A shareholder contract is only a contract under French law. There are no specific formalities that apply to such an agreement. However, it only engages contracting parties in terms of contract law. – directors, shareholders and social obligations – derogatory powers in favour of investors: multiple voting rights, veto rights, reporting rights in addition to all the rights mentioned below. Today, in France, it is possible to ensure the control of minority shareholders over the company through a shareholders` pact (either by voting provisions or by guarantees). – guarantees such as dilution clauses for certain shareholders. Shareholder agreements are widely used in France, particularly for private equity transactions. A shareholders` pact generally stipulates that it is binding for the purchasers of the shareholders who signed the agreement or for the holders of new shares issued by the company. In order to enhance the applicability and practical implementation of these provisions, they are often accompanied by provisions requiring the company to require, as a precondition for the issuance of new shares or the listing of a share transfer in the company`s share statements, that the new shareholder or acquirer execute a Joinder in the shareholder contract. – Issues that require a unanimous dissolution of shareholders The subject of a shareholders` pact in France is generally limited to matters relating to the management and management of the company as well as the management of shareholders` rights and obligations vis-à-vis the company and other shareholders: . All the preferential rights of investors (priority dividends, multiple votes, veto rights, etc.) would then be mentioned in the company`s statutes, which make it public and enforceable vis-à-vis third parties. The shareholders` pact would limit its scope to more confidential information such as business plan or projected internal return.
– the commitments of the founders (mainly to devote their full time and attention to the company). Founders would generally subscribe to convertible bonds („BSA“ in convertible shares). – rules and restrictions on the transfer of shares: right to pre-emption, day and tow rules, pre-emption rights, buy-sell, right to the first offer and right of refusal. – Corporate organization (governance): powers of the board of directors (certain important issues that require the approval of the board of directors by particular decision), composition of the board of directors (members appointed by investors, some of the founders, potentially independent directors) Not all forms of enterprise allow such derogatory rights for the benefit of a particular shareholder. The legal form „SAS“ is today one of the most used vehicles in private equity transactions, as it offers a high degree of freedom in the organization of management and the conditions of registration or withdrawal of a partner. The statutes of an SAS may (i) provide clauses of first refusal, (ii) the rights of the long and the dragalong, (iii) the qualified majorities necessary for certain decisions, iv) the ad hoc decision-making bodies and (v) a right of withdrawal or an effective deportation procedure of partners. A more effective option is the issuance of gold shares underwritten by investors.