Buying and Selling SARL Shares

Buying or selling shares (parts sociales) in a French SARL is not a simple handshake sale. A SARL is a closed company by design, so a transfer to an outsider needs the other shareholders' approval (agrément) - given by a majority of shareholders holding at least half the shares - before it can go ahead. The transfer then has to be recorded in a written deed, made enforceable against the company and third parties by filing at the registry, and registered with the tax office, where it attracts a 3% duty after a €23,000 allowance spread across the company's shares. This guide sets out the whole transaction: which transfers are free and which need approval, how the agrément procedure works and what happens if approval is refused, the deed and its formalities, and how the 3% registration duty is calculated.

Which SARL share transfers are free

Some transfers do not need approval, unless the articles say otherwise. Transfers between existing shareholders, and transfers between spouses and between ascendants and descendants, are free by default. The idea is that these transfers do not bring a stranger into a closed company - the buyer is already a shareholder, or a close family member.

But "free by default" is exactly that - a default the articles can override. The articles can stipulate that a spouse, an heir, an ascendant or a descendant may only become a shareholder after being approved, and the clause can apply to all these people or only to a category, such as the spouse or the descendants. Founders who want a genuinely closed company routinely extend the approval requirement to family transfers, because the entry of an ascendant, a descendant or a spouse can change the tightly held character the original shareholders wanted.

Two related tools appear in the articles. A pre-emption clause gives one or more shareholders a priority right to buy shares before they go elsewhere; such a clause is valid in a SARL and restricts, without destroying, the free transferability between shareholders and family. Breaching a pre-emption clause in the articles does not, by itself, void a transfer between two shareholders - the disappointed buyer's remedy is generally a claim in liability, not annulment of the sale. Separately, shares contributed as industry (contributed skills or work rather than money or assets) are tied to the contributor and are neither transferable nor transmissible.

The agrément: approving a transfer to a third party

A transfer to a third party outside the company needs approval, and the majority is set by law: the agrément must be given by a majority of the shareholders representing at least half the shares - a double majority, in number and in capital - though the articles can require a stronger majority. A lower double majority than the legal one cannot authorise a transfer. The selling shareholder can vote and counts towards the double majority, but, being bound by a warranty obligation, cannot vote against approving the buyer they themselves proposed.

The procedure is precise, and the deadlines are what make it work:

• the proposed transfer must be notified to the company and to each shareholder, by extrajudicial act or registered letter with acknowledgement of receipt - and it is the seller who must give this notification, even where the buyer has sent a promise to purchase;
• within 8 days of that notification, the manager must convene the shareholders' meeting to decide on the transfer, or consult them in writing where the articles allow;
• the company's decision is notified to the seller by registered letter with acknowledgement of receipt;
• if the company has not made its decision known within 3 months of the last of the seller's notifications, approval is deemed to be given.

The formalities are of public order, so they cannot be cured after the fact. A transfer carried out without approval, or despite a refusal, can be annulled. No implicit confirmation can make up for a missing notification, and the company can rely on a failure to notify without having to show a separate interest in acting. The action to annul a transfer to a third party is time-barred three years after the transfer deed is filed at the registry, and it can be brought by the company or the shareholders whose consent was required - not, generally, by the buyer or the seller themselves.

What happens if approval is refused

A refusal does not leave the seller trapped. Where the shareholders refuse approval, and provided the seller has held the shares for at least two years - a condition that does not apply where the shares came from a succession, the liquidation of a matrimonial community, or a gift from a spouse, ascendant or descendant - the seller can force the company or the other shareholders to buy, or arrange the buying of, the shares.

The mechanism has a timetable. On a refusal, the shareholders are obliged, within three months, to acquire or arrange the acquisition of the shares at a price fixed under Article 1843-4 of the Civil Code - unless the seller gives up the sale. On the manager's application, the court can extend that three-month period, but not beyond six months in total; it can be extended more than once within that six-month cap. If no purchase or capital reduction has happened by the end of the period, the seller can go ahead with the originally planned transfer - again subject to the two-year holding condition.

The price and the 1843-4 expert

Where the parties do not agree the price, it is fixed by an expert designated under Article 1843-4. The expert is a technician charged with determining the value of the shares, and the assignment ends only when that value is fixed. Crucially, the expert must apply any valuation rules and methods set out in the company's articles or in any agreement binding the parties - so a well-drafted valuation clause governs the expert rather than being ignored. The expert can grant the departing shareholder an advance on the sale price. This buy-out route is what stops an approval clause from becoming a trap: a shareholder who is refused an exit can compel one, at an independently fixed price.

The share-transfer deed and its formalities

A SARL share transfer must be recorded in writing. The deed states, among other things, the names, first names and addresses of the seller and the buyer, the number and description of the shares transferred, the price and how it is to be paid. A price is essential for the sale to be valid: it must be determined, or at least determinable, from elements that allow it to be fixed later. The practice of leaving deliberate "blanks" in the deed to be filled in later - a "blank transfer" - carries real risks and is best avoided.

Making the transfer effective takes two further steps. It becomes enforceable against the company either by depositing an original of the deed at the registered office against the manager's receipt, or through the older Civil Code route of service by a commissaire de justice or acceptance by the company in an authentic act. It becomes enforceable against third parties by filing the updated articles recording the transfer at the trade and companies register, which can be done electronically. From the day the transfer is enforceable against the company, the buyer is subrogated into all the rights attached to the shares.

A community-property point catches buyers out. Before one spouse married under a community regime buys shares, the other spouse must be informed, and the deed must record that this information was given. And a seller should have their shareholder current account repaid before the sale - it is a separate asset from the shares, repayable on demand, and leaving it in place is a common source of dispute with the buyer or the company after completion.

One more optional route can simplify a transfer in a small company. Instead of the full notification machinery, the parties can use a unanimous deed in which all the shareholders intervene - a route in which every shareholder's knowledge of the transfer is certain, so the formal notifications lose their purpose. The full statutory formalism for a third-party transfer is not always applied in practice, but relying on shortcuts is risky: where a shareholder is absent or has not received the project, an intervention by the seller's co-shareholder alone does not satisfy the approval requirement, and the transfer stays exposed. For any transfer where not every shareholder is at the table, the safe course is to run the notifications and the vote in full.

The 3% registration duty and the €23,000 allowance

A SARL share transfer is subject to registration duty whether or not it is recorded in a deed. A transfer in a notarial deed is registered within one month at the tax office of the notary's area; a transfer with no deed is declared on form 2759 within one month. Online registration is available for transfers not recorded in a deed.

The duty on shares of a company whose capital is not divided into stock - a SARL - is 3%, applied after an allowance. The allowance works per share: it equals €23,000 divided by the total number of shares in the company, multiplied by the number of shares transferred. In practice the taxable base is: the price (plus any charges), or the real value if higher, minus (€23,000 × shares transferred ÷ total shares). The duty is 3% of that base, with a minimum charge of €25.

Two variations matter. A SARL that is property-heavy (à prépondérance immobilière) is taxed at 5% with no allowance, and since the 2024 finance law such transfers carry reinforced reporting obligations under the anti-fraud plan. And on a split-ownership transfer - usufruct and bare ownership - the €23,000 allowance applies without breaking it down by the usufruct/bare-ownership valuation scale; where usufruct and bare ownership are sold in the same deed to the same buyer by different sellers, a single €23,000 allowance applies.

The base for the duty, and the current account

The duty is charged on the price stated in the deed plus any charges added to it, or on the parties' own estimate where the real value is higher. Because shares are unlisted, they are valued taking account of everything that gives a figure as close as possible to what supply and demand would produce in a real market - and the administration can, in the end, assess the duty on the real market value where it exceeds the declared price or the parties' estimate. Under-declaring a price to save duty is therefore a false economy: the tax office can reassess on the true value.

The shareholder current account is treated separately from the shares, and this is a useful planning point. Where the transfer of the seller's current account happens at the same time as the share transfer, the 3% duty is not charged on the current-account claim, absent fraud - the fact that the advances were never incorporated into the capital or rewarded with shares does not make them additional contributions. The assignment of the current-account claim escapes the registration requirement and, if voluntarily presented for the formality, gives rise only to a fixed duty of €125.

One anti-abuse rule catches recent in-kind contributions. Where shares representing an in-kind contribution are transferred within three years of the contribution being finalised, in a company not subject to company tax, the transfer is treated for tax as bearing on the contributed assets themselves - so it is taxed under the regime for selling those assets, which can be far heavier than the 3% share duty. It makes no difference whether the contribution was made on formation or on a later capital increase. A buyer acquiring shares in a recently-formed or recently-increased SARL should check what lies behind them.

Protecting the buyer: warranties and non-compete

Because the legal actions open to a buyer are limited - especially where the shares turn out to be worth less than hoped - a careful buyer negotiates contractual protections into the deed. The main one is a warranty of liabilities (garantie de passif), by which the seller undertakes to repay the buyer all or part of the price if a liability predating the sale, or an overstatement of assets at the sale date, later comes to light in the company's accounts. This is the buyer's protection against a hidden liability surfacing after completion, and its exact scope - what it covers, for how long, up to what cap, and with what security for the seller's promise - is a matter of careful drafting.

The seller, in turn, often gives a non-compete undertaking: a promise not to compete with the company, directly or indirectly, for a set time and in a set area. Such a clause is valid but must be proportionate. It cannot, given the seller's age and professional specialisation, prevent them from working at all, and it must not be disproportionate to the object of the contract or to the protection of the business's commercial interests. A non-compete inserted into a sale of all the shares of a company, limited in time and in the activities covered and aimed at preserving the value of the business sold, is proportionate and enforceable.

The two protections work together: the warranty of liabilities looks backwards, covering what the company already owed or overstated; the non-compete looks forward, stopping the seller from undermining the value the buyer has paid for. Neither is implied by law in the strength a buyer usually wants, which is why both belong in the deed rather than being left to the general law.

Transmitting SARL shares on death

Transmission on death is a special case of "buying and selling" a SARL's shares, and the articles shape it heavily. By default a SARL continues with the deceased shareholder's heirs, but the articles can provide otherwise, and there are three main arrangements.

The articles can require the heir to be approved before becoming a shareholder, on the same terms as a third-party transfer - with the important limit that the deadlines the company gives itself to decide cannot be longer than for a third-party transfer, and the majority cannot be stronger than the one the articles set for third-party transfers. This approval can only be imposed on an heir who was not already a shareholder before the death. Where approval is refused, the same buy-out machinery applies: a three-month window, an expert valuation under Article 1843-4, and the heir's right - confirmed recently - to withdraw the approval request at any time and demand the value of the shares, forcing the other shareholders to buy at the expert's price even after the valuation.

Alternatively, the articles can provide that the company continues only with the surviving shareholders: the heirs are excluded, cannot claim to be shareholders, and are entitled only to the value of the deceased's shares, paid through a buy-back and capital reduction, with the value fixed at the date of death by an expert failing agreement. Or the articles can provide that the company continues with the heirs, who then become shareholders automatically on the death - holding the shares in indivision until the estate is divided, with the surviving spouse, where they are themselves a shareholder, able to deal with community shares without the co-owners' agreement. Which clause a SARL has makes a large practical difference to a family, so it should be a deliberate choice in the articles, not an afterthought.

The risk of blank share transfers

A practice worth warning against is the blank transfer (cession de parts en blanc) - a private deed of transfer in which one or more elements are deliberately left blank, to be filled in later by whoever holds all the original copies. The date, the payment terms, the price, the buyer's name, even the number of shares can be left open. It is sometimes used where founders have brought in nominee shareholders - friends or family who put up no money - and want to keep control of the shares those nominees appear to hold.

The trouble is that nominee arrangements are themselves unlawful where the apparent shareholder makes no real contribution and exercises no genuine shareholder rights, acting only on the true owner's orders. A nominee who lends their name to the real controller of a business run as a company exposes themselves to criminal liability, because they have effectively signed a false declaration about how the shares are shared out. And a blank transfer becomes unlawful where it is used to nullify, in practice, the attribution of shares subscribed by a nominee with funds handed over for the purpose.

Blank transfers carry further practical dangers. Misusing the signed-blank deed against the parties' actual intention can amount to the offence of abuse of a signed blank (abus de blanc-seing) - as where a minority manager used a blank transfer to strip the majority shareholder of nearly all their shares. That said, buying shares through a nominee is not, in itself, a ground to void the transfer, and a blank deed established to secure the repayment of funds one shareholder advanced to another has been upheld. The safe course is to avoid the device: record real transfers in a complete, dated deed with a stated price, and deal with any funding or control arrangements openly through proper agreements rather than a blank signature.

Frequently asked questions about buying and selling SARL shares

This article states general principles of French law as at its date of publication and is provided for information only. It does not constitute legal or tax advice and creates no lawyer-client relationship. Figures, rates and thresholds evolve; verify them against the texts in force before acting, and take advice on your specific situation.