Transfer of company: transfer of shares to a third party
Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)
Amount of money intended to compensate for the damage suffered
Flat-rate or proportional reduction applied on the basis of a tax calculation (income, value of property, etc.)
Property that cannot be moved (e.g. land or apartment) or an object that is an integral part of it (e.g. land fence)
Minimum number of persons present or represented for a vote or decision to be valid
Legal situation that third parties cannot ignore and must respect, even if they are not signatories
Natural persons holding more than 25% of the business' capital and/or voting rights. They may also be persons exercising, by any other means, powers of control over the management, administrative or management bodies of the business or its general meeting.
A social part is a title to part of the capital of the business. This business share gives the partner rights enabling him to participate in the life of the company. Thus, the transfer of shares means for a member (the transferor) to pass on to an acquirer (the transferee) the rights which he holds in the share capital of the company. Regardless of the legal form of the company, this operation must follow a number of steps.
What applies to you ?
SARL
The system of approval depends on the social form company and transferee : third-party operator, partner, spouse (Civil partnership or partner), ascendant or descendant.
By " third party " means any natural or legal person not associated on the date of the transfer. They may be a former partner, employees or non-associated managers.
Disposal of shares to a third party operator is not possible with the consent of the majority of the partners representing at least half of the shares in the company. The statutes may provide for a larger majority.
Where the approval of members is necessary, it must be obtained at a general meeting. It has 3 months to respond (6 months for ICS). In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
The contract of assignment must be in writing
- either by authentic instrument (by a notary),
- either by private act (between parties only).
The deed of assignment must count as many copies as parts to the contract.
Each copy must be signed by the parties.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Partner Approval Detail
What information?
You must inform employees of your willingness to sell your shares and the possibility for employees of to submit an offer to purchase for the acquisition of those assets where all of the following conditions are met:
- The company includes less than 250 employees
- The company's annual turnover shall not exceed EUR 50 million,
- The sale of shares represents more than 50% shares in the capital of the business.
FYI
from 250 employees, no information is required.
When should information be disseminated?
This information must be given to employees at the latest 2 months before the date of conclusion of the contract of sale.
Any purchase offer submitted by one or more employees must be communicated to you without delay. However, this offer does not no priority character compared to other offers.
You are completely free to enter into negotiations with the employees or not. Refusal to consider or accept an offer need not be motivated. You have the right not to answer.
When each employee has made known his decision not to submit an offer, the sale of the shares may take place before the expiry of the 2 months.
How do you disseminate information?
Employees can be informed by any means of such a nature as to make the date of receipt certain:
- During a information meeting : with signature of a attendance register
- By display : with signature of a dated register
- By email : by using a process that can attest to the date of receipt with certainty
- By Delivery in your own hand : with signature or receipt
- By act of a commissioner of justice (former bailiff's act) or lawyer, etc.
What sanctions?
If the company is sold without the employees having been informed, the latter may bring the matter before the civil court to obtain compensation for their loss.
In this case, you may be ordered to pay damages up to 2% of the amount of the sale.
Furthermore, informed employees are subject to an obligation to discretion.
Failure to comply with the obligation of discretion is a fault which justifies a disciplinary sanction up to and including the dismissal of the employee.
Purpose of the guarantee
Unlike the sale of the business alone, the transfer of shares implies the transfer of the assets, but also liabilities (debts) of the company.
As a assignor, you assign your rights and duties.
The appearance of unknown debts at the time of the sale is a major risk that the buyer must avoid to ensure the company's sustainability.
By the asset-liability guarantee clause, you undertake to guarantee the accuracy of all information provided to the buyer: company activity, social accounts, customers and suppliers, salary costs, possible participation in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed.
If any of these assumptions is confirmed after the transfer of the shares, the transferee may activate the guarantee to obtain a compensation on your part.
References to the guarantee clause
The asset-liability guarantee clause shall contain the following information:
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Duration of the clause: between 3 and 5 years.
- Calculation of compensation: the percentage of the debt that you are committing to bear. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties depends.
Assignment of social rights not evidenced by a mandatory instrument to be declared
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Example :
You own 50 shares of a SARL whose capital is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser shall be calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
SARL incorporated before 4 August 2005
The decision to amend the articles of association of an LLC must be adopted by the members representing at least 3/4 of the shares.
There's no pitch of quorum required, a minimum number of participants present or represented at the AGE is not required.
SARL incorporated after 4 August 2005
The general meeting may validly deliberate only if the partners present or represented possess at least 1/4 shares (on first notice) and 1/5 of these (on second notice).
If not, a new meeting must be convened within 2 months.
If the quorum is respected, the amendments must then be decided by a majority of 2/3 of the shares held by the members present or represented.
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Publication shall take place within1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities office :
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
Capital gains realized on the disposal of the shares may be taxed according to 2 methods of taxation different:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Calculation of income tax amount: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its shares.
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% to choose to be subject to the progressive scale of income tax.
Its tax rate varies between 0% and 45% according to your personal situation.
Social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
When you opt for progressive taxation, you benefit from a abatement on your capital gains from the sale of the securities acquired or subscribed before 1er january 2018.
Warning
if you acquired the transferred securities after 1er january 2018, no allowance may be applied when calculating the amount of tax.
There is an abatement general and an abatement reinforced.
General abatement
L'general allowance is applicable in all situations and is directly related to the length of time the shares are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
Reinforced reduction
The enhanced allowance is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You sell the shares of an SME under 10 years of age : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You're a company manager and you're retiring : you must have been a continuous manager and have held at least 25% business rights (an SME) during the 5 years prior to assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
in addition to the enhanced allowance, capital gains realized by retiring managers of SMEs are fixed abatement of €500,000. If the capital gain is greater than this amount, only the surplus is subject to taxation, at the rate of the increased reduction.
CNS
The system of approval depends on the social form company and transferee : third-party operator, partner, spouse (Civil partnership or partner), ascendant or descendant.
By " third party " means any natural or legal person not associated on the date of the transfer. They may be a former partner, employees or non-associated managers.
The shares may not be transferred between members, to the spouse, to the ascendants and descendants or to third parties only with the consent of all partners.
Any clause to the contrary is not valid. This rule cannot be circumvented by any derogating clause and also concerns donations, exchanges and the liquidation of a community between spouses.
Where the approval of members is necessary, it must be obtained at a general meeting. It has 3 months to answer. In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
The contract of assignment must be in writing
- either by authentic instrument (by a notary),
- either by private act (between parties only).
The deed of assignment must count as many copies as parts to the contract. Each copy must be signed by the parties.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Partner Approval Detail
What information?
You must inform employees of your willingness to sell your shares and the possibility for employees of to submit an offer to purchase for the acquisition of those assets where all of the following conditions are met:
- The company includes less than 250 employees
- The company's annual turnover shall not exceed EUR 50 million,
- The sale of shares represents more than 50% shares in the capital of the business.
FYI
from 250 employees, no information is required.
When should information be disseminated?
This information must be given to employees at the latest 2 months before the date of conclusion of the contract of sale.
Any purchase offer submitted by one or more employees must be communicated to you without delay. However, this offer does not no priority character compared to other offers.
You are completely free to enter into negotiations with the employees or not. Refusal to consider or accept an offer need not be motivated. You have the right not to answer.
When each employee has made known his decision not to submit an offer, the sale of the shares may take place before the expiry of the 2 months.
How do you disseminate information?
Employees can be informed by any means of such a nature as to make the date of receipt certain:
- During a information meeting : with signature of a attendance register
- By display : with signature of a dated register
- By email : by using a process that can attest to the date of receipt with certainty
- By Delivery in your own hand : with signature or receipt
- By act of a commissioner of justice (former bailiff's act) or lawyer, etc.
What sanctions?
If the company is sold without the employees having been informed, the latter may bring the matter before the civil court to obtain compensation for their loss.
In this case, you may be ordered to pay damages up to 2% of the amount of the sale.
Furthermore, informed employees are subject to an obligation to discretion.
Failure to comply with the obligation of discretion is a fault which justifies a disciplinary sanction up to and including the dismissal of the employee.
Purpose of the guarantee
Unlike the sale of the business alone, the transfer of shares implies the transfer of the assets, but also liabilities (debts) of the company.
As a assignor, you assign your rights and duties.
The appearance of unknown debts at the time of the sale is a major risk that the buyer must avoid to ensure the company's sustainability.
By the asset-liability guarantee clause, you undertake to guarantee the accuracy of all information provided to the buyer: company activity, social accounts, customers and suppliers, salary costs, possible participation in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed
If any of these assumptions is confirmed after the transfer of the shares, the transferee may activate the guarantee to obtain a compensation on your part.
References to the guarantee clause
The asset-liability guarantee clause shall contain the following information:
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Duration of the clause: between 3 and 5 years.
- Calculation of compensation: the percentage of the debt that you are committing to bear. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties depends.
Assignment of social rights not evidenced by a mandatory instrument to be declared
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Example :
You own 50 shares in an SNC, the capital of which is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser is calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
Any amendment to the Articles of Association shall require the agreement of the unanimity of the members (100%).
However, the statutes may provide for certain decisions to be taken with the agreement of a majority (50 %).
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Publication shall take place within1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities office :
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
Capital gains realized on the disposal of the shares may be taxed according to 2 methods of taxation different:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Calculation of income tax amount: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its shares.
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% to choose to be subject to the progressive scale of income tax.
Its tax rate varies between 0% and 45% according to your personal situation.
Social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
When you opt for progressive taxation, you benefit from a abatement on your capital gains from the sale of the securities acquired or subscribed before 1er january 2018.
Warning
if you acquired the transferred securities after 1er january 2018, no allowance may be applied when calculating the amount of tax.
There is an abatement general and an abatement reinforced.
General abatement
L'general allowance is applicable in all situations and is directly related to the length of time the shares are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
Reinforced reduction
The enhanced allowance is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You sell the shares of an SME under 10 years of age : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You're a company manager and you're retiring : you must have been a continuous manager and have held at least 25% business rights (an SME) during the 5 years prior to assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
in addition to the enhanced allowance, capital gains realized by retiring managers of SMEs are fixed abatement of €500,000. If the capital gain is greater than this amount, only the surplus is subject to taxation, at the rate of the increased reduction.
SCS
The system of approval depends on the social form company and transferee : third-party operator, partner, spouse (civil partnership or partner), ascendant or descendant.
By " third party " means any natural or legal person not associated on the date of the transfer. They may be a former partner, employees or non-associated managers.
The shares may not be transferred between members, their ascendants and their descendants, or to third parties, only with the consent of all partners.
However, the statutes may to make adjustments.
Thus, the partners may stipulate in the articles of association that:
- The shares of the limited partners (who provide the capital) may be freely disposed of between partners.
- The shares of the limited partners may be transferred to third parties foreigners at the businesses, provided you have the consent of all sponsors (responsible for managing CBS) and majority in number and capital of limited partners.
- The shares of a general partner may be transferred in part to a limited partner or to one third at the businesses, provided that the consent of all the general partners and the majority in number and in capital of the general partners is obtained.
Where the approval of members is necessary, it must be obtained at a general meeting. It has 3 months to answer. In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
The contract of assignment must be in writing
- either by authentic instrument (by a notary),
- either by private act (between parties only).
The deed of assignment must count as many copies as parts to the contract.
Each copy must be signed by the parties.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Partner Approval Detail
What information?
You must inform employees of your willingness to sell your shares and the possibility for employees of to submit an offer to purchase for the acquisition of those assets where all of the following conditions are met:
- The company includes less than 250 employees
- The company's annual turnover shall not exceed EUR 50 million
- The sale of shares represents more than 50% shares in the capital of the business
FYI
from 250 employees, no information is required.
When should information be disseminated?
This information must be given to employees at the latest 2 months before the date of conclusion of the contract of sale.
Any purchase offer submitted by one or more employees must be communicated to you without delay. However, this offer does not no priority character compared to other offers.
You are completely free to enter into negotiations with the employees or not. Refusal to consider or accept an offer need not be motivated. You have the right not to answer.
When each employee has made known his decision not to submit an offer, the sale of the shares may take place before the expiry of the 2 months.
How do you disseminate information?
Employees can be informed by any means of such a nature as to make the date of receipt certain:
- During a information meeting : with signature of a attendance register
- By display : with signature of a dated register
- By email : by using a method that can be used to certify the date of receipt with certainty.
- By Delivery in your own hand : with signature or receipt
- By act of a commissioner of justice (former bailiff's act) or lawyer, etc.
What sanctions?
If the company is sold without the employees having been informed, the latter may bring the matter before the civil court to obtain compensation for their loss.
In this case, you may be ordered to pay damages up to 2% of the amount of the sale.
Furthermore, informed employees are subject to an obligation to discretion.
Failure to comply with the obligation of discretion is a fault which justifies a disciplinary sanction up to and including the dismissal of the employee.
Purpose of the guarantee
Unlike the sale of the business alone, the transfer of shares implies the transfer of the assets, but also liabilities (debts) of the company.
As a assignor, you assign your rights and duties.
The appearance of unknown debts at the time of the sale is a major risk that the buyer must avoid to ensure the company's sustainability.
By the asset-liability guarantee clause, you undertake to guarantee the accuracy of all information provided to the buyer: company activity, social accounts, customers and suppliers, salary costs, possible participation in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed
If any of these assumptions is confirmed after the transfer of the shares, the transferee may activate the guarantee to obtain a compensation on your part.
References to the guarantee clause
The asset-liability guarantee clause shall contain the following information:
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Duration of the clause: between 3 and 5 years.
- Calculation of compensation: the percentage of the debt that you are committing to bear. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties depends.
Assignment of social rights not evidenced by a mandatory instrument to be declared
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Example :
You own 50 shares in a CBS, the capital of which is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser shall be calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
Any amendment shall be decided upon with the agreement of all general partners and the majority (in number and capital) of the limited partners.
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Publication shall take place within1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities office :
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
Capital gains realized on the disposal of the shares may be taxed according to 2 methods of taxation different:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Calculation of income tax amount: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its shares.
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% to choose to be subject to the progressive scale of income tax. Its tax rate varies between 0% and 45% according to your personal situation.
Social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
When you opt for progressive taxation, you benefit from a abatement on your capital gains from the sale of the securities acquired or subscribed before 1er january 2018.
Warning
if you acquired the transferred securities after 1er january 2018, no allowance may be applied when calculating the amount of tax.
There is an abatement general and an abatement reinforced.
General abatement
L'general allowance is applicable in all situations and is directly related to the length of time the shares are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
Reinforced reduction
The enhanced allowance is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You sell the shares of an SME under 10 years of age : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You're a company manager and you're retiring : you must have been a continuous manager and have held at least 25% business rights (an SME) during the 5 years prior to assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
in addition to the enhanced allowance, capital gains realized by retiring managers of SMEs are fixed abatement of €500,000. If the capital gain is greater than this amount, only the surplus is subject to taxation, at the rate of the increased reduction.
SCI
The system of approval depends on the social form company and transferee : third-party operator, partner, spouse, ascendant or descendant.
By " third party " means any natural or legal person not associated on the date of the transfer. They may be a former partner, employees or non-associated managers.
In a civil real estate business (SCI), the transfer of shares to a third party requires still an approval procedure, unanimously or by a majority of the members as provided for in the statutes.
Where the approval of members is necessary, it must be obtained at a general meeting. It has 6 months to answer. In the absence of a written reply within that period, approval shall be granted.
Please note
if you are married under the legal community or under the division, your spouse's consent to the transfer is required. A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.
The contract of assignment must be in writing
- either by authentic instrument (by a notary),
- either by private act (between parties only).
The deed of assignment must count as many copies as parts to the contract. Each copy must be signed by the parties.
The deed of assignment must contain certain mandatory particulars :
- Name of parties
- Identity of the business
- Number and designation of the shares transferred (if numbered)
- Sale price of the assignment and payment terms (except in the case of a donation)
- Partner Approval Detail
What information?
You must inform employees of your willingness to sell your shares and the possibility for employees of to submit an offer to purchase for the acquisition of those assets where all of the following conditions are met:
- The company includes less than 250 employees
- The company's annual turnover shall not exceed EUR 50 million,
- The sale of shares represents more than 50% shares in the capital of the business.
FYI
from 250 employees, no information is required.
When should information be disseminated?
This information must be given to employees at the latest 2 months before the date of conclusion of the contract of sale.
Any purchase offer submitted by one or more employees must be communicated to you without delay. However, this offer does not no priority character compared to other offers.
You are completely free to enter into negotiations with the employees or not. Refusal to consider or accept an offer need not be motivated. You have the right not to answer.
When each employee has made known his decision not to submit an offer, the sale of the shares may take place before the expiry of the 2 months.
How do you disseminate information?
Employees can be informed by any means of such a nature as to make the date of receipt certain:
- During a information meeting : with signature of a attendance register
- By display : with signature of a dated register
- By email : by using a process that can attest to the date of receipt with certainty
- By Delivery in your own hand : with signature or receipt
- By act of a commissioner of justice (former bailiff's act) or lawyer, etc.
What sanctions?
If the company is sold without the employees having been informed, the latter may bring the matter before the civil court to obtain compensation for their loss.
In this case, you may be ordered to pay damages up to 2% of the amount of the sale.
Furthermore, informed employees are subject to an obligation to discretion.
Failure to comply with the obligation of discretion is a fault which justifies a disciplinary sanction up to and including the dismissal of the employee.
Purpose of the guarantee
Unlike the sale of the business alone, the transfer of shares implies the transfer of the assets, but also liabilities (debts) of the company.
As a assignor, you assign your rights and duties.
The appearance of unknown debts at the time of the sale is a major risk that the buyer must avoid to ensure the company's sustainability.
By the asset-liability guarantee clause, you undertake to guarantee the accuracy of all information provided to the buyer: company activity, social accounts, customers and suppliers, salary costs, possible participation in other businesses, ongoing disputes, etc.
This guarantee clause allows the purchaser to protect himself against:
- The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
- Incorrect valuation of the asset whose value is ultimately lower than agreed.
If any of these assumptions is confirmed after the transfer of the shares, the transferee may activate the guarantee to obtain a compensation on your part.
References to the guarantee clause
The asset-liability guarantee clause shall contain the following information:
- Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
- Duration of the clause: between 3 and 5 years.
- Calculation of compensation: the percentage of the debt that you are committing to bear. This percentage may decrease over time.
- Floor Amount Warranty: The amount from which the warranty can be activated.
- Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
- Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).
Declaration of assignment
Assignment established by an act
Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.
The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.
Who shall I contact
Assignment not established by an act
Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:
- or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights
Impots.gouv.fr professional space
- or by means of Form No 2759, to be filed with the registration department on which one of the parties depends.
Assignment of social rights not evidenced by a mandatory instrument to be declared
Who shall I contact
Payment of registration fees
The acquisition of shares shall give rise to payment by the purchaser a registration fee.
However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.
This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.
The rate is 5% for businesses with a predominance of real estate, i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.
Registration fee cannot be less than €25.
Example :
You own 50 shares in a SCI whose capital is divided into 400 shares. You sell your shares to the buyer for a value of €50,000.
The amount of registration fees payable by the purchaser shall be calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x 3%.
Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.
Tax Exemption
The transfer shall be subject to abatement of €500,000 on the value of the shares in the company where it is held with one of the following :
- Let's say one employee of the transferred company. He must have been employed on a full-time contract for at least 2 years or have a apprenticeship contract ongoing at the time of transfer.
- Let's say one family member of the transferor (her Civil partnership or partner, her direct ascendants or descendants, or her siblings).
This reduction shall be applied when all following conditions are respected:
- The company shall exercise commercial, industrial, craft, agricultural or liberal activity, with the exception of the management of its own movable or immovable property.
- The transferor shall have held the securities for more than 2 years (if the transferor has acquired the shares free of charge, no holding period is required).
- The purchaser must to continue the business of the business whose shares have been transferred as a professional activity unique and in an effective and continuous manner, for 5 years after the date of sale.
- The purchaser must to ensure effective management of company during these five years.
A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association.
The statutory amendment shall be made in 3 steps.
1. Convening of a special general meeting
The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)
If the status change is not approved at the first meeting, the partners are consulted again.
Any amendment to the Articles of Association shall require the agreement of the unanimity of the members (100%).
However, the statutes may provide for certain decisions to be taken with the agreement of a majority (50 %).
2. Publishing legal announcements in a media
Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.
Publication shall take place within1 month as of the amendment.
The notice of publication must contain the following :
- Name or corporate name
- Legal form
- Share capital
- Social purpose
- Address of the seat
- Place and registration number of SCR: titleContent
- Decision or minutes of the general meeting, dated and signed
- Changes made
This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.
3. Declaration of amendment
Finally, the amendment to the Staff Regulations must be declared within the1 month, on the website of the company formalities office.
Please note
Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties.
When reporting, you must submit the supporting documents following:
- Copy of the minutes of the amendment of the statutes
- Copy of the updated articles of association: dated and certified as original by the legal representative
- Certificate of publication of the notice in a legal listing support
FYI
If the status change results in a change in beneficial ownership, it must also be declared on the formalities window.
During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.
The capital gains realized on the sale of SCI's shares are taxed differently depending on whether SCI is subject tobusiness tax (IS) orincome tax (IR).
Company subject to SI
Capital gains may be taxed according to 2 methods of taxation different:
- Flat rate of income tax
- Progressive Income Tax Schedule
Flat rate
In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2%, or a total of 30% on the amount of the capital gain.
Example :
You give up for €150,000 the business titles you originally purchased €100,000. So you realize an added value of €50,000.
- Calculation of social security contributions: 50,000 x 17.2% = €8,600
- Calculation of income tax amount: 50,000 x 12.8% = €6,400
You will therefore have to pay in total €15,000 on the transfer of its shares.
This flat rate of 12.8% is the default regime, you can opt for the progressive scale.
Progressive scale
You can waive the flat rate of 12.8% to choose to be subject to the progressive scale of income tax. Its tax rate varies between 0% and 45% according to your personal situation.
Social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.
When you opt for progressive taxation, you benefit from a abatement on your capital gains from the sale of the securities acquired or subscribed before 1er january 2018.
Warning
if you acquired the transferred securities after 1er january 2018, no allowance may be applied when calculating the amount of tax.
There is an abatement general and an abatement reinforced.
L'general allowance is applicable in all situations and is directly related to the length of time the shares are held:
- 50% for securities held between 2 and 8 years
- 65% for securities held since older than 8 years
L'increased abatement is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:
- 50% for securities held between 1 and 4 years
- 65% for securities held between 4 and 8 years
- 85% for securities held since older than 8 years
The enhanced allowance shall apply in any of the following :
- You sell the shares of an SME under 10 years of age : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
- You're a company manager and you're retiring : you must have been a continuous manager and have held at least 25% business rights (an SME) during the 5 years prior to assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.
Please note
in addition to the enhanced allowance, capital gains realized by retiring managers of SMEs are fixed abatement of €500,000. If the capital gain is greater than this amount, only the surplus is subject to taxation, at the rate of the increased reduction.
Company subject to IR
Capital gains are taxed at the rate of 19% in respect of income tax to which are added social security contributions of 17.2%, or a total of 36.2% of taxation on the amount of the capital gain.
You can benefit from a abatement in proportion to the length of the shareholding:
- On income tax : a reduction of 6% of 6e at 21e year of detention and 4% 22e year. After 22 years of holding shares, the capital gain is totally exempt.
- As social security contributions : a reduction of 1.65% of 6e at 21e year of detention, 1.6% 22e year and 9% after 22e year. From 30 years of ownership, the capital gain is totally exempt.
Please note
when it is greater than €50,000, the capital gain shall also be subject to the tax on high property gains.
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