How does a share sale work in France?

Selling shares means selling the company with its history: its contracts, employees, disputes and debts remain in place; only the shareholder changes. This is what distinguishes a share deal from the sale of a business as a going concern, and it is why most of the negotiation turns less on the price than on how risk is allocated between seller and buyer.

1. Preparing the sale

A sale is prepared well before the first contact with a buyer. The company’s legal file must be up to date and consistent: articles of association, share transfer register, shareholder minutes, key contracts, leases, intellectual property, employment matters.

Three checks drive the timetable. The articles and any shareholders’ agreement may provide for prior approval of the buyer, a pre-emption right of the other shareholders or a tag-along right: they must be identified at the outset. Key contracts may contain change-of-control clauses allowing the counterparty to terminate or renegotiate. Finally, the seller’s tax position, in particular the taxation of the capital gain, is addressed upstream with the seller’s tax adviser, as it may shape the structure of the transaction itself.

For the seller, the practical consequence is simple: put the file in order and identify approval clauses, pre-emption rights and change-of-control provisions before any first contact, because every irregularity discovered later is paid for in time or in price.

2. The letter of intent

The letter of intent sets out the main lines of the contemplated deal: scope, price or pricing method, timetable, conditions, and often an exclusivity period in favour of the buyer. It is in principle non-binding as to the completion of the transaction, but some of its provisions do bind the parties, in particular exclusivity and confidentiality.

Negotiations remain free, but they must be conducted in good faith (article 1112 of the French Civil Code). A brutal or disloyal termination of negotiations may trigger liability. The pre-contractual duty of information (article 1112-1 of the French Civil Code) moreover binds the party who knows information of decisive importance for the other party’s consent.

Before signing, each party must therefore decide what it accepts to lock in at this stage – price or method, exclusivity and its duration, timetable – and have the draft reviewed, because this framework will weigh on the whole negotiation. See also: does a letter of intent commit you to sell in France?

3. The buyer’s due diligence

The buyer reviews the company from a legal, tax, employment and financial standpoint, generally through a data room. For the seller, the challenge is to organise this disclosure: what is revealed during due diligence shapes the negotiation of the warranties, and information poorly presented is often paid for on the price.

For the buyer, due diligence serves less to draw up a list of risks than to rank them: those that justify a price reduction, those that are covered by a specific indemnity, and those that lead to walking away.

The seller should prepare the data room as part of the negotiation itself; the buyer should come out of it with a ranked list of risks, each assigned to a treatment: price, specific indemnity or condition.

See also: buying a company, the buyer’s perspective.

4. The share purchase agreement

The share purchase agreement organises the entire transaction. Its main chapters are the following.

• The price and its mechanism. A fixed price based on reference accounts (locked-box), a price adjusted on completion accounts, or deferred consideration linked to future performance (earn-out).
• Conditions precedent. Financing, regulatory clearances, approval under the articles, or waiver of change-of-control clauses.
• Representations and the warranty and indemnity provisions. The seller describes the company and undertakes to indemnify the buyer if those representations prove inaccurate. This is the heart of the negotiation: see our guide on French warranty and indemnity provisions.
• The seller’s covenants. Non-compete and non-solicitation undertakings, which must remain limited in time and space and proportionate to the interests protected; transition assistance.
• Security for payment. An escrow over part of the price or a bank guarantee, to secure the payment of any indemnities.

Before entering the negotiation, each party must have settled its fallback positions on these five chapters, because it is the balance between price, warranties and security that makes the deal, not each clause taken in isolation.

5. Approval, pre-emption and form-specific requirements

The rules vary with the corporate form. In a SAS, the articles may subject any transfer of shares to the prior approval of the company (article L. 227-14 of the French Commercial Code). In a SARL, the transfer of units to a third party requires the consent of a majority of partners representing at least half of the units, unless the articles provide for a higher majority (article L. 223-14 of the French Commercial Code). In an unlisted SA, the articles may contain an approval clause (article L. 228-23 of the French Commercial Code).

These procedures have their own time limits and formalities. A transfer made in breach of such clauses is void (articles L. 227-15 and L. 228-23 of the French Commercial Code): they must be built into the timetable from the letter of intent.

In practice, the seller must re-read the articles and any shareholders’ agreement before signing anything and build the approval periods into the deal timetable, failing which the announced completion date will not hold.

6. Completion

On the day of completion, the parties record the satisfaction of the conditions precedent, sign the transfer forms or deeds, and the buyer pays the price. Since 27 June 2026, the sale of shares or units of an entity predominantly invested in real estate, within the meaning of 2° of I of article 726 of the French Tax Code, must moreover, on pain of nullity, be recorded in a notarial deed, in a deed countersigned by a lawyer or, in the sole cases where an accountant is legally authorised to draw it up, in a private deed drawn up by that accountant (article 1865-1 of the French Civil Code); registration is then subject to the production of a copy of that deed (article 635-0 A of the French Tax Code). The guide selling shares in a French SCI or real estate company sets out the rule in detail. For shares in a company limited by shares, ownership passes upon registration of the shares in the buyer’s account (article L. 228-1 of the French Commercial Code). For SARL units, the transfer is recorded in writing and made enforceable against the company and third parties through specific formalities (articles L. 221-14 and L. 223-17 of the French Commercial Code).

The transfer then attracts registration duties, at rates that differ between shares and units (article 726 of the French Tax Code). Completion is accompanied in practice by resignations and appointments of officers and the corresponding filings.

Completion day is prepared in advance: by the day before, each party must have the exact signing order of all documents, cleared funds and verified signing authority, because one missing document is enough to postpone completion.

7. After completion

Signing does not close the relationship. During the warranty period, the buyer may notify claims under the procedure set out in the agreement. Any earn-out is computed on subsequent financial years, which requires precise calculation rules and information rights. Non-compete undertakings run their course. It is often in this phase that the quality of the drafting shows.

From signing, seller and buyer should keep a schedule of warranty periods, escrow releases and earn-out windows, and preserve the documents that will allow them, when the time comes, to notify or dispute a claim in the forms required by the agreement.

Frequently asked questions

See also: the corporate health check for your company.

This information is general and does not constitute legal advice. Every transaction calls for its own analysis.