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The seizure of shareholders' rights allows creditors to take legal action and then sell the company's assets. shares held by their debtor. This procedure has existed since the 1991-1992 reform of enforcement procedures, but is still rarely used. Why is this potentially formidable legal tool so little used in practice?
A codified but under-exploited procedure
The Code of Civil Enforcement Procedures devotes an entire chapter to this type of seizure, which has now been integrated into the broader framework of the seizure of intangible rights. In theory, a creditor with a writ of execution can have the debtor's shares sold in order to be paid from the proceeds.
This procedure This applies to rights in both partnerships (shares in SCIs, SARLs, SNCs) and limited companies (shares in SAs, SASs).
In theory, it is a powerful lever. In practice, commissioners make little use of it.
The clash of legal logics: enforcement vs. company law
The central problem lies in the conflict between two contradictory legal logics:
- The law of civil enforcement procedures, which seeks to ensure the effectiveness of the recovery process
- Company law, which protects the corporate order and the freedom of partners
La approval procedure is the main obstacle. For unlisted companies, the entry of a third party after an auction is subject to the agreement of the other shareholders. The other shareholders may oppose the arrival of the successful bidder.
For SNCs, unanimity of the partners is required - including that of the debtor himself! For SARLs, a majority of partners representing half of the shares is required. In civil partnerships, all partners must give their consent.
The legislator has decided in favour of company law: article R. 233-9 of the Code of Civil Enforcement Procedures states that "the legal and contractual procedures for approval, pre-emption or substitution are implemented in accordance with the provisions specific to each of them".
Practical difficulties
Limited access to asset information
It is often difficult for judicial officers to identify the debtor's shareholdings. There is no central database that lists all the corporate rights held by an individual. This lack of transparency makes it difficult to initiate a seizure.
The complex valuation of unlisted securities
For unlisted rights, the value is uncertain. How do you set a price? Shares in SCIs or family businesses have no obvious market value. This uncertainty discourages potential bidders.
Discouraged bidders
The sword of Damocles represented by approval procedures deters potential buyers. Why bid for shares when you know that the company or the partners can then block entry or exercise a right of pre-emption?
Practical solutions exist
Simplified procedure for listed securities
For securities admitted to trading on a regulated market, the procedure is more flexible. Approval is not required and the sale is carried out directly at the market price. The garnishee (financial intermediary) sells the securities himself.
Seizure as negotiating leverage
More than a procedure actually aimed at sale, seizure of shareholders' rights acts as a powerful means of exerting pressure. Once the shares have been frozen, the debtor is often encouraged to negotiate an amicable settlement.
Changes in case law
Practice is adapting: some writers of specifications include clauses stipulating that the sale is "at the auction price" in the event of a buy-back after refusal of approval, in order to avoid the application of article 1843-4 of the Civil Code on expert appraisal.
Financial rights
Seizure renders unavailable not only the securities but also the "pecuniary rights" attached to them. This means that future dividends are blocked. This prospect may also encourage the debtor to pay his debt.
A necessary reform?
As Professor Rudy Laher wrote: "The regulatory authority should have gone all the way. Rather than referring to the existing rules on approval for each type of share, it should have introduced a procedure specific to forced sales, less respectful of the other shareholders and more energetic in imposing the successful bidder.
Without such reform, the seizure of shareholders' rights is likely to remain an underused instrument, despite its considerable potential. To overcome these obstacles and maximise the effectiveness of this procedure, the support of a lawyer specialising in the seizure of partners' rights is strongly recommended.
Sources
- Code of civil enforcement procedures, articles L. 231-1 to L. 233-3 and R. 231-1 to R. 233-9
- LAHER Rudy, "La vente forcée sur saisie de droits sociaux: propositions de réforme des procédures d'agrément, de préemption et de substitution", Revue des sociétés, 2019
- LAHER Rudy, "Saisie des droits incorporels", Répertoire de procédure civile, Dalloz, July 2023
- PERROT Roger and THÉRY Philippe, "Procédures civiles d'exécution", 3rd edition, Dalloz, 2013
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