Repayment of a partner’s current account: conditions, time limits and remedies.

Shareholder’s current account: legal nature and right to reimbursement

Before taking any action, define your claim precisely: this definition determines your rights.

What is a shareholder current account?

A shareholder’s current account is a loan that you grant to your company. You become its creditor. Unlike a capital contribution, this sum is intended to be repaid to you.

In practice, you either pay in funds or leave unclaimed dividends with the company. Even without a written contract, the company’s accounting records are sufficient to prove your claim (Commercial Court of Cassation, 23 April 2013, No. 12-14.283). Since the PACTE Act of 22 May 2019, no minimum shareholding threshold is required. Any partner may make an advance, as may directors: managing director, chairman or chief executive (Article L312-2 of the Monetary and Financial Code).

Conversely, a current account in debit is prohibited for managers and partners who are natural persons in a limited liability company (SARL). It is also prohibited for directors of a simplified joint stock company (SAS) and a public limited company (SA). Such an overdraft may constitute a misuse of company assets, which falls within the remit of a solicitor specialising in commercial criminal law.

Current account agreement: the clauses governing repayment

The agreement sets out the rules: term, notice period, lock-up period, interest. If it is silent on repayment, the general principle applies: you may claim your funds at any time.

Above all, an ambiguous clause works in the partner’s favour. In a Parisian case, the agreement provided for immediate repayment in the event of the sale of the business. The court refused to regard this as a restriction: any exception must be clearly stated (Paris Court of Appeal, 26 February 2015).

Clauses to check in your agreement:

• the duration of the advance or the absence of a fixed term;
• the notice period for repayment;
• any lock-in clause and its beneficiary;
• the interest rate and payment date;
• what happens to the current account in the event of a transfer of ownership or death.

Are you unsure about the scope of your agreement? A corporate lawyer in Paris can review it before you take any further action.

Can you demand repayment at any time?

Yes, unless otherwise stipulated. According to the Court of Cassation, an open-ended current account is a loan of indefinite duration. You may therefore demand repayment at any time, without having to justify your request.

The key feature of a current account is that it is repayable at any time, unless otherwise provided for in an agreement or a clause in the articles of association (Court of Cassation, Commercial Division, 10 May 2011, No. 10-18.749). The same rule applies to real estate investment companies (SCIs) (Court of Cassation, 3rd Civil Chamber, 3 May 2018, No. 16-16.558). The Commercial Chamber reaffirmed this again in 2025 (Cass. com., 12 February 2025, No. 23-17.483).

This right, moreover, survives your departure. The transfer of your shares does not entail either the transfer or the closure of your current account (Cass. com., 27 May 2021, No. 19-18.983).

Is repayment automatic in the event of withdrawal or liquidation?

No. The departure of a partner does not, in itself, make the current account payable. You must submit a claim. Only the liquidation of the company requires settlement, within a specific framework.

In a voluntary liquidation, the liquidator settles the liabilities before distributing any surplus amongst the partners. As your current account is listed under liabilities, it is settled before any distribution takes place, provided the assets are sufficient.

Conditions for repayment of the current account: when can the company refuse or defer repayment?

The company may only refuse on specific grounds. A lack of cash flow is not one such ground (service-public.fr, information verified on 3 July 2026). However, there are several mechanisms that allow payment to be legitimately deferred.

Note a subtle distinction. Even in the face of an unfounded refusal, the court may grant the company payment extensions. These are limited to two years (Article 1343-5 of the Civil Code).

Holdback agreement: repayment deferred to an agreed date

A lock-up agreement is your undertaking not to claim your funds for a specified period or until a specific event occurs. Whilst the agreement remains in force, the company may legitimately refuse to make a repayment.

The lock-up arises from a unanimous decision by the shareholders or from an agreement signed with the company. Banks often require this before granting a loan.

Remember that any doubt works in the shareholder’s favour: a restriction must be clearly stipulated to be enforceable against you.

Articles of association and shareholders’ agreements: notice periods, instalments and caps

The articles of association or a shareholders’ agreement may set out the framework for repayment: notice periods, payment in instalments, and annual limits. These clauses limit your right, but only if they are enforceable against you.

Enforceability is key. The articles of association are binding on all partners, including new entrants. A partnership agreement, on the other hand, is binding only on its signatories. If you have not signed it, its clauses do not bind you.

You should also be wary of clauses that make repayment subject to a vote. Used to block the sole minority shareholder, such a decision may constitute an abuse of majority power.

Temporary waiver of the claim: the ‘return to better fortune’ clause

By waiving your claim under a ‘return to better fortunes’ clause, you temporarily set it aside. It is revived if the company achieves the anticipated financial position. You may then request repayment once again.

Everything depends on the wording. The clause must define ‘improved financial position’ using an objective criterion and specify a time limit. A vague clause opens the door to litigation.

Fictitious example: Paul waives €50,000 in 2025. The clause takes effect as soon as equity exceeds the share capital. In 2027, the condition is met: his claim is reinstated and becomes due again.

Unjustified claim for reimbursement: the risk for the managing director

A claim for repayment is only deemed unreasonable in exceptional circumstances. The right to repayment remains the rule, whatever your reasons. However, the risk increases if you are also a director.

A few courts of appeal have dismissed claims deemed unreasonable, but these decisions remain isolated cases. On the other hand, the managing partner decides for themselves whether to claim a reimbursement. If they do so whilst aware of the company’s financial difficulties, they are prioritising their own claim at the expense of other creditors. This decision may constitute a breach of fiduciary duty.

Obtaining repayment from your current account: procedures, timeframes and remedies

Are there any clauses preventing your claim? It’s time to take action – but do so methodically.

Drafting your repayment request: template for a registered letter

Send a registered letter with acknowledgement of receipt to the company’s legal representative. State the amount claimed and the basis for your claim. This letter dates your claim and makes it immediately payable.

1. 1. Gather your evidence: balance sheets, current account statements, bank transfers, agreements.
2. 2. Review the articles of association, shareholders’ agreement and contract to identify any restrictions or notice periods.
3. 3. Write to the managing director or chairman, specifying the balance claimed and the interest due.
4. 4. Keep the acknowledgement of receipt: it proves the date of your claim.

Are you agreeing to a payment plan? Formalise the agreement in an addendum or memorandum, setting out specific payment dates. This letter will be produced in court in the event of a dispute. Your solicitor can draft it or review your draft.

Repayment period and limitation period: how long do you have to take action?

There is no statutory time limit imposed on the company: the sum is due and payable as soon as you make your claim. You then have five years to take legal action, starting from the date of that claim.

If the company delays, send it a formal notice. Interest will then accrue on the sum at the statutory rate (Article 1231-6 of the Civil Code).

The limitation period does not begin to run from the date of payment. The Court of Cassation takes the date of the claim for repayment as the starting point, as this is when the debt becomes due. In the case in question, the shareholder had sold his shares in 2004, claimed what was due to him in 2013 and brought proceedings in 2016. His claim was not time-barred (Court of Cassation, Commercial Division, 27 May 2021, No. 19-18.983).

Avoid a common misunderstanding: the ‘five-year period’ sometimes referred to is not a payment period granted to the company. It is the period within which you must take legal action.

Unjustified refusal to repay: remedies and consequences for the company

In the event of an unfounded refusal, proceed in stages: formal notice, negotiation, then legal action. An interim order for payment allows you to obtain a judgment quickly where the claim is not seriously disputable.

For a limited liability company (SARL) or a simplified joint-stock company (SAS), the dispute falls within the jurisdiction of the Commercial Court. In Paris, this became the Economic Activities Court on 1 January 2025, on a trial basis until 31 December 2028. For a real estate investment company (SCI), bring the matter before the Civil Court.

An unjustified refusal is costly for the company: capital, late payment interest, and a portion of your costs. If the company is unable to pay, you may apply for the commencement of insolvency proceedings.

Often, a refusal masks a wider conflict: exclusion, dilution of shares, or governance issues. A solicitor specialising in shareholder disputes will therefore incorporate the recovery of funds into an overall strategy, combining negotiation and litigation as practised by a business law solicitor.

Is the repayment taxable? Principal, interest and write-off

No, not for the principal: recovering the amount lent is not considered income. Only the interest is taxed. From the company’s perspective, this repayment is not a tax-deductible expense for corporation tax purposes.

In 2026, your interest will be subject to the single flat-rate levy of 31.4 per cent. This rate comprises 12.8 per cent tax and 18.6 per cent social security contributions. The option to use the tax scale remains available (service-public.fr, 3 July 2026).

The company may deduct this interest provided its share capital is fully paid up, and the rate does not exceed a ceiling. This ceiling stands at 4.33% for a financial year ending between 31 August and 29 September 2026 (same source).

With a better fortunes clause, sources differ. Some guides describe the taxation of the waiver as deferred. Administrative doctrine, on the other hand, treats it as a taxable profit upon waiver, followed by a deductible expense upon repayment.

Repayment of the current account in insolvency proceedings (protection, administration, liquidation)

Once proceedings have commenced, the company is no longer entitled to repay your current account.

Ranking of the creditor shareholder and priority of new capital contributions

Your current account is, in principle, an unsecured claim, i.e. one without security. You are paid after employees, legal costs and secured creditors, if the assets allow. However, a new advance may be entitled to a priority claim.

An advance granted as part of an approved conciliation agreement benefits from the ‘new money’ priority (Article L611-11 of the Commercial Code). Since the Order of 15 September 2021, a comparable priority protects certain capital contributions made during safeguard or reorganisation proceedings. Capital contributions are excluded from this, but not current account advances.

Filing a claim with the insolvency practitioner: the two-month deadline

You must lodge your claim with the insolvency practitioner within two months of the publication of the order commencing proceedings in the BODACC. Failure to do so will render your claim unenforceable against the proceedings.

1. 1. Keep an eye on the BODACC as soon as you become aware of the company’s financial difficulties.
2. 2. Quantify your claim: the account balance and interest due as at the date of the order.
3. 3. Send the claim and your supporting documents to the insolvency practitioner or liquidator.

The deadline is doubled if you live outside mainland France. If you miss the deadline, you may request a certificate of forfeiture within six months of publication. You will need to prove that the delay was not your fault (Article L622-26 of the Commercial Code).

Reimbursement during the period under investigation: nullity and mismanagement

A repayment received between the date of cessation of payments and the order opening insolvency proceedings may be set aside. If your account was frozen, the repayment is automatically void. The liquidator may then claim the sums back from you.

Two regimes coexist during this ‘suspended period’:

• automatic nullity for the payment of a debt that is not yet due, such as a frozen account repaid before maturity (Article L632-1 of the Commercial Code);
• optional nullity for a debt that has fallen due, if you were aware of the suspension of payments (Article L632-2 of the Commercial Code).

A director who repays themselves is at greater risk. The Court of Cassation found a breach of duty of care against a director who had been repaid whilst the business had ceased trading. This preferential payment was detrimental to the other creditors (Cass. com., 24 May 2018, No. 17-10.119).

This misconduct may form the basis of a liability claim for insufficient assets (Article L651-2 of the Commercial Code). Is a liquidator claiming reimbursement from you? Has the date of cessation of payments been determined and analysed? It determines the entire course of the proceedings.

Shareholder’s current account in the event of death or divorce: treatment of the claim and repayment

Your current account is not subject to the same treatment as your shares. This autonomy has consequences that are often overlooked.

Can the partner’s heirs demand repayment?

Yes. The current account claim forms part of the partner’s estate. Their heirs become the holders of the claim, even if they are not approved as partners. They may therefore demand repayment.

However, they inherit the claim as it stands: any restriction on disposal or notice period remains enforceable against them. Until the estate is divided, the claim belongs to the undivided estate. Each heir may, acting alone, carry out a protective measure (Article 815-2 of the Civil Code). Acts of administration require a two-thirds majority of the undivided shares (Article 815-3 of the Civil Code). As a precaution, it is in the heirs’ interests to act jointly or to authorise one of them to act on their behalf.

How is the current account valued in the estate?

In principle, the claim is declared at its nominal value, plus interest accrued up to the date of death. A lower value requires proof that the company is unable to repay the debt.

The burden of proof lies with the person making the declaration. In relation to the wealth tax (ISF), the Court of Cassation has thus upheld a reassessment based on the nominal value (Cass. com., 9 July 2013, No. 12-21.836).

Fictitious example: the current account shows a balance of €120,000 and €2,400 in accrued interest. Unless there is proven difficulty in recovery, the estate must declare €122,400.

Conversely, a current account in debit constitutes a debt owed by the deceased to the company. Its deduction is not automatic, particularly where the company is controlled by the heirs.

Current account receivable: joint property or separate property?

It all depends on the matrimonial regime and the source of the funds. Under the statutory community of property regime, an advance financed by the couple’s income is, in principle, joint property. It does not matter whether the shares are separate property.

Evidence makes all the difference. Without proof of the origin of the funds, the presumption of community property works against the spouse claiming separate property (Article 1402 of the Civil Code).

Divorce: how is the joint current account divided between spouses?

A claim arising from a joint current account forms part of the assets to be divided. It is valued on the date of division. The spouse who retains the account generally pays a cash adjustment to the other.

Unless there is mutual consent, the divorce takes effect in respect of the assets on the date of the application. The court may adopt the date on which cohabitation and collaboration ceased (Article 262-1 of the Civil Code). Compensatory payments are then made to rebalance the spouses’ estates where separate and joint funds have been intermingled (Articles 1433 and 1437 of the Civil Code).

Fictitious example: a joint claim of €60,000 is awarded to the husband, a partner in the SAS. All other things being equal, he owes €30,000 in a cash adjustment. To fund this, he may request a repayment from his current account.

Point to watch out for: a decision to freeze funds in the middle of proceedings in order to reduce the claim should raise a red flag. Such a manoeuvre may be challenged.

Planning for death or divorce: clauses and precautions to consider

Set out the fate of the debt in the agreement, trace the origin of the funds and amend your marriage contract. These precautions cost very little compared to the disputes they help to avoid.

The Goldwin law firm, in the 16th arrondissement of Paris, assists partners in safeguarding their current accounts.