You live in London, New York, Dubai or Singapore, and the French company you built with a co-founder has stopped moving. The bank asks for two signatures and one never comes. The annual accounts are ready but the collective decision to approve them never reaches a majority. The co-founder refuses every buyer, blocks every capital increase, answers every proposal with silence, and still draws on the company. Distance makes everything slower: you cannot knock on the office door, you receive the greffe (the court clerk office that keeps the trade register) letters weeks late, and your Kbis (the official company identity extract issued by the greffe) still shows a company that exists on paper but no longer decides anything. This article explains, for a foreign founder who runs a French SAS (soci\u00e9t\u00e9 par actions simplifi\u00e9e, the flexible joint-stock company most foreign founders choose) from abroad, the two legal exits French law actually offers when co-founders deadlock: forcing the blocking co-founder out through an exclusion clause written into your articles, with a buyout price fixed by agreement or by expert, and asking a court to dissolve the company early for justes motifs (just grounds) when paralysis makes survival impossible. It also shows how to file and argue each route from Paris and Ile-de-France while you live outside France, which documents to gather first, and which alternatives can save the business without killing it.<\/p>\n
French SAS law starts from freedom of contract, and exclusion is no exception. The statute does not exclude anyone by itself. It lets your articles do it. Article L227-16 of the Commercial Code provides that \u00ab Dans les conditions qu’ils d\u00e9terminent, les statuts peuvent pr\u00e9voir qu’un associ\u00e9 peut \u00eatre tenu de c\u00e9der ses actions. \u00bb<\/a> The same article adds that \u00ab Ils peuvent \u00e9galement pr\u00e9voir la suspension des droits non p\u00e9cuniaires de cet associ\u00e9 tant que celui-ci n’a pas proc\u00e9d\u00e9 \u00e0 cette cession. \u00bb<\/a> In plain English: your articles (statuts, the constitutional contract of the company) may list the situations in which a shareholder must sell, who decides, by what majority, with what notice and what defence rights, and they may suspend the non-financial rights of that shareholder, mainly voting rights and information rights, until the transfer happens. Dividends and other financial rights survive, because suspension covers only non-pecuniary rights. If your articles say nothing, no exclusion is possible, however serious the misconduct, however total the blockade. Judges do not invent an exclusion power. They enforce the one you wrote, or they refuse to exclude.<\/p>\n That single sentence reshapes everything a foreign founder should review tonight. Open your articles and your shareholders agreement side by side and ask five questions. First, does an exclusion clause exist at all, and does it cover your situation: persistent absence from votes, refusal to approve accounts, competing activity, loss of a professional licence, criminal conviction affecting the business, or simply defined deadlock after two failed collective decisions? Second, who triggers it: the president alone, a defined majority, or every shareholder except the targeted one? Third, what procedure applies: formal notice by registered letter or bailiff, minimum notice period, written invitation to present observations, access to the file, reasoned decision? Fourth, what happens to the shares: purchase by the remaining shareholders in proportion to their holdings, purchase by a named third party, or repurchase by the company itself followed by resale or cancellation? Fifth, how is the price fixed: formula in the articles, reference to annual accounts, independent valuation, or expert determination? Each answer must appear in writing before the dispute. Courts annul exclusions pronounced under a clause adopted after the facts to target a named person without following the adoption rules, and they annul exclusions pronounced without respecting the contractual defence rights, even when the underlying grievance looks strong.<\/p>\n A second statutory tool covers a narrower but common foreign-founder pattern: the corporate co-founder whose control changes hands. Article L227-17 of the Commercial Code provides that \u00ab Les statuts peuvent pr\u00e9voir que la soci\u00e9t\u00e9 associ\u00e9e dont le contr\u00f4le est modifi\u00e9 au sens de l’article L. 233-3 doit, d\u00e8s cette modification, en informer la soci\u00e9t\u00e9 par actions simplifi\u00e9e. \u00bb<\/a> It continues that \u00ab Celle-ci peut d\u00e9cider, dans les conditions fix\u00e9es par les statuts, de suspendre l’exercice des droits non p\u00e9cuniaires de cet associ\u00e9 et de l’exclure. \u00bb<\/a> Control here means the company-law concept of article L. 233-3, direct or indirect holding of a majority of voting rights or power to appoint most corporate officers. When your co-founder is a foreign holding company and that holding is sold, merged or restructured without telling you, this clause lets the SAS suspend and exclude the changed shareholder, provided the articles organised that consequence in advance. The same paragraph extends the mechanism, under the same conditions, to a shareholder who acquired that status through a merger, split or dissolution. For groups with an SAS operating subsidiary in France and a holding abroad, this clause is the early-warning radar. Without it, you learn of the change of control from the BODACC (Bulletin officiel des annonces civiles et commerciales, the gazette where company life events are published) months later, when the new controller already votes.<\/p>\n Voting on exclusion deserves its own check, because the Cour de cassation (the French supreme court for civil and criminal matters) polices the boundary between what the majority may change and what requires unanimity. Article L227-19 of the Commercial Code draws that line. It states that \u00ab Les clauses statutaires mentionn\u00e9es aux articles L. 227-14 et L. 227-16 ne peuvent \u00eatre adopt\u00e9es ou modifi\u00e9es que par une d\u00e9cision prise collectivement par les associ\u00e9s dans les conditions et formes pr\u00e9vues par les statuts. \u00bb<\/a> Exclusion clauses therefore follow the majority your articles already set for collective decisions, which article L227-9 leaves to the articles to define when it provides that \u00ab Les statuts d\u00e9terminent les d\u00e9cisions qui doivent \u00eatre prises collectivement par les associ\u00e9s dans les formes et conditions qu’ils pr\u00e9voient. \u00bb<\/a> By contrast, the same article L227-19 provides that \u00ab Les clauses statutaires vis\u00e9es aux articles L. 227-13 et L. 227-17 ne peuvent \u00eatre adopt\u00e9es ou modifi\u00e9es qu’\u00e0 l’unanimit\u00e9 des associ\u00e9s. \u00bb<\/a> Approval clauses and change-of-control exclusion clauses need unanimity to be introduced or amended. The practical lesson for a founder abroad is direct: if your articles contain no exclusion clause today, adding one now requires the targeted co-founder’s vote under the applicable rule, and that vote will likely be negative once the conflict is open. The time to negotiate exclusion, approval and inalienability clauses is at incorporation or at the funding round, when everyone still signs. After deadlock sets in, you work with the clause you have, not the clause you wish you had. A related decision of the Cour de cassation of 2 February 2010, appeal number 09-10.701, shows how strictly judges review collective decisions in SAS companies when voting rights and pre-emption clauses change: the court quashed an appeal ruling that had decided on a ground raised by the court itself without inviting the parties to comment, recalling article 16 of the Code of Civil Procedure. The full ruling is published at Cour de cassation, chambre commerciale, 2 fevrier 2010, n\u00b0 09-10.701<\/a>. The message for exclusion votes is identical: respect the articles, respect adversarial debate, keep minutes, or the whole operation falls.<\/p>\n The most sensitive voting question is whether the targeted shareholder votes on his own exclusion. Article 1844 of the Civil Code states the principle that \u00ab Tout associ\u00e9 a le droit de participer aux d\u00e9cisions collectives. \u00bb<\/a> Every shareholder has the right to take part in collective decisions. Your articles may organise the exclusion vote and, as the litigation around SAS company LT Capital showed, may even provide that the shareholder whose exclusion is proposed takes part in the vote, but they must say so clearly and the clause must have been regularly adopted. In that case, which reached the Cour de cassation as a constitutional challenge on 12 October 2022, appeal number 22-40.013, an employee-shareholder who had resigned from his salaried duties was excluded by an extraordinary meeting after the articles had been amended to let the targeted shareholder vote on his own exclusion, and he challenged both the amendment and the exclusion. The full referral ruling is published at Cour de cassation, chambre commerciale, 12 octobre 2022, n\u00b0 22-40.013<\/a>. The dispute did not create a general right to exclude without a clause. It confirmed that exclusion lives and dies by the articles and the regularity of the votes that adopt and apply them. From abroad, organise this vote as a formal collective decision: convene by the contractual means with proof of receipt, attach the grievances and evidence, record attendance and proxies, let the targeted shareholder submit written observations even if relations are broken, have the minutes signed, and file the resulting share transfer through the Guichet unique (the single online business formalities portal run with the INPI, the French intellectual property and companies office) so the RCS (Registre du commerce et des soci\u00e9t\u00e9s, the trade register kept by the greffe) reflects the new shareholding and a fresh Kbis can be issued.<\/p>\n Assume the clause exists. The next battle is the price. Co-founders who agree on nothing else never agree on value, and the excluded shareholder will argue that the price imposed from abroad confiscates his work. Article L227-18 of the Commercial Code gives the hierarchy. It provides that \u00ab Si les statuts ne pr\u00e9cisent pas les modalit\u00e9s du prix de cession des actions lorsque la soci\u00e9t\u00e9 met en oeuvre une clause introduite en application des articles L. 227-14 , L. 227-16 et L. 227-17 , ce prix est fix\u00e9 par accord entre les parties ou, \u00e0 d\u00e9faut, d\u00e9termin\u00e9 dans les conditions pr\u00e9vues \u00e0 l’article 1843-4 du code civil. \u00bb<\/a> Agreement first, expert second. Where the articles already contain a complete valuation method, that method applies. Where they are silent or incomplete, and the parties cannot agree, an independent expert fixes the value. The same article adds a time discipline when the company itself buys back the shares: \u00ab Lorsque les actions sont rachet\u00e9es par la soci\u00e9t\u00e9, celle-ci est tenue de les c\u00e9der dans un d\u00e9lai de six mois ou de les annuler. \u00bb<\/a> Six months to resell or cancel, stated in the same sentence as the rule, so diary that deadline from the buyback date and publish the resulting capital change. A company that holds its own shares beyond that period without cancelling or reselling them invites annulment actions and auditor qualifications, and a foreign president who ignored the mail will discover the problem at the worst moment, when the bank reviews the Kbis before releasing funds.<\/p>\n The expert mechanism of article 1843-4 of the Civil Code is powerful but often misunderstood, and misunderstanding it from abroad costs money. The article states that \u00ab Dans les cas o\u00f9 la loi renvoie au pr\u00e9sent article pour fixer les conditions de prix d’une cession des droits sociaux d’un associ\u00e9, ou le rachat de ceux-ci par la soci\u00e9t\u00e9, la valeur de ces droits est d\u00e9termin\u00e9e, en cas de contestation, par un expert d\u00e9sign\u00e9, soit par les parties, soit \u00e0 d\u00e9faut d’accord entre elles, par jugement du pr\u00e9sident du tribunal judiciaire ou du tribunal de commerce comp\u00e9tent, statuant selon la proc\u00e9dure acc\u00e9l\u00e9r\u00e9e au fond et sans recours possible. \u00bb<\/a> The president of the competent judicial or commercial court appoints the expert by a fast-track decision that cannot be appealed, which means you obtain an expert quickly but you cannot challenge the appointment itself. The same article binds the expert to your contracts: \u00ab L’expert ainsi d\u00e9sign\u00e9 est tenu d’appliquer, lorsqu’elles existent, les r\u00e8gles et modalit\u00e9s de d\u00e9termination de la valeur pr\u00e9vues par les statuts de la soci\u00e9t\u00e9 ou par toute convention liant les parties. \u00bb<\/a> If your shareholders agreement sets a multiple of EBITDA, a discounted cash-flow method or a nominal-value rule for leavers, the expert must apply it. If no method exists, the expert values freely using standard business valuation approaches at the relevant date. The second paragraph covers cases where the articles provide for a transfer without any determinable value: there too, on dispute, an expert appointed the same way fixes the value, applying any agreed rules where they exist.<\/p>\n Two rulings of the Cour de cassation frame when that expert actually intervenes, and both matter before you file anything. In a ruling of 24 November 2009, appeal number 08-21.369, the court held that where the transfer price was determinable under pre-agreed calculation terms and the transfer had become complete when the purchase option was exercised, the court of appeal had correctly found that the price had not been disputed before the transfer was completed, and it therefore correctly rejected the late request for expert valuation. The court noted that \u00ab celui ci \u00e9tait d\u00e9terminable et que la cession \u00e9tait devenue parfaite d\u00e8s la lev\u00e9e de l’option \u00bb<\/a>. The lesson is procedural: contest the price early, in writing, before the transfer completes, or the expert door may close. A ruling of 11 March 2014 on a shareholders agreement with a forced sale at nominal value after resignation shows the mirror risk: sign a leaver clause promising your shares at nominal value on departure, and the court will enforce the clause you signed, leaving only narrow routes to challenge an abusive dismissal behind the resignation. For a fuller analysis of how French courts treat forced sales of SAS shares, price setting and approval refusals, see the companion guide on selling SAS shares from abroad: price, approval and tax challenges<\/a>, which follows this article and uses the same valuation rules.<\/p>\n From abroad, run exclusion as a documented file, not as an email exchange. Instruct a French lawyer to send the contractual formal notice, convene the collective decision with the contractual notice period, and arrange a videoconference vote with identity checks and a bailiff or lawyer as scrutineer where the articles allow remote participation. Keep every proof: articles in their current greffe version, shareholders agreement, cap table, bank statements showing blocked operations, copies of unanswered convocations, minutes of failed meetings, expert correspondence on price, and the transfer instruments. File the share transfer on the Guichet unique promptly, update the beneficial-owner register (the RBE, registre des b\u00e9n\u00e9ficiaires effectifs, which lists the natural persons ultimately controlling the company) where control changes, and order a fresh Kbis to confirm the RCS now shows the right shareholders. If the excluded co-founder sues for annulment, French courts will review the clause, the adoption majority, the defence rights and the price. A file that proves each step survives. A file built on oral grievances and retroactive paperwork does not. Where the family dimension overlaps with the business conflict, for example when a spouse claims rights over the shares during a divorce, coordinate both fronts using the method described in co-founder divorce and spouse claims over French company shares<\/a>, because matrimonial rights and exclusion price interact directly.<\/p>\n When the articles contain no exclusion clause, or when the required majority is unreachable because each co-founder holds half the votes, exclusion is legally unavailable and insisting on it wastes months. French law then offers the ultimate remedy: early dissolution ordered by a court for just grounds. Article 1844-7 of the Civil Code lists how companies end, and its fifth case provides that \u00ab La soci\u00e9t\u00e9 prend fin : […] 5\u00b0 Par la dissolution anticip\u00e9e prononc\u00e9e par le tribunal \u00e0 la demande d’un associ\u00e9 pour justes motifs, notamment en cas d’inex\u00e9cution de ses obligations par un associ\u00e9, ou de m\u00e9sentente entre associ\u00e9s paralysant le fonctionnement de la soci\u00e9t\u00e9 \u00bb<\/a>. M\u00e9sentente means lasting disagreement between shareholders, and paralysie means the company can no longer decide or act: no accounts approved, no president appointed or renewed, no strategic decision taken, bank mandates frozen, key contracts unsigned. Courts require both elements together, disagreement plus paralysis, not mere tension, not a single lost vote, not a difficult personality. A company that still approves its accounts, still pays its staff and suppliers, and still files at the greffe will not be dissolved because two shareholders dislike each other. A fifty-fifty SAS where every collective decision fails, where two rival presidents claim to represent the company before the bank, and where the URSSAF (the social-security collection agency) and the tax administration receive contradictory filings, meets the test.<\/p>\n The leading ruling foreign founders should understand is the Cour de cassation decision of 16 September 2014, appeal number 13-20.083. A minority structure holding half the capital of a property company asked for dissolution for paralysing disagreement, and the court of appeal had declared the claim inadmissible because the claimant’s own manager had caused the trouble by never convening meetings and by selling the company’s only building in disputed conditions. The Cour de cassation quashed that reasoning on receivability but restated the substantive filter. It held that \u00ab si la circonstance, \u00e0 la supposer \u00e9tablie, que l’associ\u00e9 qui exerce l’action est \u00e0 l’origine de la m\u00e9sentente qu’il invoque est de nature \u00e0 faire obstacle \u00e0 ce que celle-ci soit regard\u00e9e comme un juste motif de dissolution de la soci\u00e9t\u00e9, elle est sans incidence sur la recevabilit\u00e9 de sa demande \u00bb<\/a>. In English: being yourself the author of the discord does not make your claim inadmissible, but it can prevent the discord from counting as a just ground for dissolution. Any shareholder may file, including from abroad through a lawyer, but a shareholder who manufactured the blockade to force a cheap buyout will lose on the merits. Courts examine who refused convocations, who withheld documents, who diverted opportunities, and who proposed reasonable exits. File only with clean hands and paper to prove it: propose mediation in writing, propose a buyout at a reasoned price, propose a reciprocal put and call, attend every meeting even when you expect failure, and keep the bailiff records of each refusal by the other side.<\/p>\nB. Who votes, what majority applies, and how is the forced buyout price fixed when you disagree?<\/h3>\n
II. How to end or save a deadlocked French company when exclusion is impossible<\/h2>\n
A. When will a French court dissolve your company for co-founder deadlock, and how do you file from abroad?<\/h3>\n