Selling when there are several shareholders, and they don't always agree

What a buyer expects: all the shares

A buyer of a real estate company almost always wants to take over all of the shares. A minority stake in a family company, alongside shareholders it does not know, interests very few buyers.

In practice, a sale to a third party therefore requires the agreement of all the shareholders, or a buyout between shareholders beforehand.

What company law provides

In an SRL (private limited company), the most common form for a real estate company, the default regime is that of a closed company. Unless the articles of association provide otherwise, a transfer of shares to a third party requires the approval of at least half of the shareholders, holding at least three quarters of the shares, not counting the shares being transferred.

Some transfers are exempt from this approval: those to another shareholder, to the transferor's spouse or legal cohabitant, and to their direct-line ascendants or descendants. A brother or sister who is not yet a shareholder does not fall within these exceptions.

This is only a default regime: the articles of association can make it more flexible or stricter, up to requiring unanimity. They also often provide a pre-emption right, which obliges the seller to offer their shares to the other shareholders first. The first step is therefore always to reread the articles, and any shareholder agreement.

A refusal of approval can be challenged before the president of the enterprise court, sitting as in summary proceedings. If the court finds the refusal arbitrary, its decision stands as approval, unless the prospective buyer withdraws from the purchase within two months.

Amicable solutions

• A buyout between shareholders. The one who wants to stay buys the shares of the one who wants to leave. It is often the fastest solution, provided they agree on a price and its financing.
• Selling the whole company together. Everyone sells to a third party at once. This is generally the solution that maximises value, because it allows 100% of the shares to be sold.
• Separating the buildings. A demerger can allow each shareholder to leave with part of the properties. It is subject to strict legal and tax conditions, and has to be prepared with an adviser.

If a buyout goes through a company, its tax treatment must be checked first. Where the seller controls the buying company, alone or with their spouse or relatives up to the second degree (siblings included), the gain in principle falls under the internal capital gains regime, taxed at 33% with no exemption. The regime is explained here.

When agreement is impossible: court remedies

The Code of Companies and Associations provides two procedures to end a conflict between shareholders, in SRLs as in SAs:

• Withdrawal: a shareholder asks the court, for just cause, to order the shareholders responsible for that just cause to buy all of their shares.
• Exclusion: shareholders meeting a minimum voting threshold set by law ask the court, for just cause, to order another shareholder to transfer their shares to them.

These claims are brought before the president of the enterprise court of the company's registered office, sitting as in summary proceedings, who also sets the price of the shares. Recognised just causes include, in particular, serious and lasting disagreement between shareholders, or abuse of majority.

These procedures are a last resort: they take time, cost money, and harden positions. They nonetheless carry useful weight in a negotiation, because they show that a deadlock is not without a way out.

How to avoid deadlock

• Reread the articles of association and any shareholder agreement before taking any step.
• Agree on an independent valuation, accepted by all, before discussing price with a buyer.
• Appoint a single person to lead the discussions, with a clear mandate.
• Set together the timetable and the floor price below which nobody sells.
• Settle disagreements before launching the sale, not in front of the buyer.