Key points
- Pacte d’associés and pacte d’actionnaires both refer to an agreement between members or shareholders made outside the articles of association, but the clauses permitted vary according to the company’s legal form.
- In an SARL or a société civile, the holders of parts sociales are “associés” (members); in an SA, the holders of actions are “actionnaires” (shareholders), and the French Commercial Code (Code de commerce) uses both terms for the SAS.
- In an SARL, transfers of shares follow statutory approval rules, whereas in an SAS there is greater freedom in the articles of association to organise governance and transfers.
- The agreement is confidential whereas the articles of association are public: it deals with exit conditions, price, bad leaver clauses and retention commitments.
- The agreement creates obligations only between its signatories; a breach mainly gives rise to damages, and it must remain consistent with the articles of association.
The terms “pacte d’associés” and “pacte d’actionnaires” both refer to an agreement made outside the articles of association between the members or shareholders (associés or actionnaires) of the same company. The confusion is common, and it is not without consequences: depending on the company’s legal form, some clauses are permitted, while others are limited or cannot be enforced against the company. Understanding these nuances is useful before drafting or signing such a document.
Primarily a difference in terminology
Under French law, the holders of shares (parts sociales) in an SARL (private limited company) or a société civile (non-trading company) are “associés” (members). The holders of shares (actions) in an SA (public limited company) are “actionnaires” (shareholders); for the SAS (simplified joint-stock company), the Commercial Code uses both terms (Article L. 227-10 of the French Commercial Code (in French)). By extension, the agreement concluded between holders of parts sociales is often called a pacte d’associés (members’ agreement), and the one concluded between holders of actions a pacte d’actionnaires (shareholders’ agreement).
Further reading: shareholders’ agreement lawyers.
In everyday usage, the two expressions are often used interchangeably, including for SAS companies, a very widespread legal form. In start-up and SME practice, “pacte d’associés” is the most commonly used term, whatever the legal form. This is not a mistake, but bear in mind that the applicable rules vary according to the legal form.
SAS, SARL, SA: the practical differences by legal form
In an SARL, transfers of shares are governed by statutory approval rules. The agreement can supplement or adjust these rules within certain limits. In an SAS, there is greater freedom in the articles of association: they can organise governance, voting rights and transfer conditions very freely. The agreement supplements them to deal with matters that the articles of association should not disclose publicly (economic exit conditions, bad leaver clauses, financial terms of exit mechanisms).
In an SA, the way the company operates is more closely set by law, which leaves less room for the articles of association and makes the agreement more valuable. The SA is less common today for unlisted companies, but it is still used in certain institutional contexts.
What a shareholders’ or members’ agreement keeps confidential
The articles of association are public: they are filed with the court registry (greffe) and can be consulted by any third party. The agreement is confidential between its signatories. This confidentiality makes it possible to deal in the agreement with matters that should not be brought to public attention: economic terms for buying back the securities when a shareholder leaves, exit price mechanisms, non-compete clauses, retention commitments.
However, the agreement creates obligations only between the parties that signed it (Article 1199 of the French Civil Code (Code civil) (in French)). It does not bind third parties and cannot derogate from mandatory statutory rules. A breach gives rise in principle to damages against the defaulting party; specific performance may also be sought, unless it is impossible or manifestly disproportionate (Article 1221 of the Civil Code (in French)). Where a pre-emption agreement (pacte de préférence) is disregarded, the beneficiary may obtain the annulment of the transfer or be substituted for the third party, if that third party knew of the agreement and of the beneficiary’s intention to rely on it (Article 1123 of the Civil Code (in French)).
The agreement and the articles of association: read them together
The agreement must be read consistently with the articles of association. Contradictions between the two documents create uncertainty about the applicable rule, which the courts will resolve according to criteria that are not always predictable. A joint review of the articles of association and the agreement at each significant event (entry of an investor, departure of a shareholder, fundraising) is recommended.
For assistance with drafting or negotiating a shareholders’ or members’ agreement, see our dedicated pages on pacte d’associés lawyers and pacte d’actionnaires lawyers (in French).
