Share Transfer in SARL: Circumventing Refusal of Approval

Extract

[...] At the request of the manager, this period may be extended by court decision, without this extension exceeding six months. The socibeen may also, with the consent of the withdrawing partner, decide, within the same period, to reduce its capital by the nominal value of the shares of this partner and to repurchase these shares at the price determined in the conditions provided above. A payment period that may not exceed two years may, upon justification, bebetween agreementsis at the company by court decision. The amounts due bear interest at the legal rategal in matiiscommercial trade. [...]

[...] On the transfer of shares of one of the associates A a associateis a SARL wishes to transfer its shares to another partner. However, the SARL's articles of association provide for an approval clause requiring the unanimous agreement of the partners for any transfer between associatess. L'associé cédant anticipating the refusal of one of associis, which would prevent it from procedthe to the transfer in the preconditionsviews. What legal mechanisms can be implemented to circumvent the refusal of approval for [...]

[...] By participating in the vote on the deliberation authorizing the contract with the SNC, the rule provided for in Article L. 223-19 of the Commercial Code has thus been breached. Furthermore, if the prices practiced by the SNC are indeed higher than those of the market, this could constitute a prejudice for the SARL. The participation of the interested associate in the vote has therefore been able to influence the decision to conclude the contract. However, this does not call into question the deliberations or the vote. [...]

[...] These are stricter conditions than those required by Article L.223-14 of the Commercial Code. This statutory clause must therefore be applied by the shareholders. Or, in this case, the risk of not obtaining the required approval is real. To mitigate this inconvenience, Article L.223-14 mentioned above has established a procedure that allows the shareholderwishing to transfer his shares, to compel his co-shareholders to buy or have the company buy them, or else, to proceed with a capital reduction of the amount of the transferring shareholder's shares, if they refuse to approve the proposed transferee. [...]

[...] Finally, the concerned shareholder cannot transfer his shares without the unanimous consent of the shareholders. Therefore, if the approval is not obtained, many circumvention solutions exist after the shareholder has requested the intervention of the court to obtain the judicial fixing of the price of his shares: - the forced buyback by the company, - the reduction of capital of the amount of shares of the transferring shareholder, - in case of failure of the previous solutions within the given deadline, the transfer will finally take place under the initial conditions envisaged. [...]