Quick efficient solutions to solve shareholders disputes in France

Quick efficient solutions for in shareholders disputes in France

Efficient legal solutions can be used to protect the company, or the rights of a shareholder. There are two advantages to these procedures: speed and relative simplicity.  These procedures will mainly be there, in practice, to enable the conflict to be resolved by a global solution, by bringing the parties to the negotiating table

Interim measures are the reference procedure for shareholder disputes since interim measures are quick.

Within the context of interim measures, two types of procedure are particularly useful in the event of a crisis between shareholders: application procedures (“procedure sur requete” / “ordonnance sur requête” or  “référé injunction”)

Orders on motion are issued by a single judge without contradictory debate. In other words, a court decision will be rendered without the other shareholder, identified as the opposing party, being informed of the proceedings and therefore not being able to present his arguments.

The procedure on request is particularly interesting in case of conflicts between shareholders since it allows in particular to ask the judge for measures of instruction before any trial (example: bailiff’s mandate to record the seizure by one of the shareholders of all the company’s accounting documents). However, the judge will be able to grant the shareholder’s requests only on the condition that the effectiveness of the measure sought justifies that the opposing party was not previously notified.).

The interim injunction, which is an adversarial procedure, allows for the enforcement of an obligation against an officer or shareholder.

The injunction may be based on articles 809 and 873 of the Code of Civil Procedure. The obligation in question must then not be seriously questionable. For example, this procedure can be used to force an officer to convene a board of directors or a meeting. It will then be a matter of proving that, in accordance with the statutes or the law, he has an obligation to do so but refuses to do so.

An interim injunction may also be based on the basis of the special provisions of company law. This is the case with Article L.611-2 of the French Commercial Code (obligation to deposit the company’s accounts at the office of the Commercial Court), Article L.238-1 of the French Commercial Code (obligation to communicate the accounts and the management report to the shareholders), or article 1843-3 of the Civil Code (obligation to release the entire share capital).

These provisions can prove very useful, especially for minority shareholders who wish to have access to certain corporate documents whose disclosure is refused by majority shareholders.

In practice, these quick procedures are often intended to trigger negotiations by reminding shareholders who have the power to deal with the minority, or the minority that they can exercise their rights without abusing them….

Both in the context of interim proceedings and in the case of proceedings on application, the judge will often need only a hearing to decide on the applications submitted by the shareholder applicant.

Thus, before the commercial court, the interlocutor bears his name particularly well since it happens regularly that the judge makes an order, barely a month after the appearance of the conflict between the shareholders.

The relative simplicity of these quick procedures:

The procedure before the Commercial Court is a voice of justice for which the Ministry of Attorney is not obligatory. The procedures to be followed are intended to be simple in order to facilitate the referral which is done by service of the summons on the adversary (except obviously in case of request) and placement of the summons at the court registry.

However, the mandatory information to be indicated on the summons and the deadlines for referral and placement imposed by the texts make the intervention of a counsel relevant in order to avoid unpleasant surprises.

More generally, these proceedings do not deal with the “substance” (as are, for example: an action for liability against a managing shareholder, or an action for nullity against a social decision, for abuse of majority or non-compliance with the law).

In practice, these quick procedures are often intended to trigger negotiations by reminding shareholders who have the power to deal with the minority, or the minority that they can exercise their rights without abusing them….