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Company Law (en cours)

A partner in a civil company may dispose of their ownership interests by transferring or pledging them.

Unlike shares, ownership interests do not constitute marketable securities. Article 34 of Decree No 78-704 of 3 July 1978 indeed provides that the "certificates representing ownership interests" issued in the name of each partner for each interest or multiple interests or for the total interest …

Transfers and pledges

A partner in a civil company may dispose of their ownership interests by transferring or pledging them.

Unlike shares, ownership interests do not constitute marketable securities. Article 34 of Decree No 78-704 of 3 July 1978 indeed provides that the "certificates representing ownership interests" issued in the name of each partner for each interest or multiple interests or for the total interests held by them must be very clearly marked with the mention "non-marketable." As a result, a wife married under the legal community regime cannot transfer the ownership interests of a real estate civil company without her husband's consent . Furthermore, Article 1861 of the Civil Code provides that they can only be transferred with the approval of all partners , it being understood that only the partners whose consent is required for the transfer of ownership interests and the civil company can invoke the provisions of Article 1861 of the Civil Code relating to the approval procedure . The transferor  or the transferee  cannot therefore retrospectively rely on the absence of approval to withdraw from their commitment.

The articles of association may derogate from the rule of unanimity and provide that approval will be obtained by a majority they determine, or that it may be granted not by the partners, but by the managers. They may also exempt from approval the transfers made to partners or to the spouse of one of them. Unless otherwise provided in the articles of association, transfers made to ascendants or descendants of the transferor are not subject to approval. According to the Court of Cassation, the exemption from approval also applies to the legatee of the deceased partner .

The partners are never compelled to grant approval. Indeed, Article 1862 provides that they may decide to acquire the shares that the partner wishes to transfer . However, this option does not grant the other partners any preemption right: in the event of refusal of approval and a buyback offer by the partners, the transferor retains the right to withdraw from the transfer and keep their shares .

If none of the partners acquires the shares, the company may have the shares acquired by a third party designated unanimously by the other partners or according to the procedures provided for in the articles of association. It may also proceed with the repurchase of the shares for the purpose of cancellation. Article 1863 concludes by stating that if no purchase offer is made to the transferor within six months from the last notification of the transfer project, approval is deemed granted, unless the other partners decide, within the same period, on the early dissolution of the company.

The transfer of ownership interests is also subject to the substantive conditions applicable to any contract, namely the requirement of good faith, the duty of loyalty, the absence of vitiated consent, and finally the determination of a determined or determinable price which, moreover, must not be derisory.

Finally, it is only definitive subject to compliance with its enforceability formalities. In accordance with Article 1865, the transfer of ownership interests, which must be recorded in writing, is made enforceable against the company in the forms provided for in Article 1690 or, if the statutes so stipulate, by transfer on the company's registers. No other method, such as the signing of the notarized transfer deed by the company's legal representative , or the publication of the deed in the RCS , is permitted. With regard to third parties, the transfer is only enforceable after these formalities have been completed and after publication in the trade and companies register. However, case law considers that the transfer of ownership interests in a real estate civil company (SCI) can be made enforceable against them, even if the transfer deed has not been filed with the commercial court registry, as long as the updated statutes recording this transfer have been published .

Furthermore, Article 1866 of the Civil Code expressly establishes the right of partners to pledge their shares as security for an obligation. To be valid, the pledge must be documented in writing . Previously subject to notification to the company or acceptance by the latter through an authentic act, the pledge of shares in civil companies was subject to a specific regime that significantly distinguished it from the pledge of shares in SNC or SARL. Indeed, it had to be registered in a specific register and enjoyed indefinite validity, exempting its author from any need for renewal. Since the reform of security law implemented by Ordinance No 2021-1192 of 15 September 2021, whose relevant provisions came into force on 1 January 2022, the pledge of shares in civil companies is now subject, like that of shares in SARL and SNC, to registration in the register of pledges without dispossession at the registry of the commercial court of the company's place of registration. The registration is now valid for only five years and must be renewed. If the partner granting the pledge is no longer required to notify the company, they now have the option to notify the partners and the company to obtain the approval of the transferee in the event of forced realization of the shares . Each partner may nevertheless substitute themselves for the purchaser within five clear days from the sale. If several partners exercise this option, they are, unless otherwise stipulated by clause or agreement, deemed purchasers in proportion to the number of shares they previously held. If no partner exercises this option, the company may repurchase the shares itself, with a view to their cancellation .

Cass. 1re civ., 9 November 2011, LawLex202300009757JBJ.

The necessity of obtaining approval applies both in cases of voluntary and forced transfer: the purchaser of the shares of an SCI is not entitled to contest the clauses and conditions of the specifications related to the auction, which specify that it will only be carried out in favor of a third party under the resolutory condition of obtaining approval under the conditions provided in the statutes, and that the partners are free to acquire the shares as the company is to proceed with their buyback, See Cass. 3e civ., 14 January 2009, LawLex202200006530JBJ.

Cass. com., 18 December 2007, LawLex202200009637JBJ; Cass. 3e civ., 25 April 2007, LawLex202300009758JBJ.

Civil Code, Article 1867, para. 2: the notification must take place at least one month before the sale.

Cass. 3e civ., 9 November 2005, LawLex202300009809JBJ, holding that the contribution of shares of a real estate civil company (SCI) to another company is unenforceable against the first when the approval of the transferees has not been requested.

Cass. 3e civ., 6 December 2000, LawLex202300009755JBJ;

Cass. 3e civ., 19 July 2000, LawLex202200008533JBJ, D. 2002, 480, obs. HALLOUIN; BJS 2000, 1083, obs. LE CANNU; French Company Law 2000, No 168, obs. BONNEAU; Rev. sociétés 2000, 437, obs. BARBIERI.

Cass. com., 5 April 2018, LawLex202200006512JBJ, considering that the articles of association of an agricultural civil company, which provide for the continuation of the company in the event of the death of a partner, between the surviving partners and their heirs and assigns, by exempting them from approval, also apply to the legatee of the deceased partner.

Cass. com., 29 September 2015, LawLex202300010444JBJ, holding that the partners of an SCEA make a valid decision to refuse approval of the heirs of a deceased partner, even if this decision was made outside the framework of an extraordinary general meeting, as long as they unanimously decided to take over the shares or have them taken over by the company for cancellation, chose an expert to evaluate them, and, failing that, authorized the manager to initiate legal proceedings to determine their value.

Cass. com., 7 December 2010, LawLex202300004005JBJ.

Cass. 3e civ., 11 October 2000, LawLex202300000341JBJ.

Cass. 3e civ., 25 May 2022, LawLex202200010135JBJ, D. 2022, 1882, obs. LAMAZEROLLES, emphasizing that the publication of the transfer of ownership interests in the Trade and Companies Register is solely intended to ensure its enforceability against third parties, so the presumption of knowledge of the act resulting from the completion of this formality does not apply in relations between the partners.

Company Law (en cours)

661. Transfers and pledges

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661. Transfers and pledges

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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