Leaving an SCI: how the withdrawal right works

Leaving an SCI: how the withdrawal right works

A member who wants out of an SCI (société civile immobilière) is not trapped. French law gives every member of a civil company a right of withdrawal (droit de retrait) - the right to leave the company and be paid the value of their shares - and it can be exercised by three distinct routes: under the company's own articles, by the unanimous agreement of the other members where the articles are silent, or, failing both, by a decision of the court on a just cause. Withdrawal is not the same as selling shares to a buyer: the member leaves and the company itself pays them out, cancelling their shares and reducing its capital. This matters most in the family SCI that has broken down - where a minority member is being kept out, a couple has divorced, or the others simply will not agree to a sale - because withdrawal is often the only clean exit. This guide sets out the three routes, when a court will order a withdrawal, what the leaving member is paid and when, and the moment at which they actually cease to be a member.

The subject matters because withdrawal is both a powerful remedy and a slow, technical one. A member who understands the routes can force an exit that the others are trying to block; a member who does not can find their capital locked in a company they no longer want to be part of. And the mechanics carry traps of their own - the valuation date, the point at which member status is lost, the continuing liability for debts until the payout is complete. For an international family whose relationships have soured across borders, knowing exactly how the withdrawal right works is what turns a deadlock into a resolved departure.

Withdrawal is a strictly personal right

The foundation is a single article of the Civil Code. The right of a member to withdraw from the SCI is a personal right (C. civ. Art. 1869), and two consequences flow from its personal character. First, it belongs to the member alone: it cannot be exercised by a creditor of the member. When the customs administration, a creditor of members of a civil company, tried to force their withdrawal by the oblique action (then Article 1166, now Article 1341-1 of the Civil Code) so as to seize the reimbursement of their shares, the attempt failed - a member's creditor cannot step into the member's shoes to make them leave. Second, the exercise of the right is bounded by the interests of others: in every case, the withdrawal of a member cannot prejudice the rights of third parties (C. civ. Art. 1869), so a departure cannot be used to strip the company's creditors of their security.

In its mechanics, a withdrawal is a repurchase of the leaving member's shares by the company, which translates into a reduction of the capital: the member's shares are cancelled and the capital is reduced by their nominal amount. This is the structural difference from a sale of shares to a new buyer, where the capital is untouched and a third party takes the seller's place. Because withdrawal shrinks the company rather than substituting a member, it engages the capital-reduction rules and the third-party protections that attend them - which is why the law insists that the operation cannot harm the company's creditors, and why the departing member is paid out of the company's substance rather than by an incoming purchaser.

Route one: withdrawal under the articles

The first and simplest route is the one the articles provide. A member may withdraw totally or partially from the company under the conditions provided by the articles (C. civ. Art. 1869), and well-drawn articles set out the whole procedure. They fix how the request is made - a registered letter with acknowledgement of receipt, a deposit in the gérant's hands against a receipt, or another agreed form - and the notice required, which is often a stipulation that the registered letter must reach the company at least six months before the close of the current accounting period. Authorisation of the withdrawal generally belongs to the members collectively, by a simple or a reinforced majority, and the decision can also be taken by a written consultation on the gérant's initiative. The articles frequently add that a failure to answer the request within a set period - often two months - amounts to a tacit authorisation of the withdrawal, so that the others cannot stall indefinitely by silence.

The reimbursement conditions are where the articles earn their care. They will usually impose a period for payment, which can run from the approval of the accounts of the accounting period current at the time of the request, and they reserve the recourse to an independent expert under Article 1843-4 of the Civil Code for the case of disagreement over the value. One firm point of case law frames a member who has begun this route: once a withdrawal procedure is under way, the member cannot simply abandon it to sell their shares to a third party instead. Where a member obtained the company's agreement to buy back their shares and an expert had valued them, but the member then tried to sell to an outsider, the court held that so long as the withdrawal procedure was in progress and its failure had not been formally established, the sale to a third party was impossible and it fell to the member to carry the withdrawal to its end (Cass. civ., 3e, 25 May 2023, no. 22-17246). So the statutory route, once triggered, has a certain momentum: it must be seen through, not swapped mid-course for a sale.

Route two: unanimous authorisation where the articles are silent

Many SCIs have articles that say nothing about withdrawal. There, the second route applies: in the absence of a statutory clause, a unanimous decision of the members can authorise the withdrawal of a member (C. civ. Art. 1869). The member who wishes to leave, unable to invoke any withdrawal clause, must ask the gérant to consult the members on their request, and only a unanimous decision of the others can authorise it. This is a real hurdle in a company where relations have broken down, because it hands each of the other members a veto - a single refusal defeats the request. The route works well where the parting is amicable and everyone agrees; it works badly where the very reason for leaving is a conflict with the others.

The law does not, however, leave the member wholly at the mercy of an obstructive gérant or an obstructive majority. Where the gérant keeps silent or refuses to consult the members and convene a meeting on the request, the member can turn to the court to have the consultation ordered - and, more importantly, the failure of this unanimous route is precisely what opens the third route, judicial withdrawal for just cause. Two further points guard the member. An authorisation cannot be made subject to an unlawful condition that empties the right of content - an authorisation stating that the withdrawal would take effect only on the day the SCI sold its buildings was challenged as making the withdrawal depend on an event outside the member's control. And where the others refuse, the refusal itself, if it is designed to keep profiting from the member's locked-in funds, can become the abuse that founds a judicial withdrawal. So the unanimous route is the amicable path; when it is blocked in bad faith, it becomes the gateway to the court.

Which withdrawal route fits your SCI?

The route depends on your articles and on the others' stance. Pick your situation - the check points you to the right path.

Route three: judicial withdrawal for just cause

When the amicable routes fail, the court is the answer. Whether or not this mode of withdrawal is provided by the articles, a member may be authorised to withdraw by a decision of the court (C. civ. Art. 1869), and to obtain it the member must invoke a just cause (juste motif). The just cause is the whole of the case: the court will not release a member on demand, but it will where the member shows a legitimate reason to leave that the others are frustrating. The categories the case law recognises fall into three broad groups, and it is worth being precise about them because the same facts that fail as a "personal convenience" can succeed as an "abuse" or a "discord".

The first group is the member's personal situation. Article 1869 does not forbid the judge from retaining, as a just cause, elements touching the member's personal situation - a very low dividend distributed to the member coupled with the surrounding circumstances was accepted in one case, and a change of residence preventing a member from benefiting from the company's services in another. The second, and richest, group is financial abuse and the sidelining of a member. A withdrawal for just cause has been founded on the systematic and unjustified refusal of the majority to distribute dividends; on the systematic allocation of the profits to reserves in a way answering neither the object nor the interest of the company and favouring the majority; on keeping a minority member out of the company's life by communicating no accounts and not convening them to meetings, while refusing their withdrawal so as to keep profiting from the funds they had contributed; and on the inaction and loss of affectio societatis of a managing member who produced no management, presented no accounts and let the property deteriorate. The third group is serious discord (mésentente). In a family SCI, discord that does not paralyse the company will not justify its dissolution - but that same discord can constitute a just cause for the withdrawal of a minority member who draws no benefit in return for the charges they bear (Cass. civ., 17 December 2008, no. 07-14601), and the courts cannot refuse a withdrawal on the ground that family discord is a just cause only where it obstructs the company's functioning or amounts to an abuse of the majority (Cass. civ., 3e, 4 April 2019, no. 17-31052). So discord is a stand-alone just cause for the minority member squeezed by it, not merely a symptom of paralysis.

The boundary matters as much as the categories. What will not do is a withdrawal sought for reasons of pure personal convenience: a demand resting only on the member's own convenience is not a just cause (Cass. com., 8 March 2005, no. 02-17448), and, in particular, reasons of personal fiscal or succession convenience do not constitute the just cause Article 1869 requires. So a member who simply wants their capital back, or who is repositioning their estate planning, cannot use the judicial route; the member who is being denied their rights, kept in the dark, or ground down by a conflict they cannot escape, can. Framing the grievance in the language the case law rewards - denial of rights, exclusion, abuse, serious discord - rather than in the language of personal preference is what decides these cases.

Do you have a just cause to withdraw?

The court releases a member on a just cause, not on preference. Pick what is happening - the check tells you whether it is likely to qualify.

What the withdrawing member receives

A member who withdraws has the right to the reimbursement of the value of their social rights, fixed by common agreement or, failing that, by an expert designated by a decision of the court (C. civ. Art. 1869, al. 2). Where negotiations fail, the value is determined by an expert appointed by the parties or, absent their agreement, by a judgment of the president of the tribunal judiciaire ruling by an accelerated procedure and without possible appeal (C. civ. Art. 1843-4). The valuation is anchored in time: it is at the date on which the transfer of ownership takes place that the value of the member's shares is to be assessed, though the articles may fix the valuation date at the day of the withdrawal request, the day of the judicial authorisation, or the day of the capital-reduction decision. The expert's figure is not beyond challenge - a price vitiated by a gross error can be set aside - but within those limits the expert's determination governs, so the choice of valuation date and the quality of the expertise are what most affect what the member walks away with.

The reimbursement can take the form of assets rather than cash. Instead of a reimbursement of the value of the social rights, a division in kind may take place (C. civ. Art. 1869, al. 2), and the member who withdraws may ask to take back any contributed asset that is found in kind in the divided mass, subject to a balancing payment (soulte) where appropriate (C. civ. Art. 1844-9, al. 3). Two limits define this payout. The withdrawing member is entitled to the value of their rights and to nothing more: a court that ordered the SCI to pay a leaving member not only the value of their shares but a share of the rents owed by the tenants was reversed, because the member who withdraws has a right only to a share of the profits, not to the company's income as such. And the operation is not a partition: a withdrawal is not open to rescission for lésion, the operation giving rise only to the valuation of the member's rights, and it cannot be analysed as a partage; so once the withdrawal is done the member cannot invoke the protective rules of a partition, and only defects of consent - error or fraud - remain open to them. The message is to get the valuation right at the time, because the ordinary protections that follow a division do not apply here.

When you actually cease to be a member

A point that surprises many leaving members is that authorisation to withdraw does not, by itself, end their membership. The loss of the status of member cannot precede the reimbursement of the value of the shares (Cass. com., 27 April 2011, no. 10-17778). So a member who has been authorised to withdraw but has not yet been paid - because an expertise to fix the value is still under way - has not lost their status of member at the date of the judgment authorising the withdrawal; they still have standing to act, and can, for instance, seek the annulment of general-meeting resolutions that harm them in the interval. Membership runs until the money is actually received, not from the decision that the member may leave.

The consequences of that rule cut both ways. Until reimbursed, the withdrawing member keeps their pecuniary rights and their rights to participate in the company's life, and must correspondingly bear the risks on the company's liabilities; the company is not entitled to demand the restitution of dividends paid before the shares were fully reimbursed, since at the time they were received the person was still a member (Cass. civ., 28 March 2012, no. 10-26531). On the liability side, the member remains responsible for the debts due before their withdrawal, and is no longer responsible for debts contracted before their departure was made opposable to third parties but not yet due at that date - but this relief holds only if the member is not a personal guarantor of the company, because a guarantee stands outside the withdrawal and survives it. The members are free to arrange their financial relations differently by agreement, but the default is clear: you are a member, with the rights and the risks, until you are paid, and a guarantee you have given is not shed by leaving.

Tax on a withdrawal

Because a withdrawal is carried out as a reduction of the capital by the cancellation of the leaving member's shares, it is treated for registration purposes as a repurchase of social rights rather than as a partition. Since 1 January 2021, the acts recording a reduction of the company's capital are dispensed from the registration formality (CGI Art. 635, 1.5°), and where such an act is presented voluntarily, a reduction of capital against the cancellation of shares is registered free of charge (CGI Art. 814 C). So a straightforward cash payout on a withdrawal generally carries no proportional registration duty. Two situations change the picture. Where the reduction is effected by attributing real property to the leaving member, the act is subject to the merged formality at the land-registry service of the place where the property is situated within the month of its date (CGI Arts. 647 and 657); and the fixed duty of the unnamed acts, €125, is levied in certain preparatory cases (CGI Art. 680). Where a company acquêt - property the company contributed on onerous terms, or acquired or created during its life - is attributed to the members' mass to be sold and its price shared, the partition duty (droit de partage) of 2.5% applies (CGI Art. 746).

A further layer applies where the property leaving the company was originally contributed to it. Under the theory of the conditional transfer of contributions (mutation conditionnelle des apports), the attribution of a contributed asset to a member other than the one who contributed it is taxed as a transfer for value; a member who takes back the very assets they themselves contributed, being identifiable property, is not caught. And for an SCI subject to corporation tax, a capital reduction not motivated by losses is a distribution to the members: where the distribution has, for the members, the character of a reimbursement of their contributions, it is not treated as a distribution of income, but a distribution of reserves not assimilated to contributions is a taxable distribution in the members' hands. The tax treatment of a withdrawal therefore depends closely on how the member is paid - cash or property, contributed or acquired property, income-tax or corporation-tax SCI - which is why the tax analysis belongs at the planning stage of the exit, not after it.

The three routes out of an SCI - at a glance

Frequently Asked Questions

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal advice. Whether and how a member may withdraw depends on the SCI's articles and on the facts. Always seek qualified legal advice before seeking or resisting a withdrawal from an SCI.