

Cass. com., 23 January 1990, LawLex202300000382JBJ.

Cass. com., 19 December 2006, LawLex202300000263JBJ.

Company Law (en cours)

97. Determination by the parties or by a third party

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97. Determination by the parties or by a third party

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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