Shareholder disputes lawyer Paris: deadlock, abuse, negotiated exit

Abuse of majority is a decision taken by the majority shareholders against the company interest and for the sole purpose of favouring them to the detriment of the minority shareholders (Cass. com., 17 June 2008, Marina Airport). Abuse of minority is the opposite attitude: a minority shareholder uses their vote to block a decision essential to the survival of the company, without being able to justify a legitimate interest (Cass. com., 9 March 1993, No. 91-14.685). The first allows annulment and compensation. The second can lead to the appointment of an ad hoc agent who votes in place of the minority shareholder.

The company interest, mentioned in Article 1833 of the Civil Code, is the company's own interest, distinct from the sum of the individual interests of the shareholders. It is assessed according to the economic durability of the company, its ability to meet its commitments, to grow and to employ its staff. The PACTE Act of 2019 added that the company is managed taking into consideration the social and environmental issues of its activity. The judge reviews the company interest to characterise a possible abuse.

The ut singuli action is the civil liability action brought by one or more shareholders against the manager on behalf of and for the benefit of the company (Article 1843-5 of the Civil Code). It is useful where the company, run by the person under challenge, refuses to act against them. Any shareholder may bring it, alone or with others. The compensation goes to the company. The costs are advanced by the claimant shareholders and reimbursed by the company if the action succeeds. The firm checks shareholder status, the limitation period and the substance of the faults alleged.

Every shareholder has a standing right to disclosure of corporate documents (articles of association, accounts, lists of shareholders) and a prior right before any general meeting (report, resolutions, related-party agreements). For an SARL, Articles L. 223-26 and R. 223-18 of the Commercial Code require disclosure fifteen days before the annual general meeting. For an SAS, the organisation is more flexible but the fundamental right to information remains. A refusal to provide documents justifies applying to the president of the commercial court in urgent proceedings to obtain compelled disclosure under a penalty payment.

Article 1843-4 of the Civil Code provides that, failing amicable agreement on the price of company rights in cases where a transfer or buy-back is provided for, an expert is appointed either by the parties or by judgment of the president of the competent judicial court or commercial court, ruling under the accelerated procedure on the merits and without any possible appeal. The valuation is in principle binding on the parties. The value of the rights must be determined at the date closest to actual repayment (Cass. com., 15 January 2013, No. 12-11.666). A gross error in the method allows the report to be set aside. The cost of the expert is generally shared.

An ad hoc agent is an independent third party appointed by the president of the commercial court to carry out a precise and temporary task within the company: convening a meeting, voting in place of a blocking shareholder, overseeing a sensitive transaction. The request is made in urgent proceedings. Since Cass. com., 9 March 1993, No. 91-14.685, the agent may vote in place of an abusive minority shareholder on a decision consistent with the company interest. The firm first checks that the task is precise, temporary and consistent with the company interest, failing which the application fails.

Yes. Article 1844-7, 5° of the Civil Code provides for judicial dissolution where disagreement between shareholders paralyses the operation of the company. The paralysis must be effective and lasting, not a mere disagreement. Proof comes from the minutes of failed general meetings, reports of lack of quorum, and the inability to approve the accounts or appoint a manager. Dissolution is the last resort, because it leads to liquidation and the loss of going-concern value. The firm favours other routes (agent, mediation, negotiated exit) before considering this option.

It is almost always preferable, unless urgency is established. Mediation is confidential, faster than a trial, and preserves the possibility of continuing to work together. The commercial court of Paris has affiliated mediation centres. Some shareholders' agreements impose a mandatory prior mediation clause, the breach of which makes the court action inadmissible. The firm examines the articles of association and the shareholders' agreement before any formal notice in order to identify such clauses.

Subject to the specific provisions governing mergers, demergers and changes in share capital, an action for nullity of the company, of corporate decisions subsequent to its formation or of contributions is time-barred after two years from the day on which the nullity is incurred (Article 1844-14 of the Civil Code). A civil liability action against the directors or the chief executive officer of an SA is time-barred after three years from the harmful act or its disclosure (Article L. 225-254 of the Commercial Code). For other civil liability actions, the ordinary five-year limitation period applies (Article 2224 of the Civil Code). A prompt consultation avoids forfeiture.

No. The Court of Cassation has held that any provision of an exclusion clause whose object or effect is to deprive the shareholder concerned of the right to vote on that proposal is deemed unwritten (Cass. com., 29 May 2024, No. 22-13.158, on the basis of Articles 1844 and 1844-10 of the Civil Code and L. 227-16 of the Commercial Code). The shareholder must therefore be able to vote, even against their own exclusion. This rule, laid down for the SAS, invalidates contrary provisions of the articles of association.

The loss is calculated from the actual loss suffered by the minority shareholder: dividend not received, reduced valuation, loss of a chance of a sale at a better price. It is necessary to produce the annual accounts, comparable distribution policies in the sector, the valuation of the shares before and after the disputed decision, and an expert report where the amount claimed exceeds a few tens of thousands of euros. The court generally awards between 30% and 80% of the theoretical undistributed dividend.

Yes, for disputes between shareholders relating to the operation and management of a commercial company whose registered office is in Paris (Article L. 721-3 of the Commercial Code). For a civil company, the judicial court has jurisdiction. An arbitration clause in the articles of association or the shareholders' agreement may displace these jurisdictions in favour of an arbitral tribunal. The firm regularly pleads before the commercial court of Paris and handles urgent proceedings before the president of the chamber.

Up-to-date articles of association with all amendments, signed shareholders' agreement, minutes of the last three general meetings, annual accounts for the last three financial years, approved related-party agreements, lists of shareholders and the breakdown of the share capital, written exchanges with the other shareholders and the manager (emails, letters, formal notices), notification of any disputed notice of meeting with its acknowledgment of receipt. The firm uses these documents to characterise the dispute and determine the strategy.

Fees are quoted case by case according to the stakes, the complexity, the number of proceedings and the foreseeable duration. A pre-litigation strategy with formal notice and negotiation is generally priced from €3,500 incl. VAT. Urgent proceedings for an ad hoc agent or an expert appraisal are priced between €5,000 and €12,000 incl. VAT depending on the difficulty. A summons on the merits requires a more substantial budget, often above €15,000 incl. VAT. The firm provides a written quote after reading the documents.

Urgent proceedings for disclosure of documents or the appointment of an ad hoc agent obtain a hearing within four to eight weeks, and a decision soon afterwards. A summons on the merits before the commercial court of Paris generally lasts between ten months and two years, depending on the complexity of the case and the attitude of the parties. A court-ordered expert appraisal can extend the proceedings by a further six to twelve months. Most cases are settled by agreement before the hearing on the merits, once the balance of power becomes clear.