Abuse of majority power: how should you respond when the majority shareholders decide against you?

When the majority shareholder uses their voting power to further their own interests, the general meeting becomes a weapon against minority shareholders. Systematically refused dividends, the sale of assets to a related company, and dilution of share capital: such decisions may constitute an abuse of majority power.

In both a limited liability company (SARL) and a simplified joint-stock company (SAS), such actions undermine the equality between shareholders. This article sets out the criteria established by case law, the types of decisions that may be challenged, and the evidence required. You will learn how to challenge such an abuse and within what limitation period you must act to defend your rights. Finally, you will see why the support of a solicitor specialising in shareholder disputes in Paris ensures every step is handled securely.

What is an abuse of majority in a company?

Abuse of majority power is the misuse of voting rights by majority shareholders for their own benefit.

The Commercial Code sets out the rules governing majority voting but contains no specific provision addressing its misuse. In the face of this silence, case law has established the standard definition. It penalises a vote that upsets the balance between shareholders. Beyond the aggrieved minority shareholder, it is the company as a whole that may suffer: cash flow drained, projects sacrificed, and a climate of ongoing conflict.

Can my business partner commit an abuse of majority in an SARL, an SAS or an SCI?

Abuse of majority power is possible in any company where several shareholders vote: SARL, SAS, SAorSCI. It is not possible in an SASU or an EURL, as there are no minority shareholders to protect.

In an SARL, ordinary decisions generally require more than half of the shares (Article L. 223-29 of the Commercial Code). A partner holding 51 per cent therefore decides alone on the allocation of profits.
Amendments to the articles of association, however, require a reinforced majority (Article L. 223-30).

In an SAS, the articles of association are free to set out the rules governing collective decisions and the majorities required for them.

Civil-law partnerships are also affected. In a case decided in 2022, an SCI (real estate investment company) set aside 20 per cent of its profits as reserves each year. Its majority partner, who held a lease on the SCI’s land, was the sole beneficiary of the works financed by these reserves. The company had neither any projects nor any debt, and its reserves amounted to eight times its annual profit. The Court of Cassation upheld the finding of abuse of majority power (Cass. 3rd Civil Chamber, 6 April 2022, No. 21-13.287).Family-owned SCIs, which manage property assets passed down through the generations, are a frequent source of conflict.

Abuse of majority, abuse of minority, abuse of equality: what is the difference?

Do not confuse abuse of majority withabuse of minority or abuse of equality, which are governed by their own rules.

Correctly characterising the conduct determines the course of action to be taken and the possible sanction.

How can one tell if a decision by the majority shareholders is unfair?

A decision is abusive if two cumulative conditions are met. If one is missing, there is no abuse.

• It is contrary to the company’s best interests.
• It favours the personal interests of the majority shareholders to the detriment of the minority shareholders (breach of equality).

The company’s best interests are the company’s own interests, distinct from those of each shareholder.
Article 1833 of the Civil Code requires the company to be managed in accordance with this interest. A decision is contrary to this interest when it impoverishes the company without providing anything in return: cash outflow, a price far removed from the market rate, or a missed business opportunity.

The second criterion requires a breach of equality between shareholders.
The mere prejudice suffered by the minority shareholder is not sufficient. The courts have found an abuse where reserves were used solely to repay the current accounts of the majority shareholders (Cass. com., 17 June 2008, No. 06-15.045).

Finally, the court assesses the legality of the decision, not its appropriateness. It does not penalise either a management error or a risky strategic choice.

Which decisions by majority shareholders can be challenged?

Disputes often centre on the allocation of profits, directors’ remuneration, capital transactions and asset disposals.

The majority shareholders have refused to pay dividends for years: is this an abuse?

Not automatically. Repeated retention of profits is only deemed an abuse if it does not serve the company’s interests and benefits the majority shareholders.
Judges rule out an abuse where the minority shareholder fails to prove any breach of equality. They uphold the claim where the retained profits are in fact used to fund an increase in the managing director’s remuneration.
It therefore all depends on the justification put forward. A specific project, such as building works or the repayment of a loan, legitimises the reserves. Profits accumulated without any specific project or debt, on the other hand, raise suspicion.

The majority manager increases his or her remuneration: can this be opposed?

Yes, if it isdisproportionate in relation to the results or the work carried out.
In a limited liability company (SARL), the majority managing director often votes on their own remuneration. They can thus convert a distributed profit into a reserved salary. The courts compare the remuneration to turnover, profit and previous financial years. They also examine whether this coincides with a refusal to pay dividends.
Remuneration used to finance personal investments, rather than those of the company, is particularly vulnerable.
Furthermore, any partner in a limited liability company (SARL) may apply to the court for the director’s removal on legitimate grounds (Article L. 223-25 of the Commercial Code).

A capital increase dilutes my shareholding: is this contestable?

Yes, if it does not meet any genuine need of the company.
The pitfall is simple: a minority shareholder who is unable to subscribe sees their stake diminish.
In public limited companies (SA) and simplified joint-stock companies (SAS), the removal of pre-emptive subscription rights exacerbates this risk. But dilution alone proves nothing.

The courts will assess whether the transaction served a legitimate corporate interest, such as rebuilding the company’s equity.

How can one prove an abuse of majority power?

The minority shareholder must prove both criteria, using documents which they often have to obtain from the company itself.

Is it up to me, as a minority shareholder, to prove the abuse?

The burden of proof lies with the party alleging the abuse. The minority shareholder must demonstrate that the transaction was contrary to the company’s interests and that it conferred an advantage on the majority shareholders. The second criterion is often the reason claims fail.

Article 9 of the Code of Civil Procedure sets out this principle: each party must prove the facts necessary to support their claim. However, the intention to favour the majority is rarely explicitly stated in the minutes. It must be inferred from objective and consistent evidence.

The company, for its part, will seek to justify its decision. It will produce plans, quotations or correspondence with its bank. Anticipating these justifications allows one to test their soundness before taking action.

How do I obtain the company documents to put together my case?

Minority shareholders have four tools at their disposal:

• The right of access:
  This grants access to the annual accounts and reports prior to each general meeting. In a limited liability company (SARL), a shareholder may also obtain documents relating to the last three financial years at any time.
• Written questions:
  These oblige the manager to respond at the meeting, and the response is included in the case file.
• Management investigation:
  An expert appointed by the judge analyses one or more specific transactions. In a public limited company (SA), the request must first take the form of written questions to the chairman, which must remain unanswered satisfactorily for one month.
• Pre-trial investigative measures:
  Article 145 of the Code of Civil Procedure finally allows evidence to be obtained prior to anytrial. A legitimate reason must be provided, such as the risk of documents going missing.

The order in which these tools are utilised influences the subsequent course of the case. Our lawyers specialising in company law, based in Paris 16, will advise you on which to use first.

What evidence convinces a judge that there has been an abuse of majority rights?

A body of consistent evidence often convinces the judge; a single piece of evidence never does. Abundant cash reserves without a clear plan, benefits received by the majority shareholders and a suspicious timeline carry the most weight.

What are the risks for majority shareholders in the event of an abuse?

The judge may set aside the decision, order the majority shareholders to compensate the minority shareholder and, more rarely, wind up the company.

Can the resolution passed be set aside?

The judge may set aside the abusive resolution: abuse of a majority remains a ground for nullity (Article 1844-10 of the Civil Code). For decisions taken since 1 October 2025, the court also applies a three-part test. It checks three points:

• whether the claimant has a valid complaint;
• the irregularity influenced the outcome of the decision;
• the consequences of the nullity are not excessive.

The annulment is, in principle, retroactive. The court may, however, defer its effects if they are manifestly excessive for the company. Annulling remuneration may therefore require the repayment of sums received.

Can I claim damages for the loss suffered?

A minority shareholder may be awarded damages, to be paid personally by the majority shareholders. They must prove fault, personal loss and a causal link between the two (Article 1240 of the Civil Code).

This claim is directed at the assets of the majority shareholders, not those of the company. It remains a viable option even when the annulment no longer serves any practical purpose. However, the loss must be specific to the minority shareholder: a loss suffered by the company itself is the subject of a separate claim.

The main types of loss eligible for compensation are:

• lost dividends;
• dilution of the shareholding;
• the loss in value of the shares.

Can an abuse of majority power lead to the dissolution of the company?

Dissolution remains a possibility, but is exceptional.
Article 1844-7(5) of the Civil Code permits judicial dissolution on just grounds.
Abuse alone is not sufficient: the disagreement must paralyse the company’s operations.
The claimant must not be the cause of the disagreement. This measure allows the minority shareholder to recover their share of the net assets, but destroys the company. Hence the reluctance of the courts.

How can a decision taken by the majority shareholders be challenged?

You must verify your standing to bring proceedings, select the correct defendant, comply with time limits and follow a specific procedure.

Who can bring legal proceedings for abuse of majority power?

Only an aggrieved shareholder may bring an action for abuse of majority power. They must prove their status as a shareholder and demonstrate a legal interest in bringing the action. Third parties, such as creditors, cannot rely on this ground.

Should the action be brought against the company or the majority shareholders?

It all depends on the claim.
An action for nullity may be brought against the company alone, whilst an action for damages is brought against the majority shareholders responsible for the abuse. To claim both, the company and the majority shareholders must be sued.

What is the time limit for bringing a claim and before which court?

• The limitation period foran action for nullity is two years from the date on which the nullity arose; in practice, this is the date of the decision, fordecisions taken on or after 1 October 2025 (Article 1844-14 of the Civil Code). This time limit was previously three years.
  For earlier decisions, transitional rules apply: you should have your time limit checked on a case-by-case basis.
• The limitationperiod for liability claims is five years, in accordance with Article 2224 of the Civil Code. This period begins to run from the date the damage is discovered.

• Disputes involving a SARL, SAS or SA fall within the jurisdiction of the commercial court. 
• SCIs fallwithin the jurisdiction of the civil court.

What steps should be taken, from the general meeting through to the trial?

The dispute follows five stages, from the general meeting to the summons to appear on the merits.

• A vote against is decisive: a decision taken unanimously is presumed to be free from abuse. Voting in favour and then challenging the decision therefore weakens your case.
• The formal notice must identify the resolution in question, set out your grievances and make a specific request, accompanied by a deadline for a response.

Finally, the judge hearing the interim application does not rule on whether there has been an abuse of power. They merely order provisional measures, pending the judgment on the merits of the case.

How can you protect yourself against an abuse of majority power when you are a minority partner?

Protection comes through clauses negotiated in advance and, once a dispute has arisen, through a negotiated exit.

What clauses should be included in the articles of association or the shareholders’ agreement?

The shareholders’ agreement enables you to prevent abuse rather than suffer it. It is negotiated when a new shareholder joins the company or during a renegotiation, whilst the minority shareholder still holds influence. In particular, it may provide for:

• a right of veto over important decisions;
• a reinforced majority for sensitive transactions;
• an extended right to periodic information;
• restrictions on directors’ remuneration and agreements with related parties;
• an exit or share buy-back clause;
• a procedure for mediation or independent expert assessment;
• anti-dilution clauses, subject to them being drafted in a legally valid manner.

The agreement supplements the articles of association and remains confidential. Its limitation: a breach is primarily punishable by damages.

Can I leave the company or negotiate the buy-back of my shares?

It all depends on the type of company.
In a SARL or an SAS, there is no legal provision guaranteeing a right to withdraw. You must sell your shares, often to the majority shareholder themselves.

In a civil company, such as an SCI, there is an additional option: withdrawal authorised by a court on just grounds (Article 1869 of the Civil Code). The partner is then reimbursed the value of their shares.

Abuse of majority power: when should you consult a company law solicitor?

A company law solicitor can be of particular assistance at three specific stages:

• Preparing for the vote: before the meeting, they draft your written questions and prepare your reservations for the minutes.
• Gathering evidence: they select the evidence and prioritise it.
• Deciding between negotiation and litigation: they assess your prospects and the timeline for proceedings.

Goldwin Avocats is a multidisciplinary law firm based in Paris’s 16th arrondissement. It practises commercialand corporate law in Paris and throughout France. Maître Jonathan Bellaiche, a member of the Paris Bar, assists numerous shareholders in their disputes, through both amicable and judicial channels.

The initial consultation takes place via video call or at the office. It enables us to assess your situation, identify the available evidence and check your time limits.