Startup lawyer in Paris: organising founding shareholders, from share allocation to dispute.

The right time is before the articles of association are signed, while the founders still get on and nobody knows the company's future value. At that stage it is easier to agree what will happen if one of them stops working, falls ill, is removed or wants to sell. The articles of association of an SAS freely set the conditions under which the company is run (Article L. 227-5 of the Commercial Code) and may provide for inalienability, approval or forced transfer of shares. The shareholders' agreement supplements this base with cross-promises and a price formula. Waiting for the first funding round carries a risk: investors then impose their own model, and a founder who has already stepped back may refuse to sign. The firm checks that the articles of association and the agreement answer each other, that each founder signs every document that concerns them, and that the definitions of departure are precise enough to be applied without interpretation. A clear rule written early prevents the separation from being settled by a balance of power, at the moment when the company least needs a dispute.

No rule requires an equal split between founders. Each shareholder's rights in the share capital are proportional to their contributions (Article 1843-2 of the Civil Code), which means distinguishing money paid in, assets contributed and work promised. A contribution in kind, such as software or a domain name, is valued in the articles of association; in an SAS, the involvement of a contributions auditor (commissaire aux apports) may be waived unanimously within certain limits, but the shareholders are then jointly and severally liable for five years towards third parties for the value adopted (Article L. 227-1 of the Commercial Code). This liability rule does not apply where a contributions auditor has acted and his or her valuation has been adopted. Beyond the law, the allocation reflects an estimate of each person's future contribution. If that contribution is uncertain, an allocation combined with gradual vesting is better than a percentage gap negotiated once and for all. The firm also examines how power is distributed, which the articles of association can separate from the capital.

Yes, through a contribution in industry. An SAS may issue inalienable shares in return for such a contribution, and its articles of association set the terms of subscription and allocation (Article L. 227-1 of the Commercial Code). These shares do not count towards the formation of the share capital, but carry a right to share in profits and net assets, with an obligation to contribute to losses (Article 1843-2 of the Civil Code). A contribution in industry assumes work provided in complete independence. The Paris Court of Appeal held that "It follows from these provisions that the issue of industry shares requires an amendment to the company's articles of association in order to provide for the terms of issue and allocation of those shares" (our translation) (CA Paris, pôle 5 ch. 8, 28 February 2023, No. 21/15851). In that case, which went against the claimants, an employee presented as a "Partner" was not recognised as a shareholder: the articles of association mentioned no industry shares and the relationship of subordination excluded the contribution. A founder who is an employee and wants a share of the capital must therefore subscribe for shares or receive securities through a mechanism provided by law, rather than rely on an oral promise.

The term is not defined by law, but the mechanism is built with familiar tools. The most common is a unilateral promise under which each founder undertakes to transfer all or part of their shares if they leave the company, at a price that rises with time spent with the company. This arrangement is often called reverse vesting, because the founder holds the shares from the outset and may lose part of them. Article 1124 of the Civil Code protects the beneficiary: revoking the promise during the option period does not prevent the sale from being formed, and a sale concluded in breach of the promise with a third party who knew of its existence is null. For the mechanism to work, the promise must name the beneficiaries, the leaver events, the vesting schedule, the price formula and the period for exercise. A temporary inalienability clause, adopted unanimously (Article L. 227-19 of the Commercial Code), also prevents a founder from selling before the end of the schedule. The firm checks that the documents are signed by everyone and that the formula produces a consistent price for each departure date.

Where they have signed a unilateral promise to sell, their refusal does not prevent the sale if the beneficiary exercises the option in the form and within the period provided (Article 1124 of the Civil Code). They can, however, challenge whether the leaver event has occurred, the date adopted, the price formula or the regularity of the exercise. The route chosen matters. In a case that went against the departing founder, the Paris Court of Appeal refused to suspend, on an urgent application, transfers that had already been recorded: "It is therefore necessary to interpret the intention of the parties to the promise of 4 February 2020. Such an interpretation is beyond the powers of the urgent applications judge" (our translation) (CA Paris, pôle 1 ch. 3, 19 June 2025, No. 24/12506). The transfer therefore remained in place pending a debate on the merits: the need to interpret the promise and the absence of established imminent damage prevented suspension on an urgent application. A founder who challenges must act quickly, in writing, and prepare an action before the trial judge rather than rely on an urgent suspension.

The price first results from the agreed formula. Article 1843-4 of the Civil Code provides for an expert valuation where the law refers to it or where the articles of association impose the transfer without the value being determined or determinable; the expert appointed must then apply the valuation rules set by the articles of association or by any agreement binding the parties. For a promise freely given in a shareholders' agreement, the provision does not itself provide for an expert valuation: the agreed price applies, and the discussion then concerns the interpretation of the promise and the calculation of the formula. The Court of Cassation did, however, recall, under the former wording of the provision, that "Article 1843-4 of the Civil Code applies to transfers of corporate rights imposed by the company's articles of association or internal rules" (our translation) (Cass. com., 18 November 2020, No. 19-13.402). The basis of the transfer therefore determines the route: a contractual promise with an agreed price, or a transfer imposed by the articles of association without a determined or determinable price, which alone opens the way to an expert valuation in the event of a dispute. Where the articles of association of an SAS do not specify the price of a forced transfer, that price is fixed by agreement between the parties or, failing that, in accordance with Article 1843-4 (Article L. 227-18 of the Commercial Code). The firm recalculates the formula on the reference accounts and checks whether a dispute over value is a matter for the expert or a debate on the interpretation of the contract.

It can apply, but its implementation is scrutinised where the founder is also an employee. Article L. 1331-2 of the Labour Code prohibits fines and other financial penalties, and deems any contrary stipulation unwritten. A price discount triggered by misconduct committed in the course of employment can therefore be challenged. The Paris Court of Appeal, ruling on an employment matter, held that the judge "may analyse whether depriving the employee of the ability to exercise the options is a prohibited financial penalty, which cannot be the subject of a contractual provision" (our translation) (CA Paris, pôle 6 ch. 8, 28 November 2024, No. 23/05673). In that case, the forced transfer was held to be abusive and damages were awarded to the employee. In another case, the same court required that the grievances relied on be tied to the right capacity: "The fact that the respondent is both an employee and a shareholder of the company requires the appellants who allege misconduct against him or her to link it to the performance of the employment contract or to the status of shareholder" (our translation) (CA Paris, pôle 5 ch. 9, 25 April 2024, No. 23/03132). These outcomes depend on the clauses in issue and are not a general rule.

Deadlock is not unlawful in itself: each shareholder votes freely. It becomes wrongful where the vote prevents a transaction essential for the company with the sole aim of promoting the voter's interests to the detriment of the other shareholder. The Court of Cassation characterised this situation as abuse of equality in a judgment of 21 June 2023 (No. 21-23.298), and set aside the decision of the court of appeal which had ruled out the abuse "on grounds based on the unanimity rule that were incapable of excluding the existence of an abuse of equality" (our translation) (same judgment). In other words, having accepted unanimity at incorporation does not prevent a party from relying on the abuse. Proof concerns two points: the essential nature of the transaction refused and the sole aim of promoting one's own interests to the detriment of the other shareholder. The Court set aside the decision for lack of legal basis, without finding the abuse itself, and remitted the case. The minutes must make it possible to identify who voted against; failing that, the written exchanges between founders become all-important. The judgment rules on civil liability, that is, compensation for damage; the appointment of an agent to cast the vote is also seen, as in the abuse of minority case discussed below. Before reaching that point, the firm examines whether mediation or a negotiated buy-out offers a faster way out of the impasse.

They can where the articles of association require a majority that they are able to block, in particular for an amendment to the articles. This power is limited by abuse of minority rights. The Court of Cassation requires a twofold proof: "The existence of an abuse of minority requires proof, on the one hand, that the minority shareholder's attitude is contrary to the general interest of the company in that it prevents an operation essential to it and, on the other, that it stems from the sole aim of promoting their own interests to the detriment of the other shareholders" (our translation) (Cass. com., 13 March 2024, No. 22-13.764). In that case, the appeal judgment which had found abuse and appointed an ad hoc agent was partly set aside, as to the mission given to that agent to vote the amendment of the corporate purpose. For a startup, the essential transaction may be a capital increase on which cash flow depends, or a change of corporate purpose that has become necessary. The firm documents what the decision means in figures, the alternatives offered to the minority shareholder and their real reasons, in order to distinguish a legitimate disagreement from an abusive refusal.

Yes. On the terms they set, the articles of association of an SAS may provide that a shareholder must transfer their shares and have their non-financial rights suspended until the transfer (Article L. 227-16 of the Commercial Code). The clause is adopted or amended by a collective decision in the form set by the articles of association (Article L. 227-19). The articles of association set the conditions of exclusion and do well to designate the competent body, the grounds, the procedure and the method of calculating the price; where no price terms are set, the price is fixed by agreement between the parties or, failing agreement, in accordance with Article 1843-4 of the Civil Code (Article L. 227-18 of the Commercial Code). The procedure provided must be followed to the letter, but case law does not make every irregularity a ground of nullity. In a case that went against a shareholder excluded in 2017 from a limited liability company (SARL), decided under the former wording of Article L. 235-1 of the Commercial Code, the Versailles Court of Appeal recalled that "the fact that the excluded shareholder was unable to come and explain themselves before the body deciding on their exclusion is not a ground of nullity of the resolution ordering the exclusion" (our translation) (CA Versailles, ch. com. 3-2, 18 November 2025, No. 24/06500). Since 1 October 2025, breach of the articles of association is not in principle a ground of nullity (Article 1844-10 of the Civil Code), but the articles of association of an SAS may provide for the nullity of decisions taken in breach of their rules (Article L. 227-20-1 of the Commercial Code): a current exclusion is checked against these provisions and the clause. Specifying the date on which the shares are valued also avoids a debate over which date to use. The firm checks the clause, the notice of meeting, the vote and the price proposed.

Not by itself. Article 1844-7 of the Civil Code allows the court to order early dissolution for just cause, in particular where disagreement between shareholders paralyses the functioning of the company. The Court of Cassation set aside a court of appeal decision that had ordered dissolution "on grounds incapable of establishing that the disagreement between the shareholders paralysed the functioning of the company" (our translation) (Cass. com., 5 April 2018, No. 16-19.829). Paralysis must be shown: general meetings impossible to hold, accounts not approved, vital decisions prevented. An intermediate solution exists for a company that is still viable. The Paris Court of Appeal sets the limit in these terms: "While disagreement between the shareholders cannot by itself justify the appointment of a provisional administrator" (our translation) (CA Paris, pôle 1 ch. 8, 22 March 2024, No. 23/15250). It nonetheless upheld that appointment, because the company was no longer being managed and the paralysis threatened it with imminent peril. In a startup, dissolution most often destroys each person's value. The firm favours a negotiated buy-out of a founder's shares and reserves such applications for situations where the company can no longer function.

Everything depends on what they have signed and on their situation. A non-compete clause inserted in a shareholders' agreement is valid on certain conditions. The Court of Cassation states that "A non-compete clause provided for on the occasion of a transfer of corporate rights, whether inserted in the deed itself or in a shareholders' agreement, is lawful as regards the shareholders who subscribe to it provided that it is limited in time and space, and proportionate to the legitimate interests to be protected" (our translation) (Cass. com., 5 November 2025, No. 23-16.431). Real financial consideration is also required if the shareholder was an employee of the company on the day of their undertaking. The court also checks the actual duration of the prohibition: such a stipulation "is lawful only if it is proportionate to the legitimate interests to be protected having regard to the purpose of the contract" (our translation) (Cass. com., 13 November 2025, No. 24-10.747). The firm re-reads the clause, its duration, its scope and the consideration provided, then compares the departing founder's plan with the startup's actual activity. Each person's know-how and rights in their creations must be examined separately.