Share transfer lawyer in Paris: price, approval and warranty.

SARL shares require a written deed, service on the company and publication in the commercial register, as well as an approval procedure in the case of a transfer to a third party (Article L. 223-14 of the French Commercial Code, the Code de commerce). SAS or SA shares are transferred by a share transfer form and entry in the shareholder account, with an approval clause that is possible but optional in the articles of association (Articles L. 227-14 and L. 228-23 of the Commercial Code). Registration duties differ sharply: 3 per cent on SARL shares against 0.1 per cent on unlisted shares.

For an SARL, approval is mandatory for a transfer to third parties outside the company. The articles of association may require a stronger majority than half, but cannot remove the approval requirement (Article L. 223-14 of the Commercial Code). For an SA and an SAS, approval is optional and applies only if it appears in the articles of association. Shareholders' agreements often add a contractual pre-emption or approval right, enforceable only against the signatories.

There are three main methods: valuation based on revalued equity, the comparables method, and the discounted cash flow (DCF) method. In practice, the price results from a negotiation that combines several approaches. It may be fixed at signature, or include an additional price payment (earn-out) indexed to future performance. A clear calculation formula in the sale and purchase agreement avoids later disputes.

Where the parties do not agree on the price but have provided for a calculation method, the expert appointed under Article 1843-4 of the French Civil Code (Code civil) decides. The Commercial Chamber reiterates (Cass. com. 28 May 2025, No. 24-13.902) that a unilateral promise becomes a sale as soon as the option is exercised, provided the price is determinable under an agreed formula. The expert does not create the contract but completes a contract that has already been formed. The matter is brought by summons before the president of the commercial court, ruling under the accelerated procedure on the merits.

Escrow is a blocked account held by a trusted third party (notary, lawyer, bank) that retains part of the price for the duration of the warranty and indemnity agreement. If the buyer invokes the warranty for a liability that comes to light, the escrow is called on first, which spares the seller from having to repay funds already spent and the buyer from having to pursue an insolvent seller. It is generally 10 to 20 per cent of the price.

It is the seller's undertaking to indemnify the buyer for any liability revealed after the transfer whose cause predates it (tax reassessment, employment tribunal claim, forgotten debt), or for any reduction in assets of the same origin. Four parameters are negotiated: the scope covered, the duration (often two to five years, extended to the limitation period for tax matters), the overall cap and the deductible per claim. The firm systematically negotiates these clauses before signature.

The seller is bound by the statutory warranty against eviction resulting from the seller's own acts (Article 1626 of the Civil Code), even without a non-compete clause. In practice, the seller cannot restart an activity that diverts the customers of the company sold or that makes it impossible to carry on the business acquired. The sanction may go as far as an order to cease the competing activity, together with compensation. In practice, a precisely drafted non-compete clause defines the boundaries and makes proof easier.

For SARL shares, the transfer is enforceable against the company by service by a commissaire de justice (judicial officer) or by filing an original of the transfer deed at the registered office (Article 1690 of the Civil Code for assignments of claims, supplemented for shares). For SAS and SA shares, enforceability results from entry in the shareholder account in the share transfer register. Publication at the court registry makes the transfer enforceable against third parties.

For an individual seller, the capital gain is subject to the single flat-rate levy (PFU) of 31.4 per cent (12.8 per cent income tax and 18.6 per cent social charges), with an option for the progressive scale. For shares acquired before 2018, relief for length of holding may apply if the progressive scale is chosen. A company director retiring may benefit from a fixed allowance of €500,000 under strict conditions (Article 150-0 D ter of the General Tax Code).

Unless otherwise agreed, the buyer bears the registration duties. For SARL shares, the rate is 3 per cent after an allowance of €23,000 calculated pro rata to the number of shares transferred out of the total number of shares. For shares in unlisted companies, the rate is 0.1 per cent. For shares in companies whose assets are predominantly real estate, the rate is 5 per cent of the real value of the buildings.

Closing is when the shares are actually transferred and the price paid. The documents signed at closing are: the share transfer form (SAS and SA shares) or the deed of transfer (SARL shares), the warranty and indemnity agreement, the release of the seller's personal guarantees, the escrow agreement if there is one, the resignations from corporate offices and the minutes appointing the new directors. The firm organises the closing as a precise roadmap.

If the contract so provides, the transfer may be terminated automatically under a termination clause, after an unsuccessful formal notice. The seller recovers the shares but must return the sums already received. Failing that, court proceedings for termination or for specific performance are required. To limit this risk, the parties provide in advance for payment in cash, vendor financing secured by a pledge of the shares or by a bank guarantee, and a clear termination clause.

Yes, if the seller concealed decisive information. The Commercial Chamber reiterates (Cass. com. 18 September 2024, No. 23-10.183, published in the Bulletin) that an error resulting from fraudulent misrepresentation is always excusable, thereby ruling out any argument based on the buyer's lack of diligence. The time limit for bringing an action is five years from discovery of the fraud. The consequences may be annulment of the transfer or damages.

Disputes between shareholders and between seller and buyer fall within the jurisdiction of the commercial court of the registered office. For a company registered in Paris, this is the Paris commercial court. The articles of association or the shareholders' agreement may provide for an arbitration clause that overrides this jurisdiction. The firm regularly pleads before this court in post-closing disputes, warranty claims and challenges to approval.

Fees vary with complexity (value of the transaction, number of sellers, presence of an earn-out, scope of the warranty and indemnity agreement, ongoing litigation). For a simple transfer between two shareholders without heavy audit work, full assistance (audit, negotiation, drafting, closing) generally starts at €4,800 incl. VAT. For a transaction of more than €500,000 with a full warranty and escrow, the fixed fee is adjusted to the scope. The firm provides a written quote after scoping.