Exoneration Effect of Promises to Redeem Social Rights at Floor Price

Extract

[...] The distinction between statutory act and non-statutory act it is here important to recall. - Highlight the divergence between the civil chamber and the commercial chamber, where the latter has finally taken a + favorable position to the promises of floor price redemption. Reason for the risk - Recent jurisprudence tends to recognize that there is a risk in these conventions, as the partner remains subject to the risk of depreciation or disappearance of the shares, which prevents automatically qualifying these promises as lionine. [...]

[...] Leverage clauses are prohibited because they break this balance between profits and losses . They prevent the partner from fully playing their role as a partner. You can't be in a company, take the profits when things are going well, but say 'no thanks' when there are losses. The Court of Cassation shows us that it is not rigid. She nuances her position on the clauses of the lions and adapts to the situation of the partners. For her, as long as there is a risk of uncertainty, even a promise of sharing will not be lionine. [...]

[...] One cannot expect him to take all the risks without a guarantee of reimbursement. The Paris Court of Appeal had said the same thing before, but it was just a bit more nuanced. It had said that this clause did not affect the participation in profits and did not exclude the associate from losses. So, the Court of Cassation, in short, confirms that this clause was fair, because the associate was a lender of funds. In this kind of arrangement, one cannot leave someone to bear all the risks. [...]

[...] The prohibition of usurious clauses, it's a question of profits but above all of balance between associates. In corporate law, usurious clauses are strictly forbidden in order to avoid certain associates from reaping the profits without ever assuming the losses. Facts : It is a situation where an associate subscribed to 300 new shares, and in exchange, a clause provided that the main shareholders would repurchase his titles at a determined price (700,000 francs + interest) if he requested it within a specific period. [...]

[...] The a priori leonine character of the conventions in question - Analyse why, at first glance, these repurchase promises may seem leonine. In fact, they allow certain associates to avoid losses (by repurchasing at a fixed price) while maintaining a share of the profits. - A parallel can be drawn with previous jurisprudence, such as the Bowater decision of 1986, which has played an important role in the evolution of the treatment of these conventions. - Mention that in venture capital, this type of promise is often used and justified by the nature of the investor of the associates. II. [...]