Launching a French company is thrilling, but the excitement of new partnerships can quickly turn into uncertainty if things go wrong. A well‑drafted shareholders’ agreement provides the confidentiality, flexibility, and protection you need to keep the focus on growth. Below we explore why it’s essential, what to include, and how to make it legally robust.
Why a shareholders’ agreement matters
A shareholders’ agreement, also known as a pacte d’actionnaires, is a private contract between two or more partners in a French company (SAS, SA, SARL, or any other form). It governs their relationship outside the Articles of Association and can be tailored to the specific needs of the partners.
Below are the main reasons you might want to put such an agreement in place:
- Targeted regulation: You can apply specific rules to certain partners only, or to all partners for a limited period, without altering the Articles of Association.
- Confidentiality: Unlike the Articles, the agreement is not filed with the Trade and Companies Register, so sensitive clauses (e.g., unusual dividend splits) stay private.
- Flexibility: The contract can be amended at any time, provided all signatories (or their successors) consent.
These points illustrate how a well‑crafted agreement can protect your interests while keeping the company’s public documents clean. Our Debt recovery specialists are ready to enforce your rights swiftly if a dispute does arise.
A well‑drafted shareholders’ agreement is the first line of defence against disputes that can arise as soon as the first round of funding closes. – Marc Timmermans, Partner, Tax/Corporate
What a shareholders’ agreement can contain
When drafting, you have a lot of freedom to tailor the content to your situation, as long as you respect French corporate law. Here are some of the most common provisions you might consider:
- Shareholding management: Clauses on holding, acquiring, or preserving shares.
- Entry of new partners / heir rights: Procedures for admitting new shareholders or handling inheritance.
- Dispute resolution: Mechanisms for settling disagreements between partners.
- Sanctions for misconduct: Penalties for breach of fiduciary duties.
- Financial and voting rights: Allocation of dividends, voting powers, and other corporate rights.
- Power distribution: How management authority is shared among shareholders.
- Non‑competition: Restrictions preventing partners from competing with the company.
- Balance between partners and legal representatives: Rules governing the relationship with the board.
- Departure of a partner: Including an exclusion clause.
Including these elements helps create a comprehensive framework that anticipates future events and reduces the risk of conflict. Our Tax assistance team can help ensure any financial clauses are tax‑efficient.
Sample clauses to consider
To give you a concrete sense of what a clause looks like, here are three frequently used examples:
- Anti‑dilution clause: Protects existing shareholders from dilution during capital increases by guaranteeing their percentage is maintained through various techniques.
- Withdrawal clause: Allows a shareholder (often a minority) to exit the company and receive the fair value of their shares without having to find a buyer.
- Management control clause: Gives minority shareholders specific veto or decision‑making powers over key management actions.
These sample clauses demonstrate how you can address specific concerns that often arise in shareholder relationships. Our advisors also handle complex Business and commercial issues that may affect the interpretation.
Anti‑dilution provisions are essential when you bring in foreign investors; they must be clearly defined to avoid unexpected tax consequences. – Marc Timmermans, Partner, Tax/Corporate
Can a foreign shareholders’ agreement be used for a French company?
If you are a non‑French investor, you might be tempted to use a template from your home jurisdiction, but that can create problems. French corporate law governs the internal relationships of a French company, and the agreement must respect both written and unwritten principles.
Key points to keep in mind:
- The drafter must adapt the clauses to the legal form of the company (SAS vs. SARL, for example).
- Foreign‑law provisions that conflict with French rules should be avoided.
- Engaging a French‑qualified lawyer who specializes in shareholders’ agreements is strongly recommended.
It is essential to draft the agreement very carefully. It is often drawn up at the start of the life of a company or partnership, when the financial stakes are modest. However, as the company grows and the stakes become higher, it may be regrettable not to have a more secure document. At this stage, conflicts between partners can escalate considerably, and it may be too late to amend a poorly drafted agreement.
For a deeper look at French corporate law, see the relevant section of the Code de commerce on Légifrance : Article L225‑39.
In France the contractual freedom granted by the Civil Code lets you embed very specific clauses, as long as they don’t breach public‑policy rules. – Marc Timmermans, Partner, Tax/Corporate
How effective is a shareholders’ agreement
A shareholders’ agreement is binding only on the signatory partners and the company itself; it does not create rights for third parties. However, there is an important exception: if a third party suffers loss because of a breach, they may invoke the agreement to claim compensation under French contract case law.
If a signatory fails to comply, the court can order damages or enforce a contractual penalty clause. For more on French contract law, the authoritative source is Légifrance : Le contrat.
Duration options for a shareholders’ agreement
The term of the agreement can be structured in several ways, depending on the partners’ preferences:
- Linked to the presence of certain parties: Ends when a specified shareholder leaves.
- Fixed term: A predetermined period agreed upon by the parties.
- Indefinite: Continues until terminated by mutual consent.
- Aligned with the company’s life: May expire when the company is dissolved.
Choosing the right duration helps ensure the agreement remains relevant throughout the company’s evolution. Our team can also help you with the initial Company setting-up to make sure your entity is compliant from day one.
The shareholders’ pact must be viewed as a contract of trust: it anticipates conflicts and protects the interests of all partners. – Pierre‑Yves Gautier, Professor of Corporate Law, University Paris II Panthéon‑Assas
Get the right legal support to protect your shares in France
My French Lawyer’s registered attorneys are at your disposal to answer any questions about a shareholders’ agreement in France. We connect you with the most qualified lawyers for your project and provide precise, up‑to‑date advice that reflects the latest corporate law. Drafting a robust shareholders’ agreement early in a company’s life can prevent costly disputes later. For personalized guidance on French shareholders’ agreements, contact our team of registered lawyers. Reach out today for a free consultation and gain the peace of mind that comes from expert support.