Transfer of company shares, securing the sale of the registration certificate

Shares, stocks or business assets: knowing what you're selling

Companies whose capital is divided into shares

Shares represent the capital of SARLs, EURLs, general partnerships, and civil law companies, including SCIs. SASs and SAs issue shares.

The difference is not just a matter of vocabulary. It changes the agreement to be obtained, the form of the transfer, and the tax cost of the operation.

Shares are not negotiable. They do not circulate simply by being recorded in an account, like stocks. Their transfer must be documented in writing and then made enforceable against the company and third parties through specific formalities.

This legal nature has concrete effects. The Court of Cassation ruled on this on February 11, 2026 (Commercial Chamber, appeals no. 24-18.103 and 24-19.661). Shares in a limited liability company (SARL) cannot be gifted. Transferring shares, even free of charge, therefore requires a formal deed.

To sell one's shares or to sell the business

Selling your shares means selling the entire company, including its history. The buyer takes over the assets, but also the debts, current contracts, legal disputes, and future audits. The company itself remains unchanged.

Selling a business is the opposite. The company sells its operations but retains its liabilities. The buyer chooses what they acquire. The formalities and tax implications then follow specific rules, which we detail on our page dedicated to the sale of a business.

The choice between the two is never neutral. The seller often prefers to sell their shares, as it allows them to exit in a single transaction, without subsequently liquidating the company. The buyer often prefers the business itself, as it avoids assuming unknown liabilities.

The seller wants to sell their shares, while the buyer only wants to take over the business. It's the liability guarantee that brings the two positions closer together. We'll come back to that later.

The case of real estate-focused companies

A new rule has been in effect since June 27, 2026. Article 1865-1 of the Civil Code was created by Law No. 2026-534 of June 25, 2026. It imposes a specific form on the transfer of shares of a legal entity whose assets consist primarily of real estate.

On pain of invalidity, the document must be authenticated or countersigned by a lawyer. It may also be drawn up by a chartered accountant, but only in cases where they are legally authorized to do so. A private agreement drawn up between the parties is no longer sufficient.

The classification does not depend on the legal structure. A limited liability company (SARL) or a simplified joint-stock company (SAS) whose assets are primarily real estate may be affected, while a real estate investment company (SCI) may not. For commercial companies, the exact scope of the legislation remains debated. We have detailed this regime and its uncertainties in our article on the transfer of shares in a company whose assets consist mainly of real estate.

Who needs to give their approval before the sale?

Between partners and within families, a transfer is in principle unrestricted

In a limited liability company (SARL), shares are freely transferable between partners. They are also transferable between spouses, ascendants and descendants, according to article L. 223-13 of the commercial code.

The articles of association may, however, make these transfers subject to approval. This is common in family businesses that want to retain control of their capital. Therefore, the first document to consult before any negotiation is the current articles of association.

Towards a third party, the approval of the SARL is a matter of public policy

A transfer of shares to someone outside the limited liability company (SARL) requires the approval of the shareholders. Article L. 223-14 of the French Commercial Code sets out the rule. A majority of shareholders representing at least half of the company's shares are required, unless a higher majority is stipulated in the articles of association.

This text is a matter of public policy. Any clause that deviates from it would be deemed null and void. In practice, only the EURL (single-member limited liability company), with a single shareholder, is exempt from this procedure, since there is no one else to consult.

Notify the project in the proper form

The proposed transfer must be notified to the company and each of the partners. Article R. 223-11 of the French Commercial Code requires notification by a court-appointed officer or by registered letter with acknowledgment of receipt.

The company then has three months from the date of the last notification to respond. If it does not respond within this period, consent to the transfer is deemed to have been given.

What happens in case of refusal

A refusal does not indefinitely prevent the transferor from acquiring the shares. The partners must then, within three months of the refusal, acquire or arrange for the acquisition of the shares. The price is determined in accordance with Article 1843-4 of the Civil Code, that is, by an expert in the event of disagreement.

The company can also buy back the shares and reduce its capital, with the seller's agreement. The three-month period can be extended by court order, but the extension cannot exceed six months.

If none of these solutions are successful within the time frame, the seller can proceed with the originally planned sale.

A limit must be noted. A partner who has held their shares for less than two years cannot impose this buyback mechanism. The exception applies to shares received through inheritance, division of marital property, or family gift.

This is reiterated in the ruling of October 7, 2026

The Court of Cassation recently reiterated this point (Commercial Chamber, October 7, 2026, appeal no. 24-10.131). Two managing partners of a limited liability company (SARL) had signed an agreement transferring their shares to a third party. All partners agreed.

The project, however, had not been notified in accordance with the requirements of Article L. 223-14. The transfer was therefore cancelled. A unanimous agreement, even in writing, does not replace the legal notification procedure.

SNC, SCI and SAS: different rules

In a general partnership, each partner has a right of veto. Article L. 221-13 of the French Commercial Code requires the consent of all partners, and any clause to the contrary is deemed null and void.

In a civil law partnership, Article 1861 of the Civil Code also establishes the principle of unanimous approval. The articles of association may relax this requirement by stipulating a majority or by exempting certain transfers between partners or within families. The partnership has six months to respond.

In a simplified joint-stock company (SAS), the law does not provide for any default approval process. Everything depends on the articles of association, which Article L. 227-14 of the French Commercial Code allows to be free to stipulate approval, pre-emption rights, or inalienability. A transfer that violates these statutory clauses is void, according to Article L. 227-15.

The spouse of the seller, an often overlooked agreement

A partner married under a community property regime cannot always sell their shares alone. Article 1424 of the French Civil Code prohibits one spouse from transferring, without the other's consent, non-negotiable shares belonging to the community property.

Shares fall into this category. The spouse who did not consent may request the annulment of the transfer. They have two years from the day they became aware of it to do so, according to Article 1427 of the Civil Code.

In practice, we involve the spouse in the transaction as soon as the shares have been acquired with joint funds.

The shareholders' agreement, the other lock

A shareholders' agreement can add its own rules: right of first refusal, temporary inalienability clause, joint exit, or forced exit. These clauses are added to the articles of association without replacing them.

Their violation does not always have the same effects as a statutory clause. It primarily exposes the party to damages, and sometimes more depending on the wording and what the buyer was aware of. We draft and audit them as part of our shareholders' agreement.

From the letter of intent to closing, the process of a sale

A share transfer takes place in five stages. Their order is more important than their duration. A stage done too early or too late can jeopardize everything that follows.

1. The letter of intent and confidentiality

The letter of intent sets out the general outline: the proposed price, timeline, conditions, and duration of exclusivity. It does not, in principle, obligate the parties to conclude the sale.

However, it does make commitments on certain points, according to its wording. Confidentiality and exclusivity are often restrictive. And Article 1112 of the Civil Code requires negotiation in good faith, which prohibits breaking off talks abruptly or unfairly.

The seller must also be aware that they have a duty to provide information. Article 1112-1 of the Civil Code requires them to disclose any information that is crucial to the buyer's consent.

2. The company audit

The buyer is purchasing a company, not just shares. Therefore, they must examine it before committing. The seller, for their part, benefits from preparing this due diligence to prevent it from turning into a price renegotiation.

The audit generally covers the following points:

• the statutes, the decisions of the partners and the regularity of past transfers;
• accounts, cash flow, debts and collateral granted;
• key contracts, in particular those containing a change of control clause;
• the social situation, tax and URSSAF audits, ongoing disputes;
• the lease, administrative authorizations and, where applicable, the real estate held.

One point is often overlooked. If a previous transfer of shares was irregular, the current distribution of capital can be challenged. The buyer then inherits a risk they did not create.

3. Informing employees

Certain types of transfers require informing employees before the sale. This is the case for more than half the shares of a limited liability company (SARL), or for a majority of the capital of a joint-stock company. The relevant legislation is Article L. 23-10-1 of the French Commercial Code.

Law No. 2026-403 of May 26, 2026, eased this requirement. For sales concluded since July 27, 2026, the notification period is reduced to one month in companies with fewer than 50 employees. The sale can take place earlier if all employees have waived their right to submit an offer.

In companies with a works council exercising its economic responsibilities, individual notification is replaced by consultation with the council. Failure to provide this information does not invalidate the sale. However, it exposes the company to a civil penalty capped at 0.5% of the price, down from 2% previously.

We detail this timetable in our article on informingemployees in the event of a company sale.

4. The transfer protocol

The protocol, or deed of transfer, is the central document. It identifies the parties, the company, the number of shares transferred and their possible numbering. It sets the price and its payment terms.

The price can be fixed or variable. It may include an adjustment based on the accounts closed at the date of sale, or a price supplement linked to future performance. Each mechanism must be described precisely, otherwise disputes may arise during the calculation.

The protocol also contains the conditions precedent. The most common are obtaining approval, financing from the buyer, the release of the seller's personal guarantees, or the agreement of key partners.

5. The signature and the payment

On the day of completion, which practitioners call the closing, the parties confirm that the conditions precedent have been met. The final deed is signed and the price is paid.

Part of the purchase price is often held in escrow to cover potential warranty claims. The resigning manager is replaced if the buyer takes over the management. Company documents, codes, and registers are handed over.

Liability guarantees, current accounts and sureties: what the agreement must address

Asset and liability guarantee

The seller's legal guarantees cover the shares themselves. They offer little protection to the buyer against issues affecting the company: a tax debt revealed after the sale, an overvalued inventory, or a past employment dispute.

Hence the asset and liability guarantee, stipulated in the contract. The seller undertakes to compensate the buyer, or the company, if a debt predating the sale is discovered. The same applies if an asset turns out to be less than what was declared.

A useful warranty should at least cover these points:

• the statements of the transferor on which it is based;
• the threshold from which a claim is admissible, and the possible deductible;
• the maximum compensation amount and its duration;
• the claims procedure, with its time limits and the transferor's right to conduct the defense;
• the guarantee of the guarantee, by escrow or bank guarantee.

A liability guarantee without a payment guarantee is only as good as the seller's solvency, several years after the sale. This is the point the buyer must negotiate first, and the one the seller must most carefully limit.

The partner's current account

The current account is not a share of the capital. It is a claim of the transferor against the company, arising from the sums advanced to it. It therefore does not automatically follow the shares.

The deed must specify what happens to the debt. Either the company repays it on the date of transfer, which assumes sufficient cash flow, or the buyer purchases the debt from the seller.

For tax purposes, this transfer of receivables is not taxed as a transfer of shares. According to administrative doctrine, it falls under the fixed duty stipulated in Article 680 of the General Tax Code.

In a fragile company, negotiations sometimes focus more on current accounts than on shares. A manager sells their shares for a modest price, and the main issue is the repayment of their advances.

The personal guarantees of the transferor

Many company directors have personally guaranteed bank loans or leases for their businesses. The sale of shares does not release them from these obligations.

A seller can therefore sell their company and still remain liable for their debts to the bank. The risk is real if the company experiences difficulties after the sale.

The solution is to make the release of guarantees a condition precedent, or to have the buyer take the place of the seller with the creditors. The rules governing guarantees then limit the scope for negotiation.

Non-competition and warranty against eviction

The seller must guarantee the buyer against eviction resulting from their own actions, according to Articles 1626 and 1628 of the Civil Code. No clause can exempt them from this obligation. A seller who resumes the same business and diverts the clientele is liable to legal action.

A non-compete clause specifies what is prohibited. To be valid, it must be limited in time and geographical scope, and proportionate to the legitimate interests of the buyer. A clause that is too broad risks being disregarded by a judge.

Even without a specific clause, the warranty against eviction has its limits. The Court of Cassation assesses this according to the time elapsed and the market (Commercial Chamber, November 6, 2024, appeal no. 23-11.008).

How much does it cost to transfer company shares?

Registration fees

The transfer of company shares is subject to a 3% registration fee, as stipulated in Article 726 of the French General Tax Code. This fee is applied after a deduction equal to €23,000 multiplied by the proportion of shares transferred.

The administrative doctrine provides an example. A company has 500 shares. A shareholder sells 200 shares for €60,000. The allowance is €23,000 × 200 / 500, or €9,200. The taxable base is therefore €50,800 and the transfer tax amounts to €1,524.

A minimum fee of €25 applies. In practice, the fees are paid by the buyer, but the deed may stipulate a different allocation.

One exemption is worth noting. According to tax doctrine, acquisitions of shares in companies placed under safeguard or receivership proceedings are exempt. This is yet another factor to consider for anyone contemplating taking over a struggling business.

Capital gains tax for the seller

The individual seller is taxed on their capital gain, that is, the difference between the sale price and the cost price. By default, it is subject to the flat-rate tax.

Since January 1, 2026, this levy has reached 31.4%: 12.8% income tax and 18.6% social security contributions. The increase results from the raising of the CSG (General Social Contribution) on capital income by the 2026 Social Security Financing Law.

The seller can opt for the progressive income tax scale. The allowances for holding period then only apply to securities acquired or subscribed to before January 1, 2018.

The executive who is retiring

A small business owner who retires benefits from a fixed allowance of €500,000 on their capital gains. This is provided for by Article 150-0 D ter of the French General Tax Code and has been extended until December 31, 2031.

The conditions are strict. The company must be an SME subject to corporation tax and have been operational for five years. The seller must sell all of their shares, held for at least one year.

He must also have managed the company and held at least 25% of the shares for the five years preceding the sale. Finally, he must cease his duties and retire within two years before or after the sale.

The tax allowance only applies to income tax. Social security contributions remain due on the entire gain. On an eligible capital gain of €400,000, income tax drops to zero, but social security contributions remain at €74,400.

Other situations

Shares in a French real estate investment company (SCI) subject to income tax are treated as capital gains on real estate. This is covered by Article 150 UB of the French General Tax Code. The calculation and allowances are therefore very different.

When the seller is a company, the capital gain is subject to corporate income tax rules. Capital gains tax arrangements involving contributions to a holding company prior to the sale are subject to reinvestment requirements, which were amended by the 2026 Finance Act. These arrangements must be prepared well in advance of signing.

For a family transfer rather than a sale, the Dutreil pact follows a different logic.

Fees and additional expenses

In addition, there are the fees for advisors: lawyer, accountant, sometimes appraiser. Then come the costs of formalities, court registration and, depending on the amended provisions, legal notices.

Our fees are set out in writing in a fee agreement before we begin our work. The amount depends on the size of the transaction, the number of parties involved, and the level of audit required.

The formalities that make the transfer enforceable

A signed transfer agreement is not yet a completed transfer. Until the formalities are completed, the buyer cannot always exercise their shareholder rights, and third parties may be unaware of the change.

Registration within the month

The deed of transfer must be registered within one month of its date, according to Article 635 of the General Tax Code. Filing is made with the registration office at the domicile of one of the parties, along with payment of the required fees.

A transfer without a deed must be declared within the same period, online or using form no. 2759. A delay will result in interest and penalties.

Enforceability against society

In a limited liability company (SARL), Article L. 223-17 of the Commercial Code refers to Article L. 221-14. The transfer must be recorded in writing and then made enforceable against the company.

There are two options. The first is service of process by a bailiff. The second is filing an original document at the company's registered office, against a certificate from the manager. In practice, involving the company in the process simplifies this step.

Enforceability against third parties and amended statutes

With respect to third parties, the transfer is only enforceable after the amended articles of association have been published in the trade and companies register. The filing is done through the single business formalities portal.

This formality falls to the management. If the manager fails to do so, the seller or buyer can take action after a formal notice has gone unheeded. It is best to specify in the deed who is responsible for completing the formalities and within what timeframe.

Beneficial owners and internal registers

A transfer of ownership that changes the ownership structure can alter the beneficial owners of the company. The declaration must then be updated. We outline the applicable rules in our article on beneficial owners.

In a simplified joint-stock company (SAS), the transfer results from the registration of the shares in the acquirer's account. The register of share movements must therefore be updated.

What errors cause a transfer to be cancelled or blocked?

Sign before the approval period has expired

This is the most frequent mistake. The parties agree, sign the final deed, then formalize the agreement afterwards, by a collective decision drafted for the occasion.

However, the procedure outlined in Article L. 223-14 is a matter of public policy. The correct order is reversed: notify the project, obtain approval or allow the timeframe to run its course, and then sign. The judgment of October 7, 2026, demonstrates that consensus does not cover an irregularity.

Ignoring the imposed form or the spouse's agreement

Two types of invalidity can arise where no one expects them. The first concerns the company itself, when its assets are primarily real estate. A standard private agreement is no longer sufficient since June 27, 2026.

The second point concerns the transferor's marital status. A spouse with a community property regime who did not consent to the transfer can seek to have it declared null and void. These two checks take only a few minutes at the beginning of the process and prevent years of uncertainty.

Let the formalities drag on

An unregistered, unserved, or unpublished deed renders the transfer incomplete. The purchaser may be denied access to shareholders' meetings. The transferor remains registered as a shareholder with respect to third parties.

In a general partnership (SNC), the stakes are higher. The departing partner remains liable for the partnership's debts incurred before the publication of their departure. Each week of delay prolongs their exposure.

Three reflexes limit these risks:

1. Read the articles of association and the pact before negotiating the price, not after.
2. Establish a written timetable that places approval, employee information, and release of guarantees before signing.
3. Designate in the document the person responsible for each formality, with a deadline.

Before signing, check the order of the steps rather than the price

Price dominates most discussions. Yet it is rarely the price that causes a share transfer to fail. The real culprits are poorly handled approval processes, the form of the transaction, guarantees without consideration, or the omission of a security deposit.

Seller's side

We first verify the approval process, marital status, and personal guarantees. We also finalize the tax schedule, especially if retirement is planned. We then negotiate the limit and duration of the liability guarantee.

Buyer's side

We verify the regularity of the chain of past transfers, the company's potential real estate classification, and the change of control clauses. We require a liability guarantee coupled with a payment guarantee.

When selling shares is not the right way

It is not suitable for all situations. A heavily indebted company is sometimes better recovered through a sale of assets or within the framework of insolvency proceedings. A minority shareholder without a buyer will more likely seek an exit strategy structured by the shareholders' agreement.

At Arst Avocats, these transactions fall under the purview of the Corporate Law and Mergers & Acquisitions. Romain Picard, a partner, leads the teams dedicated to mergers and acquisitions. They assist both sellers and buyers from the initial letter of intent through to the post-transfer formalities.