The transfer of shares & partners in the SARL

The LLC should not be too closed a company, which would prevent a partner from selling his shares, but it should not be too open either in order to avoid speculation and the entry of undesirables.

The transfer of shares is therefore subject to an approval procedure which limits the transferor's choice of transferee while preserving his freedom to transfer his shares.

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Scope of application of accreditation

The approval of the transferee is required when the transfer is made to a third party to the company. Approval is required regardless of the type of transfer of ownership (voluntary or forced, in the case of an exchange or donation).

Transfers between spouses or between ascendants and descendants are, in principle, excluded from the scope of application of the approval.

The shares are also freely transferable by way of inheritance or community liquidation.

However, it may be required even in the case of a transfer or transmission of shares to a spouse, ascendant or descendant.

While transfers between partners are, in principle, free, the articles of association may provide that the legal approval procedure will apply in this case as well.

Ultimately, approval has a broad legal scope which can be extended by the articles of association to all transfers and transmissions of shares to all transferees.

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The accreditation procedure

The legal approval procedure applies to all transfers requiring approval, whether the approval is required by law or by the articles of association.

The process is as follows:

• - the transferor must draw up a draft transfer agreement including the name of the prospective transferee, the number of shares to be transferred, the price and the date of transfer;
• - notification of the proposed transfer to the company and the partners: in principle, it is the transferor who must notify, but the transferee may validly make the notification; the penalty for failure to notify is the nullity of the transfer, without it being possible to confirm it.
• - the decision of the partners: the manager who receives the notification must consult the partners. Approval is given by a double majority: the approval decision is taken by a majority of the partners (per head), representing at least half of the shares (the majority in shares was previously 3/4). However, the articles of association may provide for a higher majority. The decision to approve as well as the refusal of approval must be taken within three months of the last notification, otherwise the approval is deemed to be granted.

Finally, in case of refusal of approval, the transferor is not locked into his shares: the company is obliged to acquire them or to purchase them, within a period of 3 months from the refusal, if the transferor has held his shares for more than two years. The deadline may be extended by a maximum of 6 months by the judge at the request of the manager. The price of the shares is set by an expert.

Three "novelties" in the accreditation procedure:

• - The transferor's right of withdrawal in the event that the prospective transferee refuses approval. The company will be obliged to acquire or have acquired (by an approved third party or one or more partners) only if the transferor does not renounce the transfer.
• - the costs of the valuation to determine the sale price are borne by the company.
• - the deadline for the partners to respond may be extended by the judge by six months in case of refusal of approval.

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