Shareholders Disputes

This type of case requires a good knowledge of the applicable legal matters but also, as in any conflict, the search for non-legal arguments that can be used to exert sufficient pressure to reach a negotiation if possible.

Putting yourself in a position of strength often requires initiating legal proceedings to force the other party to take a stand.

A conflict between partners is a bit like a divorce. The emotional aspect should not be overlooked.

There are several reasons for these conflicts, and here are three examples:

Example 1: A minority shareholder and CEO has his remuneration reduced by the chairman, who is also the majority shareholder, and is then dismissed from his position as CEO.

He initiates protective seizure proceedings to obtain payment of his remuneration.

The majority shareholder chairman cites difficulties faced by the company and claims that the board of directors approved these decisions.

In reality, the board meetings never took place.

The judge hearing the case ultimately refuses the seizure.

Following this decision, the majority shareholder and chairman, satisfied with the court’s ruling, offers to buy back the shares from the minority shareholder at a slight discount to market value.

Second example: A minority shareholder and CEO creates a competing company and takes part of the team from the company he manages with him, and begins to solicit customers, either directly or indirectly.

He is dismissed from his position as managing director and given formal notice to sell his shares at market value.

In the absence of any response, the employees who left the company and are now working for the competing company are given formal notice to comply with their non-competition clause. They are required to pay the damages provided for in their contracts.

An action for unfair competition is also brought against the newly created company, its shareholders, and employees.

An appraisal of the shares is carried out.

Finally, after two and a half years, an agreement is reached on the value of the shares at market price + a few incidental amounts.

3rd example: A foreign minority shareholder living in Europe with no operational role in the French company.

The articles of association include an approval clause in the event of a sale of shares.

The minority shareholder has their shares valued and finds several buyers who make offers that are notified to the company and the other shareholders.

The offers are rejected by the company.

At the same time, the company makes money, and the profits are put into reserves. The company lends money to its holding company, which invests in other companies.

A lawsuit for abuse of majority power is filed.

An attempt at mediation fails.

The first court rules and confirms the abuse of majority power but refuses to award damages.

The minority shareholder then appeals and obtains damages from the court of appeal in a significant amount, particularly in view of the dividends distributed by the holding company.

Meanwhile, the company continues to make money and holds its general meetings, and the minority shareholder continues to challenge the decisions to refuse to distribute profits.

A new appraisal of the shares is being carried out to update their value after six years of conflict.

Finally, an agreement is reached at market price.

The proceedings are withdrawn from the court, and the parties find ways to resolve the tax issues related to the sale of the shares.

07/08/2025
Thierry Clerc