So, you have successfully navigated the French bureaucracy. You have your Société Civile Immobilière (SCI), the K-bis is in the safe, and the champagne has been popped. You are officially a “associé.”
But unlike owning a freehold in the Cotswolds or shares in a PLC, owning parts sociales (social shares) in a French civil company comes with a unique set of strings attached. These strings can feel like a safety net—or a golden cage.
Here is the comprehensive guide to holding, selling, and passing on your French shares.
1. You Own Rights, Not Bricks
It is vital to remember that parts sociales are not negotiable instruments like stock market shares. You cannot simply trade them on an app. They are titles representing your rights in the company contract.
This distinction matters because these shares are considered movable property (biens meubles), but they are strictly tied to the person holding them (intuitu personae). This means the identity of your fellow shareholders matters legally, not just personally.
2. The Liability Warning (Read This First)
Before we discuss profits, we must discuss risk. In a UK Limited company, your liability is usually limited to your shares. In a French Société Civile, it is different.
The Rule of Indefinite Liability Associates are indefinitely responsible for the company’s debts.
- The Good News: You are not jointly and severally liable (unlike in a commercial partnership). This means a creditor cannot come after you for the whole debt just because you have the deepest pockets. You are only liable in proportion to your share of the capital.
- The Procedure: A creditor can only knock on your door after they have unsuccessfully pursued the company itself first.
3. Your Rights as an Associate
It is not all risk; you have fundamental rights that cannot be taken away.
- The Right to Stay: You cannot be expelled from the company against your will unless the statutes explicitly provide for an exclusion clause (e.g., for misconduct) or in specific legal cases like personal bankruptcy.
- The Right to Know: You are not a silent partner. At least once a year, you have the right to access the company books, invoices, and contracts at the head office. You can also submit written questions to the manager, who must answer within one month.
- The Right to Vote: This is a public order right. You cannot be deprived of your right to participate in collective decisions, even if you are a minority shareholder.
4. The Exit Strategy: Selling Your Shares (Cessions)
Many British investors assume that if they want out, they can just sell their stake. In France, it is rarely that simple.
The Approval Trap (L’Agrément)
By default, under Article 1861 of the Civil Code, you cannot sell your shares to a third party without the unanimous agreement of all other associates.
- The Risk: If you fall out with your business partner, they can effectively block your exit by refusing to approve your buyer.
- The Fix: Your statutes can modify this. You can lower the majority required for approval or even authorize the manager to give approval.
The Spousal Trap
If you are married under a community property regime (common in France), buying shares requires caution. If you use shared funds to buy shares, you must inform your spouse. If you fail to do so, your spouse can claim 50% of the shares later or even have the purchase annulled.
- Selling: If the shares are community property, you cannot sell them without your spouse’s consent.
What If They Say No?
If your associates refuse your buyer, they cannot keep you prisoner forever. If they refuse approval, the other associates (or the company itself) are legally obliged to buy your shares.
- The Price Dispute: If you cannot agree on a price, it will be fixed by a court-appointed expert under Article 1843-4 of the Civil Code. Be warned: this expert valuation is binding and often conservative.
5. The Escape Hatch: Withdrawal (Retrait)
If you cannot find a buyer, you might try to simply “withdraw” from the company. This is a distinct legal right under Article 1869 of the Civil Code.
- Voluntary Withdrawal: This is only possible if your statutes allow it or if the other associates agree unanimously.
- Court-Ordered Withdrawal: If you are stuck, you can ask a judge to authorize your withdrawal for “just causes” (justes motifs).
- What is a Just Cause? Courts have accepted withdrawal when a shareholder was excluded from meetings, deprived of information, or when family conflict destroyed the affectio societatis (the willingness to work together).
- The Payout: You are entitled to the value of your shares. However, you remain liable for debts incurred before your withdrawal becomes official.
6. The “Unwanted Heir”: Succession Rules
For many, the SCI is an inheritance planning tool. But does the company survive you?
Continuity
The default legal position is that the society does not dissolve upon the death of an associate. It continues with the heirs or legatees. This means your children automatically become associates… in theory.
The Approval Clause
Careful drafting is critical here. Statutes can stipulate that heirs must be approved by the surviving associates to join.
- If Refused: The heirs do not get the shares. Instead, they are entitled to the value of the shares calculated on the day of death. The surviving associates must buy them out.
- Status of Heirs: Until they are approved (if approval is required), heirs cannot vote. However, they are entitled to the value of the shares.
7. Usufruct & Bare Ownership: Who is the Boss?
It is common to split share ownership: parents keep the Usufruct (income/usage) and children get the Bare Ownership(Nue-propriété).
- The Vote: The bare owner generally has the right to vote. However, for decisions regarding the allocation of profits (e.g., dividends), the vote is reserved for the usufructuary.
- The Reform: Since 2019, the law explicitly states you can agree otherwise in the statutes, but you cannot deprive the bare owner of the right to at least participate in decisions.
- Status: Legally, the bare owner is the “associate.” The usufructuary is not strictly an associate, though they have rights to provoke deliberations on issues affecting their income.
8. Pledging Your Shares (Nantissement)
Can you use your SCI shares as collateral for a loan? Yes, shares can be pledged (nantis). This follows the rules of a “pledge without dispossession.”
- The Process: It requires a formal written deed and registration.
- The Risk: If you default, the creditor can force the sale of your shares. Interestingly, your fellow associates have a “right of substitution”—they can step in and buy the shares before the creditor takes them, preventing a stranger from forcing their way into the company.
The English Investor Bottom Line An SCI is not just a passive bucket for real estate; it is a living contract with serious implications for your liability and your estate. The rules regarding share transfers are designed to protect the group from outsiders—even if that “outsider” is your own heir.
Review your statutes today. Do they require unanimity? Do they block heirs? Do they allow for withdrawal? Knowing these clauses now is better than finding out in a French court.
Disclaimer: Always consult with a French Notary or legal professional before signing contracts.
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