Non-approved heir in a simplified joint-stock company: the value of corporate rights is calculated as of the date of death

In 2015, a shareholder of a simplified joint-stock company (SAS) passed away. His wife and minor son inherited his shares.

In 2016, the general meeting refused to approve the heirs, cancelled their shares, and set the redemption value.

The heirs challenged the valuation and requested the appointment of an expert (Article 1843-4 of the Civil Code).

In 2021, the expert submitted their report, proposing three valuations based on the balance sheet date used: 2014, 2015, or 2016.

However, according to Article 1870-1 of the Civil Code, when heirs do not become shareholders, "the value of these corporate rights is determined as of the date of death."

Nevertheless, the Court of Appeal selected the date closest to the redemption decision, namely 2016, and dismissed the date of death on the grounds that the articles of association did not refer to Article 1870-1 of the Civil Code.

The stakes are significant for the shareholders! Between 2015 and 2016, the company's value nearly tripled, and the difference between the two dates amounts to hundreds of thousands of euros. They have appealed to the Court of Cassation.

The High Court overturned the decision citing Article 1870-1 of the Civil Code: in the absence of provisions in the articles of association, the value of the corporate rights of a non-approved heir is determined as of the date of death.