In Limited Liability Companies (S.A.R.L.), the transfer of shares is free when it is carried out between partners, spouses, parents and relatives up to the second degree; however, the articles of association may require an approval procedure.
The transfer of shares for the benefit of a third party is always subject to an approval procedure by the majority of the partners representing ¾ of the shares (i.e. 75%) or according to the terms of the articles of association.
Thus, before any transfer of shares within a limited liability company, it is very important to know for whose benefit the transfer will be made and to check the applicable statutory clauses.
The approval clause
The approval clause is a clause that subordinates the sale of the shares by a partner to the approval of the general meeting of partners, which defines the terms of approval of the transfer of the shares and provides for a prior agreement by unanimity or majority of the partners to grant entry to a new partner in the company.
The associate wishing to sell his shares will also have to respect the approval clause by notifying his associates first.
The procedure for the transfer of shares starts with the notification of the transfer project to the company and to each of the company’s partners by registered letter with acknowledgement of receipt or by bailiff’s act.
- If the company does not respond within 30 days, consent is deemed to have been given.
- If the company refuses to consent to the transfer, the partners are bound within 30 days, as from this refusal, either to acquire or to have the shares acquired.
The partnership may also, with the consent of the transferring partner, decide, within the same period, to reduce its capital by the amount of the face value of the partner’s shares and to repurchase those shares.
If, at the end of this period, none of the solutions referred to above is put in place, the partner may continue the transfer initially envisaged.
Formalities relating to the approval of the sale project
An Extraordinary General Meeting whose decision must be taken by the majority of the associates representing at least the ¾ shares (the articles of association may provide for a stronger majority) must be convened to rule on the proposed sale.
After having voted on and approved the proposed sale and approved the new shareholder, the formalities of advertising at the clerk’s office of the Commercial Court, in a Journal of Legal Announcements and in the Official Bulletin enabling the sale of shares to be made opposable must be completed.
Written by Nezha BELKHADIR Legal Manager