Abuse of majority or minority, removal of directors, deadlock, exclusion and exit of a shareholder, challenges to shareholder resolutions in French companies.
You are facing:
- a blocked meeting or a resolution you contest
- a director removed or threatened with removal
- a majority shareholder draining the company for his own benefit
- an exit from the share capital to negotiate or impose
- a disagreement paralysing the company
A dispute between shareholders is the most destructive form of litigation for a small or medium-sized company: it blocks decisions, drives customers away and distracts management from the business. The firm acts for majority, minority and equal shareholders and for directors, to restore normal operation or organise an orderly separation.
Experience shows that a dispute handled early, with a clear strategy, is most often resolved through negotiation backed by the law. A dispute left to itself ends up in court, with an uncertain outcome for everyone.
The risk: losing control before you have had time to react
The first danger is the irregular or abusive collective decision: a capital increase diluting the minority, excessive remuneration for the majority director, systematic retention of profits, an unauthorised related-party agreement. Abuse of majority, defined by French case law as a decision contrary to the company’s interest taken with the sole aim of favouring the majority, allows the decision to be set aside, but time limits are short and the standard of proof demanding.
The second danger is paralysis: without a majority, accounts are not approved, the director is not renewed, the banks grow nervous. Dissolution for disagreement under Article 1844-7, 5° of the Civil Code is a blunt instrument that courts grant only where paralysis is established. Action must be taken before, using the tools of company law and civil procedure.
Is a dispute developing between shareholders? A quick assessment allows you to choose between negotiation, urgent measures and proceedings on the merits.
The legal solution: combining statutory, judicial and contractual tools
French law offers a graduated set of instruments: requests for documents and written questions, management expertise under Articles L. 223-37 and L. 225-231 of the Commercial Code, appointment of an ad hoc agent or a provisional administrator in case of imminent peril, actions to set aside abusive decisions, liability actions against directors.
Exit is negotiated or imposed: share purchase undertakings, buy-out or exclusion clauses in the articles, price determination by an expert appointed under Article 1843-4 of the Civil Code in case of disagreement. The 2026 reform of nullities in French company law changed the time limits and conditions for challenging corporate decisions; the firm has published a guide on the subject.
How the firm assists you
The firm begins by analysing the articles of association, the shareholders’ agreement and the minutes of the last three years to identify each side’s levers and weaknesses. It then defines a strategy: formal letter, request for expertise, summary proceedings, action on the merits, or the direct opening of exit negotiations with a price and a timetable.
In urgent cases, it applies to the president of the commercial court for the appointment of a provisional administrator, the suspension of a decision or the compelled disclosure of documents. It also drafts shareholders’ agreements designed to prevent future deadlock: exit, approval, pre-emption and dispute resolution clauses.
Typical matters
The situations below are illustrative scenarios drawn from the firm’s practice and anonymised.
Minority shareholder diluted by a capital increase
A 30 % shareholder in a French SAS sees his stake reduced to 8 % by a capital increase reserved to the majority at an undervalued price. The firm obtains the annulment of the decision for abuse of majority and the restoration of the share capital.
Director removed without cause or compensation
The founding manager of a French SARL is removed by new majority shareholders. The firm obtains damages for removal without just cause and in vexatious circumstances, then negotiates the buy-out of his shares.
Deadlocked 50/50 company
Two equal shareholders can no longer approve the accounts. The firm obtains the appointment of an ad hoc agent, then organises the exit of one shareholder on the basis of an expert valuation.
Does your situation resemble one of these cases? Describe it to us and we will tell you which levers are available and within what time limits.
When the dispute ends in one partner buying the other out, the operation is handled as a business acquisition or sale, with the same due diligence and the same warranties.
Everything on shareholder disputes
Frequently Asked Questions
What can a minority shareholder actually obtain?
More than is generally assumed. A shareholder has rights to information and to the communication of company documents, may put written questions to management, may ask the court to appoint an expert to report on specific management operations, may challenge resolutions adopted irregularly or in abuse of the majority, and may bring an action on behalf of the company against its directors. None of this restores control, but together these measures create the pressure that produces a negotiated exit, which is usually the real objective.
What is abuse of majority, and abuse of minority?
Abuse of the majority is a decision taken contrary to the company’s interest and for the sole purpose of favouring the majority to the detriment of the minority, for instance systematic reserves with no investment policy while the majority is remunerated through other channels. Abuse of the minority is the mirror image: blocking a decision essential to the company purely to extract an advantage. The first leads to annulment of the resolution and to damages, the second to damages and to the appointment of an agent to vote in place of the minority.
Can a deadlocked company be unblocked?
Often. Summary proceedings can appoint a provisional administrator where the functioning of the company is paralysed and the situation threatens it, and an agent may be appointed to convene a meeting or to vote on a specific resolution. These measures are temporary and the courts grant them sparingly, but the prospect of one is frequently enough to restart negotiation. Dissolution for just cause remains available where the paralysis is definitive, and it is the outcome both sides usually wish to avoid.
Can a shareholder be forced to sell?
Not under the general law, which protects ownership, but frequently under the contract. Shareholders agreements and articles of association routinely contain exclusion clauses, drag along and tag along rights and pre-emption rights, and these are effective where they are clear on the trigger, the procedure and the price. Statutory cases also exist, for example exclusion provided for in the articles of a société par actions simplifiée. Whether a forced sale is possible is therefore a question about the documents, not about the general law.
How are the shares valued?
By an expert where the parties cannot agree, and the method matters more than the identity of the expert. Article 1843-4 of the Civil Code allows a court to appoint a valuer where the sale or redemption of shares is provided for, and the valuer applies the rules the parties have set. Discounts for a minority holding and for illiquidity, the treatment of shareholder current accounts and the reference date can move the figure considerably. Agreeing the method in advance is worth far more than arguing about it afterwards.
What does a shareholders agreement change?
Almost everything in practice. It organises governance and reserved matters, information rights, transfer restrictions, exit, deadlock resolution, non compete undertakings and the price mechanism. Where one exists and is well drafted, most disputes are resolved by reading it. Where none exists, the parties fall back on the general law, which is far less precise about the situations that actually arise. Breach gives rise to damages and, increasingly, to specific performance, so the drafting of remedies deserves as much attention as the substance.