NEWS

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23-11-2018

 

Nullity of an assignment made in violation of a shareholders' agreement :

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By a decision dated June 27, 2018 (appeal no. 16-14.097), the Commercial Chamber of the Court of Cassation seems to reinforce the effectiveness and binding force of shareholders' agreements by pronouncing the nullity of an assignment of actions taken in violation of such an agreement. 

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In this case, the partners of an SAS had concluded, in the presence of the latter, a shareholders' agreement for a period of ten years.

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This pact contained in particular a promise to transfer SAS shares granted by certain

partners in the event of termination of their salaried functions. It also stipulated non-transferability of the securities covered by the promise throughout its duration. 

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In addition, the statutes of the SAS included a clause sanctioning of nullity the transfer of shares contravening the stipulations of the shareholders' agreement.

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Nearly four years after the conclusion of the pact, one of the partners (promising under the terms of the pact) sold part of his shares to third parties. 

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The manager of the SAS then refused to register the movement orders relating thereto on the grounds that the transfers contravened the stipulations of the shareholders' agreement.

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Faced with this refusal, the assigning partner sued the SAS for the purpose of ordering it to make the entries relating to the said assignments in the individual shareholder accounts.

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The trial judges and the Court of Appeal then granted this request. 

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According to the Court of Appeal, the seller had terminated the promise of sale provided for in the shareholders' agreement before the completion of the transfers and before any exercise of the option by the beneficiaries. In addition, no provision of the shareholders' agreement or the company's articles of association provided for the sanction applicable in the event of early termination of the agreement, assuming it to be at fault, so that it was not established that the parties wished derogate from the provisions of the old article 1142 of the Civil Code ("any obligation to do or not to do is resolved in damages in the event of non-performance on the part of the debtor").

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However, the Commercial Chamber quashed the appeal judgment under article 1134 of the Civil Code ("Agreements legally formed take the place of law for those who made them. They can only be revoked by their mutual consent. , (…)") on the grounds that in application of the statutory stipulations of the SAS, "the unilateral revocation of the promise and, consequently, the disputed transfer constituted a violation of the shareholders' agreement resulting in the nullity of the transfer" at benefit of third parties.

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The judges of the Court of Cassation indeed considered that the pact could not be the subject of a unilateral termination by the transferor insofar as it had been concluded for a fixed period. 

As a result of the irregular termination of the pact and a fortioride the promise, the Commercial Chamber applied the statutory stipulations for the purpose of pronouncing the nullity of the sale made in violation of the pact._cc781905-5cde-3194 -bb3b-136bad5cf58d_

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This solution thus appears to comply with Article L. 227-15 of the Commercial Code (which is however not referred to by the Court of Cassation), which provides that "Any assignment made in violation of the statutory clauses is void" and seems therefore reinforce the practice of introducing a reference to the shareholders' agreement in the articles of association in order to give the latter greater efficiency than that of a simple contract.

Although this decision should be welcomed in that it reinforces the effectiveness of extra-statutory acts, we must nevertheless question our scope, particularly in the light of the new provisions of the Civil Code (not applicable at the time of the dispute).

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In particular, the articulation of this solution with the new article 1124 paragraph 3 of the Civil Code may raise questions. For the record, this article provides that "the contract concluded in violation of the unilateral promise with a third party who knew of its existence is void.". 

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In this case, the Commercial Chamber makes no reference to whether or not the third party is aware of the existence of the promise contained in the shareholders' agreement to consider the nullity of the assignment._cc781905-5cde-3194-bb3b- 136bad5cf58d_

By refraining from addressing this point, the Court of Cassation may have considered that the bad faith of the third party was beyond doubt in this case. 

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Or perhaps it considered that Article L. 227-15 of the Commercial Code should prevail over Article 1124 of the Civil Code (special laws derogating from general laws), the first of these texts in no way taking into account the good faith of the third party to mitigate the penalty for the violation of the statutory provisions. 

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As this judgment of the Court of Cassation is not the subject of any publication in the bulletin of the Court of Cassation and does not appear on the Légifrance site, we can only call on the High Court to confirm this solution which was expected by the practitioners but which still raises certain questions.

 

FabriceSegurel, lawyer, Cabinet ARTLEX, Nantes
MarineBaron, lawyer, Cabinet ARTLEX, Nantes

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