The entry or exit of a partner in a company can mark a turning point in its operation. When a company sells all its shares, it is bought out in full. If only some of the shares are sold, this is referred to as a "share sale". The term "share" is used for SARLs, EURLs and SCIs only. For SAS, SASU or SA, the term "share" is used. As with the creation, modification or liquidation of a company, a transfer of shares must follow certain rules to be valid. Let's find out what you need to do.
The approval procedure
If the shares of a SARL are to be sold to a person outside the company, it is essential to obtain the approval of the other partners, i.e. 50% of the votes plus one, i.e. a simple majority vote. In the case of a non-trading property company (SCI), the vote is generally unanimous. However, the Articles of Association may stipulate other conditions.
The seller must notify all associates and the managing director of the sale by registered letter with acknowledgement of receipt, or by bailiff's deed. The latter has eight days to convene a General Meeting or to consult the other partners in writing.
The Shareholders' Meeting has a period of 3 to 6 months, depending on whether the company is a SARL or a SCI, to respond. If no response is received within this period, approval is automatically granted.
Sometimes, approval is refused. In this case, the partners must buy back the shares themselves within the allotted time.
The deed of sale
Whether shares are transferred free of charge or not, a share transfer agreement must be drawn up in writing, either by the partners under private deed, or by a notary in the form of a deed.
Certain information must be included:
- the identity of the parties
- number of shares
- unit price
- total share price
- payment terms
- approval
Amending the Articles of Association
When shares are sold, the capital is necessarily redistributed. Any modification, particularly of share capital, requires a change in the articles of association.
On the other hand, when shares are sold to an existing partner, it is not always necessary to amend the articles of association, unless the identity of the transferor is specified.
The formalities for modifying the share capital vary according to the legal form, the nature of the modification and the characteristics of the transfer. In all cases, a notice must be published in a SHAL (medium authorized to receive legal announcements), and the updated articles of association must be registered with the Trade and Companies Register.
Registration with the tax authorities
The transfer must be notified by the transferor or transferee to the company's tax department within one month of signature. Two copies of the deed of assignment must be supplied. One copy, bearing the registration number, will be returned.
Registration must be made with the department responsible for the notary's office, if the deed was drawn up before a notary, or with the department responsible for the domicile of one of the parties, if the deed was drawn up under private contract.
The clerk of the commercial court then takes note of the updated articles of association.
Payment of registration fees
All transfers of shares are subject to registration fees. The amount varies according to the price of the shares. The purchaser is responsible for paying these duties, but both parties are jointly and severally liable.
The calculation for SARLs is different from that for SCIs. For SARLs, the duty is 3% of the share price, compared with 5% for SCIs. Deductions are available, but there is always a minimum registration fee of €25.
Payment of capital gains
Capital gains arise when the sale price is higher than the purchase price. The amount corresponding to this difference is taxable.
When the transfer of shares is free of charge, it is possible to benefit from a 75% tax exemption, but only for SARLs. In all other cases, the default tax regime is the single flat-rate withholding tax (PFU) of 30%. The 30% rate is calculated on the amount of capital gain realized. It comprises 17.2% social security contributions and 12.8% income tax.
In a non-trading property company (SCI), the seller, a natural person, is subject to the capital gains tax regime applicable to private individuals. They benefit from an allowance based on the length of time the property has been held. After 30 years, he or she is fully exempt from capital gains tax.