FRANCE Law and Practice Contributed by: Sophie Vermeille, Vermeille & Co
provisions that would allocate all profits to one share- holder, exempt a shareholder entirely from losses, or allow the forced sale of shares at a purely nominal or manifestly inadequate price. As a result, while exit and forced transfer clauses are common, they must be carefully structured to with- stand judicial scrutiny, typically by providing for an objective or fair market value mechanism. This makes it especially important to seek tailored legal advice when drafting such agreements, as US-style flexibility cannot always be replicated in France. 2. Shareholders’ Meetings and Resolutions 2.1 Types of Meeting, Notice and Calling a Meeting In SAs, shareholders’ meetings are the mandatory vehicle for all collective shareholder decisions. This is a statutory obligation and cannot be waived. French law requires that all SAs, whether listed or unlisted, hold an annual general meeting (AGM) to approve the annual accounts, allocate profits (includ- ing dividends), and appoint or renew directors and statutory auditors, as required. In addition, companies must hold extraordinary gen- eral meetings (EGMs) to decide on matters expressly reserved by law – most importantly, any amendment to the articles of association (including capital increas- es, mergers or demergers). The AGM/EGM distinction is mandatory and not subject to contractual modifica- tion. However, in practice, SAs (especially listed ones) usually convene a single “mixed” shareholders’ meet- ing each year, with two agendas – one for ordinary resolutions (AGM matters) and one for extraordinary resolutions (EGM matters). Separate EGMs may still be convened during the year for specific transactions such as capital increases or mergers, but these are much less frequent. In SAS, written consultations may generally be used instead of physical meetings, except for matters that the law expressly reserves to the shareholders col- lectively. These include:
• approval of the annual accounts and allocation of profits; • the appointment of statutory auditors; • capital increases or reductions; • mergers; • demergers; • dissolution; • transformation into another corporate form; and • amendments to the articles of association. Notice Requirements Notice periods ahead of an AGM vary depending on the corporate form, as follows. • Unlisted SA: shareholders must be notified at least 15 days before the meeting, whether it is an ordinary or extraordinary general meeting. Unlike in other jurisdictions, shareholders in French SAs cannot waive statutory notice requirements, even unanimously. • Listed SA: the same statutory 15-day rule applies, but it is supplemented by additional requirements specific to listed companies. In particular, a pub- lic notice must be published in the Bulletin des Annonces Légales Obligatoires (BALO), an official gazette published online, at least 35 days before the meeting. This is designed to ensure equal access to information for all shareholders. • SAS: there is no statutory notice period. The arti- cles of association freely determine the rules. How- ever, case law requires that shareholders receive “reasonable” notice to safeguard their information and participation rights. With unanimous share- holder consent, the notice period can effectively be reduced to zero. 2.2 Notice of Shareholders’ Meetings See 2.1 Types of Meeting, Notice and Calling a Meet- ing (Notice Requirements). 2.3 Procedure and Criteria for Calling a General Meeting Under the French Commercial Code, shareholders holding at least 5% of the company’s voting rights may require the board to convene a general meeting. In theory, certain shareholder associations may also exercise this right under very strict statutory condi- tions, but these are rarely met in practice.
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