Seizure of company shares in France (saisie de parts sociales)

Seizing your debtor’s company shares

Your debtor has engineered an appearance of insolvency. Bank accounts are empty, there is no seizable salary, and real property is out of reach. But the debtor holds shares in a family SCI (property holding company), a SARL (limited liability company) or a société civile. Under French law, these shares are seizable. The procedure for seizing droits d’associe (shareholder rights), governed by Articles R232-1 et seq. of the Code of Civil Enforcement Procedures, allows a creditor holding an enforceable title to place those shares under judicial control and, ultimately, to have them sold to recover the debt.

The value of this measure often exceeds the face value of the shares themselves. From the moment the seizure notice is served on the company, the debtor’s financial rights become unavailable: no dividends, no distributions, no transfer of the shares. For a debtor who lives off company income, this blockage creates considerable pressure that frequently leads to payment before any forced sale takes place.

What we handle

• Identifying the debtor’s shareholdings (commercial registry, Infogreffe, beneficial ownership register)
• Assessing whether seizure is worthwhile given the probable value of the shares and the company’s structure
• Coordination with the commissaire de justice for service of the seizure notice
• Ensuring compliance with procedural formalities (service on the debtor within 8 days, mandatory information requirements on pain of nullity)
• Negotiating a settlement under the pressure created by the unavailability of the shares
• Conducting the forced sale procedure where necessary (conditions of sale, auction)

Challenging or negotiating when your shares are seized

A commissaire de justice has served a seizure notice on the company in which you are a shareholder. Your financial rights are frozen: dividends, distributions, transfers. If you do not act within the deadlines, your shares will be put up for auction. The procedure for seizing shareholder rights is, however, strictly regulated, and grounds for defence exist.

The formalities of the seizure notice are exacting. A procedural defect – late service on the debtor (beyond 8 days), a missing mandatory mention, defective service – leads to nullity. The debtor has one month from service to challenge the measure before the enforcement judge. The debtor may also choose to sell the shares privately to a buyer of their choosing within one month, which is almost always preferable to a forced auction.

Our lines of defence

• Verifying the regularity of the seizure notice and its service (formal and substantive defects)
• Challenge before the enforcement judge (no valid enforceable title, disputed claim, extinction of the debt)
• Arranging a private sale of the shares within the one-month statutory period
• Obtaining release by depositing funds with the Caisse des depots et consignations
• Relying on approval clauses in the articles of association to control the identity of any prospective purchaser
• Exercising the right of substitution available to the other shareholders (for societes civiles, Art. 1867 of the French Civil Code)

What the seizure means for the company

The company whose shareholder is subject to a seizure of shares is a third party to the proceedings but has immediate legal obligations: it must disclose to the commissaire de justice any existing pledges or prior seizures, and must render the debtor-shareholder’s financial rights unavailable. If the proceedings reach the forced sale stage, the company must provide its articles of association and any documents necessary to value the shares.

In the case of an SCI (French property holding company), Article 1868 of the Civil Code allows the other shareholders, within one month of being notified of the forced sale, to decide either to dissolve the company or to buy back the shares on the terms set out in the articles. After the auction, each shareholder may still substitute themselves for the successful bidder within five clear days (Art. 1867 of the Civil Code). Where the price is disputed, a valuation expert is appointed by the president of the court under Article 1843-4 of the Civil Code. These company law mechanisms, often overlooked by the parties, can fundamentally alter the outcome of the proceedings.

In the case of a SARL (French limited liability company), the transfer of shares to third parties is subject to approval by the other shareholders. If the successful bidder at auction is refused approval, the shareholders or the company must buy the shares within a specified period. Our firm advises companies on the strategy to adopt when one of their shareholders faces a seizure, combining the constraints of enforcement law with the protective mechanisms of company law.

Frequently asked questions

Which types of company shares can be seized under French law?

All unlisted company shares and partnership interests are seizable: shares in an SCI, SARL, SNC (societe en nom collectif), professional partnerships, or SAS. Only shares representing contributions of services (parts d’industrie), which are inalienable by nature, are exempt. Listed securities are subject to a separate procedure via the relevant financial intermediary.

How long does a seizure of shares take?

The seizure itself takes immediate effect: financial rights become unavailable from the moment the notice is served on the company. The debtor then has one month to arrange a private sale. If that fails, preparation of the forced sale (conditions of sale, publication, auction) typically takes a further two to four months, longer if approval clauses or the valuation of the shares are disputed.

Do approval clauses prevent the seizure?

No. Approval clauses in the articles of association do not prevent the seizure of shares. They come into play at the forced sale stage: the successful bidder may be refused admission to the company. In that case, the existing shareholders or the company must buy the shares. The approval clause protects the company from the intrusion of an outsider but does not deprive the creditor of the right to seize.

Can you act urgently to obtain a precautionary seizure of shares?

Yes. Before obtaining an enforceable title, the creditor may apply to the enforcement judge for authorisation to carry out a precautionary seizure of the debtor’s company shares. This interim measure freezes the financial rights pending judgment. Our firm acts to obtain such authorisation or to challenge it.

How are seized shares valued if the other shareholders exercise their right of pre-emption?

If the successful bidder is refused approval and the shareholders exercise their right to buy, the price is in principle agreed between the parties. In the absence of agreement, Article 1843-4 of the French Civil Code provides for the appointment of a valuation expert by the president of the court. The expert determines the value of the shares using appropriate valuation methods. This step can add several months to the proceedings.