A retenir
- A standard limited liability company (SARL) does not provide for any statutory right of withdrawal: you leave by selling your shares.
- Your partner is free to buy back your shares. A third party, however, must be approved.
- If approval is refused, the partners are obliged to buy back, or arrange for the buy-back of, your shares within a statutory timeframe.
- Resigning from the management does not mean you leave the company.
- Judicial winding-up remains a last resort, reserved for a company that is effectively paralysed.
You set up your company as a partnership, with equal shares. Now, meetings break down, every decision turns into a negotiation, and your partner refuses to buy out your shares. You want to leave, but you discover that there is no legal provision allowing you to simply withdraw from a limited liability company (SARL).
This is the typical deadlock situation in a 50/50 partnership. Equal shareholdings prevent any majority from being formed, and the disagreement between partners paralyses the business whilst the company’s value erodes. Every month of conflict generally reduces the price you will receive when you leave.
However, several solutions do exist: an amicable buy-out, a sale to a third party, mediation and, as a last resort, judicial dissolution. It is still essential to pursue them in the correct order, without making a mistake that would trap you within the company.
Here are the 10 questions you should ask yourself, along with the answers based on the law and practical experience. They draw on the 14 years’ experience of a solicitor specialising in shareholder disputes, Maître Jonathan Bellaiche.
1. Why is it so difficult to leave a 50/50 limited liability company (SARL)?
Because neither partner holds a majority. Every collective decision requires the other’s consent. However, the law does not provide for any right of withdrawal in a standard limited liability company. Withdrawing therefore means selling your shares, which your partner can block.
Equal shareholding: no majority possible at general meetings
In an SARL, ordinary decisions are taken by a majority of shares (Article L223-29 of the Commercial Code). With two 50 per cent blocks, no single partner can reach this threshold on their own. Extraordinary decisions, such as amending the articles of association, require a reinforced majority (Article L223-30). Without agreement, nothing goes through.
Your partner thus has a de facto right of veto. They can block the approval of the accounts or the allocation of profits. Furthermore, the dismissal of the managing director requires more than half of the shares (Article L223-25). The incumbent managing director therefore retains his powers. This is a power struggle, not a partnership.
Deadlock: what are the implications for the company and its operations?
The deadlock quickly takes its toll on the company:
- the annual accounts are no longer approved on time;
- no decision can be taken on the distribution of dividends;
- investment, recruitment or financing projects are put on hold;
- relations with the bank and partners become strained.
Day-to-day operations continue, but the company loses its way. Here are the ways out, from the simplest to the most drastic.
| Solution | Shareholder approval required | Timeframe | Relative cost | Effect on value |
|---|---|---|---|---|
| Buy-out by the partner | Yes | Subject to negotiation | Low to medium | Preserved |
| Sale to a third party | No, in the event of refusal of approval without buy-out | 3 months, then a further 3 months if refused (extendable) | Medium | Retained |
| Capital reduction | Yes | Variable | Medium | Preserved if there are sufficient cash resources |
| Mediation | Yes | Variable | Low to medium | Preserved |
| Abuse of equality | No, judge’s decision | Legal proceedings | High | Variable |
| Provisional administrator | No, judge’s decision | Interim proceedings possible | High | Under pressure |
| Judicial winding-up | No, judge’s decision | Proceedings on the merits | High | Often destroyed |
2. Does resigning as a director mean leaving the limited liability company (SARL)?
No, resigning brings your term as a director to an end, but not your status as a shareholder. You retain your shares, your rights and your liabilities. Only the sale of your shares, or a capital reduction, will result in you leaving the company.
Directorship and shareholder status: two distinct matters
The manager holds a corporate mandate. The partner holds a share of the capital. Losing one of these statuses does not mean you lose the other.
The Commercial Code governs the dismissal of the manager, not their resignation. The articles of association generally provide for a notice period. An abrupt resignation, without observing this notice period, may render you liable to the company. You should therefore formalise your departure in writing, in the prescribed manner.
Equal-status manager, employment contract and social security: what changes upon departure
A remunerated managing director on an equal footing is covered by the general social security scheme. Article L311-3, 11° of the Social Security Code treats them as equivalent to an employee. This social security cover is linked to the term of office and remuneration: it ceases when these end.
Being treated as an employee does not mean you are an employee. In principle, holding a directorship does not entitle you to unemployment benefits. You should therefore make arrangements for your social security cover in advance.
If you also hold an employment contract, the situation is different. This contract implies distinct technical duties and a genuine relationship of subordination. Transferring your shares does not terminate this contract. Its termination is governed by employment law: resignation, termination by mutual agreement, or dismissal.
3. What do the articles of association of the SARL and the shareholders’ agreement stipulate?
Review them first. An exit, buy-out or valuation clause may resolve the deadlock without the need for legal proceedings. In the absence of such a clause, the statutory rules of the Commercial Code apply, in particular the approval procedure.
Clauses to look out for: ‘buy or sell’ clauses, right of withdrawal, exclusion clauses
Certain clauses can make all the difference:
| Clause | What it enables | Point to watch out for |
|---|---|---|
| Buy or sell | One party proposes a price; the other buys or sells at that price | May favour the partner with the greatest financial standing. |
| Contractual right of withdrawal | Withdrawal in accordance with the agreed terms | Rare in a limited liability company (SARL) with fixed capital |
| Exclusion clause | To remove a partner on a specified ground | Compliance with the procedure and the right to a fair hearing |
| Promise or option to purchase | Compelling a sale or purchase should a specific event occur | Price or method to be determined in advance |
| Valuation clause | Setting the method for calculating the price | This is the responsibility of the expert referred to in Article 1843-4 of the Civil Code |
Furthermore, check whether your limited liability company (SARL) has variable capital. In that case, Article L231-6 of the Commercial Code grants each partner a right of withdrawal. The articles of association may modify this right, but not remove it.
The shareholders’ agreement supplements the articles of association. It remains confidential, but is binding only on its signatories. A well-drafted partnership agreement organises an exit before a dispute arises, not whilst it is ongoing.
No clause provided for: the statutory rules of the Commercial Code apply.
Standard articles of association often remain silent on this matter. Three statutory rules therefore apply:
- the transfer of shares between shareholders is unrestricted, unless otherwise stipulated (Article L223-16);
- the transfer to a third party requires approval (Article L223-14);
- the transfer of shares between spouses, ascendants and descendants is unrestricted, unless a clause requiring approval is in place (Article L223-13).
Have your articles of association reviewed by a company law solicitor in Paris before taking any action. An overlooked clause could alter your strategy.
4. How much are my shares worth?
Their value depends on the valuation method used, not on the nominal capital. An independent valuation provides an objective basis for negotiation. Following a refusal to approve the valuation, an expert appointed in accordance with Article 1843-4 of the Civil Code will set the price if no agreement can be reached.
Valuation methods: the role of the chartered accountant
Several methods are used. The most common are:
- the asset-based approach, based on revalued net assets;
- the profitability approach, based on results;
- the future cash flow approach.
The chartered accountant generally combines several methods and restates the accounts. Their report provides a common basis and limits matters of principle.
In the absence of agreement, the presiding judge appoints an expert (Article 1843-4 of the Civil Code). This expert applies the valuation rules set out in the articles of association or an agreement. The price becomes that of a third party, not that of the party most eager to sell.
Shareholder’s current account and guarantees: what is added to the sale price
Your current account is a claim separate from your shares. Transferring your shares does not transfer or close this account (Commercial Court of Cassation, 27 May 2021, No. 19-18.983). You should therefore negotiate this separately: repayment by the company or transfer to the purchaser.
Guarantees are also important. The purchaser often requests a guarantee covering both assets and liabilities. This may reduce your price after the sale. Limit its amount and duration.
5. Can I sell my shares to my business partner?
Yes, the transfer of shares between partners is unrestricted, unless otherwise stipulated in the articles of association. In that case, no approval is required. Your partner remains free to refuse, however: unless they refuse to give their consent, there is no legal obligation on them to buy back the shares.
Negotiating a buy-out offer: price, timeframe, conditions
A buy-out by the remaining partner is often the quickest and least expensive option. It is based on three factors:
- the price, based on an independent valuation;
- the payment schedule, whether in a lump sum or in instalments;
- the terms, such as the release of your personal guarantees.
Set out each proposal in a written, dated and quantified offer. This provides a framework for the discussion and serves as evidence should negotiations fail. A business law solicitor will draw up the offer and its conditions precedent.
Deed of transfer of shares: drafting and formalities at the registry
The transfer must be recorded in writing (Articles L223-17 and L221-14 of the Commercial Code). It becomes enforceable against the company upon service or filing of an original at the registered office. It becomes enforceable against third parties following its publication in the Trade and Companies Register.
The deed is then registered with the tax authorities, after which the articles of association are updated. Filing with the registry of the Commercial Court is carried out via the one-stop shop.
6. Can I transfer my shares to a third party if my partner refuses?
Yes, but the third party must be approved. In a 50/50 partnership, your partner can block this approval. However, their refusal triggers a legal obligation: to buy back or arrange for the buy-back of your shares within a specified timeframe. Failing that, you may sell.
The approval procedure (Article L223-14 of the Commercial Code)
Approval requires a majority of partners representing at least half of the shares. With two partners, the other partner’s consent is therefore necessary. The procedure involves five steps:
- Find a serious buyer and obtain a firm offer.
- Notify the company and each partner of the proposal, by registered letter or through a judicial officer.
- Allow the company to give its opinion: it has three months from the date of the last notification.
- If no response is received within this period, approval is deemed to have been granted.
- Once approval has been obtained, sign the deed of sale with the purchaser.
Refusal of consent: the time limit requiring the partners to buy back the shares
In the event of a refusal, the partners must acquire or arrange for the acquisition of your shares within three months. The price is to be agreed amicably; otherwise, it is to be determined by an expert in accordance with Article 1843-4 of the Civil Code. The company may also buy back your shares to reduce its share capital, with your consent.
The court may extend this time limit once only, provided it does not exceed six months. Thereafter, if no solution is found, you may proceed with the planned sale.
7. Are there other ways to exit the business?
Yes, there are three options: a capital reduction, a capital increase open to third parties, and a family gift. In practice, all of these require the consent of your partner.
Capital reduction: the company buys back the outgoing partner’s shares
The company may buy back your shares to cancel them (Article L223-34 of the Commercial Code). The decision is taken by an extraordinary general meeting, and creditors may object. Advantage: the remaining partner does not have to finance the buyback from their own funds.
Capital increase open to a third party: breaking the parity
The entry of a new partner breaks the parity. It requires an extraordinary resolution and the third party’s consent. It may pave the way for your exit, but it does not bring it about on its own.
Family-owned limited liability company (SARL): the donation of shares as an alternative
In a family-owned company, a gift transfers your shares to a relative without requiring approval, unless otherwise stipulated. It is subject to transfer duties on gifts. It settles your departure, not your price: you receive nothing.
8. What should I do if no agreement can be reached with my partner?
Take a measured approach. Try mediation first. If your partner blocks a key decision purely out of self-interest, invoke abuse of equality. The judge may also appoint an interim director. Judicial dissolution remains a last resort.
Mediation: the mediator’s role in negotiations
The mediator is a neutral third party. They help the partners to articulate their true objectives: to stay, to buy out, or to leave. They do not make the final decision.
Mediation is confidential and generally quicker than a court case. The judge hearing the case may also suggest it. A solicitor will assist you during mediation and draw up the memorandum of understanding.
Abuse of equal voting rights: appointing a proxy to vote
The Court of Cassation sanctions obstruction (Cass. com., 21 June 2023, No. 21-23.298). A shareholder with an equal stake uses their vote to block a transaction that is essential to the company. They act with the sole intention of furthering their own interests, to the detriment of the other shareholder.
The court may then appoint a proxy to vote in their place, or award damages. This procedure unblocks a specific decision, not the company as a whole. A mere disagreement is not sufficient.
Provisional director: temporary management ordered by the court
The provisional administrator is a concept established by case law. The judge appoints them when the company is no longer operating normally and is facing imminent danger. They manage the company until a solution is found.
This measure ensures the continuity of operations. However, it is costly and does not resolve the dispute. It is a stopgap measure to ensure survival, not a solution.
Judicial dissolution due to disagreement (Article 1844-7 of the Civil Code): the last resort
Article 1844-7(5) of the Civil Code allows the court to dissolve the company on just grounds. It specifically addresses disagreements between partners that paralyse the company’s operations. Disagreement alone is not sufficient: it must be proven that operations have been paralysed.
The judge assesses this paralysis as at the date of the ruling. In a case handled by Goldwin Avocats, the Paris Court of Appeal refused to order dissolution on 1 April 2026. General meetings could still be held and the partners could still take decisions by majority vote.
Finally, dissolution leads to liquidation: the partners share out assets that are often diminished.
In Paris, the Economic Activities Court has jurisdiction. It is operating on a trial basis from 1 January 2025 to 31 December 2028.
9. How much does an exit cost and what tax regime applies?
In 2026, capital gains on the sale are, by default, subject to the single flat-rate levy of 31.4 per cent. The deed is subject to registration duties of 3 per cent after the allowance. In addition, there are lawyers’ and accountants’ fees, which vary depending on the case.
Capital gain on disposal: tax payable by the seller
The capital gain is calculated as the sale price minus the purchase price of the shares. By default, it is subject to the single flat-rate levy. The Social Security Financing Act for 2026 has raised its overall rate to 31.4 per cent. This comprises 12.8 per cent income tax and 18.6 per cent social security contributions.
You may opt for the progressive tax scale, applied on a comprehensive, annual basis. Get a simulation of both tax regimes before signing.
Registration fees, solicitors’ fees and accountants’ fees
| Item | Rule | Source |
|---|---|---|
| Registration fees | 3 per cent of the price, after a deduction of €23,000 prorated according to the shares sold | General Tax Code, Art. 726, I, 1° bis |
| Solicitors’ fees | Fixed fee or time-based, depending on the case | A fee agreement is mandatory |
| Chartered accountant’s fees | Depending on the valuation assignment | Engagement letter |
Fictitious example: for 50 shares sold out of 100, the allowance amounts to €11,500. There is no publicly available fee schedule: ask for a written quote.
10. What mistakes should you avoid before leaving the company?
Never leave without having had your guarantees released, your current account settled, and proof of the funds being held in reserve. A hasty departure leaves you exposed to the company’s debts, with no control over its management.
Personal guarantees and liability: safeguarding your departure
Selling your shares does not release you from your guarantees. You remain liable to the bank for the guaranteed debts. Only a release granted by the bank will free you from this liability. Make this a condition of the sale.
Your liability as a director also continues after you leave, in principle for three years (Article L223-23). Keep records of your management activities.
Keep evidence of any deadlock: letters, minutes of meetings, written correspondence
Start compiling your file at the first signs of deadlock:
- notices of meetings and minutes;
- written requests for notices of meetings or information that have gone unanswered;
- registered letters and replies from your partner;
- unapproved accounts and correspondence with the bank.
Is the managing director refusing to convene the meeting? Any partner may apply to the court to have a representative appointed to convene it (Article L223-27).
Such obstruction may sometimes conceal embezzlement or misuse of company assets. These matters then fall within the remit of a solicitor specialising in criminal business law. Do not report them without evidence: an unfounded accusation could backfire on you.
