Lawyer - Seizure of shares

The seizure of company shares is a formidable but complex method of enforcement, offering creditors an effective means of recovering their debts, while raising crucial issues for the debtor partners and the companies concerned. Such a measure, which is often initiated after amicable collection or formal notice has failed, requires specialist legal expertise.

The involvement of an enforcement lawyer with expertise in this area is therefore crucial. Solent Avocats, based in Marseille, puts its expertise at your service:

• Creditors: we devise strategies for seizing shares in companies (SARLs, SCIs, SNCs, professional non-trading companies, etc.) to secure your debts, by navigating the intricacies of company law and civil enforcement procedures. We advise you on the best way to recover a debt.

• Joint debtors: when your shares are seized, we defend your rights, explore the possibility of an out-of-court sale or examine any legal recourse and your right to challenge the procedure if there are irregularities, in order to protect your assets as effectively as possible.

• Companies (garnishees): we advise your company or legal entity on its legal obligations when a shareholder's shares are seized and on how to reconcile this measure with the articles of association and the rights of the other shareholders, particularly with regard to approval clauses.

Our firm, Solent Avocats, has developed a recognised practice in commercial law, insolvency law and, more specifically, enforcement law, including the subtleties of seizing company shares. We adopt a pragmatic approach, favouring negotiated solutions when it is in our clients' interests to do so, while being ready to defend their positions firmly and technically before the relevant courts, such as the magistrates' court or the commercial court. Our commitment to disseminating knowledge, in particular through the QUALIOPI-certified training courses we provide, attests to our technical mastery, which we put at your service to navigate these complex procedures.

Seizure of company shares: what is involved?

The seizure of company shares is a legal procedure whereby a creditor, in possession of a writ of execution recording a liquid and due debt, can have the shares (shareholder's rights) held by his debtor in a company placed in the hands of the court with a view to their sale in order to be paid out of the price. This mainly concerns shares in companies that are not admitted to trading on a regulated market (unlisted shares). This measure is distinct from the seizure for sale of tangible movables or the seizure of bank accounts.

The rights concerned are the pecuniary rights attached to company shares, a type of intangible asset. This includes the right to future dividends and, in the event of dissolution of the company, the right to the liquidation surplus. It is important to note that, despite the seizure, the seized debtor remains the owner of his shares and retains his status as a partner as well as his political rights (non-pecuniary rights) attached to them, such as the right to vote at general meetings, until the shares are actually sold. Industry shares, on the other hand, are generally considered to be exempt from seizure because they are inalienable.

Our firm can help you assess the situation, whether you are a creditor wishing to foreclose or a debtor subject to such an enforcement measure.

Key stages in the seizure of shares procedure

If a seizure of shares is to be successful, or if it is to be contested effectively, you need to have a precise understanding of how it works, which is often governed by the Code of Civil Enforcement Procedures (CPCE) and the Code of Civil Procedure (CPC).

The seizure phase:The procedure begins with the service of a writ of seizure by a court commissioner (formerly a bailiff). This document is served directly on the issuing company whose shares are being seized, which then acts as a third party to the seizure. No prior summons to pay is required. As a garnishee, the company has information obligations. In particular, it must inform the court commissioner of the existence of any pledges or prior seizures that may encumber the shares concerned. The seizure deed must also be notified to the debtor shareholder. This notification, which must also be made by a court commissioner, must be made within a strict period of eight days of service on the company, failing which the entire seizure procedure will be null and void. A registered letter with acknowledgement of receipt may be required for certain notifications as part of the overall procedure, but the act of notification itself is a bailiff's act.

Immediate effects of the seizure and debtor's options:As soon as the company is notified of the seizure, the seized shares and the related pecuniary rights become unavailable (unavailability of rights). This means that the debtor partner can no longer transfer them. These are the main effects of seizure. However, the debtor still has an option: he can obtain the release of the seizure by depositing a sum sufficient to pay off the seizing creditor in full. There is also a right to contest the measure.

Solent Avocats ensures that each phase is carried out correctly, defending your interests whether you are the initiator of the seizure request or the party subject to it. We examine each condition of implementation.

The sale of seized shares: amicable or forced

If the seizure is not lifted, the next step is to sell the shares. The proceeds of the sale will be used to pay the creditor.

The CPCE encourages the search for a less conflictual solution by first offering the debtor the opportunity to sell his shares himself. From the date of notification of the seizure, the debtor partner has one month to find a buyer and propose an amicable sale. The proposals are communicated by the court commissioner to the distraining creditor, who has fifteen days to agree. The absence of a response often constitutes acceptance. The main challenge of an amicable sale often lies in the time allowed to obtain the approval of the transferee by the other partners, a condition that is frequently imposed. Our firm can help you anticipate this difficulty.

Forced sale (auction): the last resortIf an amicable sale cannot take place, the forced sale of the shares may be initiated. This can only take place after presentation of a certificate stating that the seizure is not contested or a court decision rejecting the contestation. The creditor is responsible for drawing up the specifications. This document must contain precise information, and in particular must reproduce the statutory approval clauses if they are to be enforceable. The forced sale is advertised. The adjudication is a public auction, conducted by a notary or a court commissioner. The price is payable in cash. Solent Avocats offers you its legal assistance in negotiating an amicable sale or in conducting the compulsory sale procedure.

Approval, pre-emption, substitution: the impact of company law on seizures

The seizure of shares comes up against the application of company law. The mechanisms for controlling share transfers (approval, pre-emption, substitution) may render the auction ineffective if the buyer is not accepted or if the shareholders exercise their priority right.

• Non-trading companies (SCI, etc.): the partners may substitute themselves for the successful bidder. Approval is often required. Before the sale, the shareholders may also decide to dissolve the company or buy back the shares.

• Société en Nom Collectif (SNC): the unanimous consent of all partners is required. Seizure of rights is often ineffective. The same does not apply to a simplified joint stock company (société par actions simplifiée - SAS), where the rules are different.

• Société à Responsabilité Limitée (SARL): approval of transfers to third parties is subject to majority rules. If approval is refused, the partners must acquire the shares or arrange for them to be acquired. A joint venture, which has no legal personality of its own, raises different issues.

Valuation of shares in the event of redemption (Art. 1843-4 of the Civil Code): if the successful bidder is not approved and the shares are to be redeemed, the determination of the price may give rise to disputes. In the event of a dispute, Art. 1843-4 of the Civil Code provides for the appointment of an expert by decision of the president of the court, which may result in delays. The case law of the Cour de cassation, in particular its civil and commercial divisions, regularly clarifies the application of this article.

Solent Avocats' combined expertise in company law and enforcement procedures is essential in anticipating these difficulties.