Pledging of shares: guarantees and issues for civil and commercial companies

By Yasmine EDDAM13 June 2025

When a company seeks to obtain financing, the collateral required by lenders is often at the heart of the negotiations. Among the tools available, the pledge of shares represents an effective security, enabling a partner to guarantee a debt by using his own shares as collateral. This technique, which is similar to a mortgage on intangible property, raises specific legal issues depending on the form of the company concerned. Its regime has been modernised to better meet the needs of business life, as we explored in our complete guide to pledging. Understanding these mechanisms is essential both for creditors seeking to secure their claims and for partners committing their assets.

Pledging company shares: a multi-faceted form of security

A pledge of company shares is a contract by which a shareholder, the pledgor, assigns his shares as security for the payment of a debt, whether his own or that of a third party. The security does not relate to a tangible asset, but to an intangible right: the status of shareholder and the rights attached to it (right to dividends, voting rights). It is a powerful credit tool for SMEs and companies whose main value lies in their share capital and not in physical assets.

The main difficulty with this mechanism lies in reconciling two imperatives: on the one hand, to offer the creditor a solid guarantee that is easy to implement in the event of the debtor's default; on the other hand, to preserve the creditor's rights.intuitus personaeIn other words, the personal nature of the partnership within companies. The other partners must be able to control the entry of new people into the capital. This is why the legal regime for pledging shares varies considerably between civil partnerships, where the personal commitment is strong, and commercial companies.

Pledging shares in non-trading companies

The rules governing the pledging of shares in non-trading companies, which for many years were governed by specific provisions of the Civil Code, underwent major changes with Order no. 2021-1192 of 15 September 2021. This reform largely unified the rules by bringing them into line with ordinary pledge law, with a view to simplification and harmonisation.

Formalities and publicity: conditions of validity and enforceability

The pledging of shares in a non-trading company must be evidenced in writing, whether in a private agreement or a notarial deed. This writing is a condition of the validity of the deed: a verbal agreement would be ineffective. The contract must clearly identify the debt secured and the number of shares pledged.

To be enforceable against third parties, i.e. for the creditor to be able to assert its preferential right over the partner's other creditors, the pledge must be published. This formality is accomplished by an entry in a special register held at the registry of the commercial court in whose jurisdiction the company is registered. It is the date of this entry that determines the ranking of the pledged creditors among themselves. In the absence of such publication, the pledge remains valid between the parties (the creditor and the shareholder), but cannot be enforced against the company or third parties, such as another creditor who comes to seize the shares.

The judicial pledge system

A creditor who does not yet have a writ of execution but whose claim appears to be well-founded can take steps to preserve his rights. Judicial protective pledging allows creditors to "block" their debtor's shares pending a final court ruling. This measure requires the authorisation of the enforcement judge.

Once the order has been obtained, the pledge is served on the company and published at the court registry. The debtor must be informed within eight days. The creditor then has one month to initiate proceedings on the merits to obtain a judgment against the debtor. Once this judgment has become final, the provisional registration of the pledge can be converted into a final registration, taking effect retroactively to the date of the first registration.

Pledging of shares in commercial companies (sarl, snc)

For commercial companies, the Commercial Code does not provide as detailed a regime as that which existed for civil companies. Article 2355 of the Civil Code states that pledges of intangible movables, other than receivables, are subject to the rules governing pledges of tangible movables. It is therefore this regime that applies by default to shares in SARLs and SNCs, with some adjustments depending on the nature of these companies. Pledging of company shares is thus distinct from pledging of financial instrument accountswhich relates to transferable securities and is governed by rules specific to the French Monetary and Financial Code.

Rules applicable to limited liability companies and approval procedures

In a Société à Responsabilité Limitée (SARL), the pledging of company shares is possible, but it must comply with the approval rules for share transfers. The aim is to prevent a creditor from outside the company from becoming a partner against the wishes of the others. Article L. 223-14 of the Commercial Code, to which reference is made, requires the consent of the shareholders to be obtained.

In practical terms, the proposed pledge must be notified to the company and to each of the shareholders. Approval is given by a decision of the shareholders representing at least half of the shares, unless the Articles of Association provide for a higher majority. If the company gives its consent to the proposed pledge, this consent also constitutes the consent of the potential purchaser in the event of compulsory realisation (sale of the shares). This advance approval provides greater security for the creditor. If the company refuses approval, the pledge cannot be created.

Specific cases of general partnerships (snc)

The Société en Nom Collectif (SNC) is the type of company in which the shareholder is the sole shareholder.intuitus personae is the strongest. All partners are merchants and are indefinitely and jointly and severally liable for the company's debts. The entry of a new partner cannot therefore be done lightly. Consequently, although the pledging of SNC shares is not prohibited, it is subject to the unanimous agreement of all the partners. Without this unanimous agreement, the pledge cannot be validly constituted. This constraint means that the practice of pledging shares in SNCs is much rarer than for other types of company.

Realising pledges: reconciling guarantees and intuitus personae

Enforcement is the final stage at which the creditor, faced with unpaid debts, exercises the rights conferred by the security. It is at this point that the tension between protecting the creditor and preserving the cohesion of the company crystallises. The procedures are designed to enable the creditor to be paid while giving the partners a way out to avoid the intrusion of an unwanted third party.

Right of retention and judicial or contractual allocation

If the debtor defaults, the secured creditor has several options. It has a right of retention over the shares, which entitles it to retain them and oppose their sale by another creditor. It can also force the sale of the shares by public auction after giving the debtor formal notice to pay.

More efficiently, the creditor can apply to the court for a judicial allocation of the shares. In this case, the value of the shares is estimated by an expert on the date of transfer of ownership, and this value is deducted from the claim. Since the reform of securities law, it has also been possible to include a "commissory pact" in the pledge deed. This clause, which had long been prohibited, allows the creditor to automatically become the owner of the shares in the event of default on payment, after estimating their value. This solution is extremely fast and effective for the creditor.

The role of shareholder approval in compulsory realisation

Whichever method is used (sale, allocation), the question of the new partner's approval arises. The law provides mechanisms to protect existing partners. The company and the partners must be notified of the compulsory sale one month before it takes place.

There are two possible scenarios:

The proposed pledge had been approved by the partners: this initial approval applies to the purchaser. However, the shareholders still have one last chance. They can take the place of the buyer in the days following the sale, or the company itself can buy back the shares to cancel them.
The proposed pledge had not been submitted for approval: The partners have several options following notification. They may decide to dissolve the company, have the shares purchased by another partner or by the company itself, or allow the sale to go ahead. If they choose to allow the sale to go ahead, the buyer will be deemed to have agreed to the sale, and any inaction on the part of the shareholders will be deemed to constitute tacit acceptance.

These complex procedures illustrate the need to draft the pledge deed with the utmost precision and to anticipate the potential difficulties involved in putting it into effect. The services of a lawyer are essential to ensure the security of the transaction, both for the creditor and for the debtor and his co-partners.

Setting up and executing a pledge of company shares is a technical legal operation that significantly affects the shareholders' assets and the balance of the company. Rigorous analysis of the articles of association and careful drafting of the pledge deed are essential to prevent disputes. To secure a financing transaction or defend your rights as a partner or creditor, do not hesitate to contact our firm, whose practice is dedicated to securities and guaranteesfor an analysis of your situation.