Simplified joint-stock company and right of first refusal: the nullity of a transfer does not require proof of fraud

A shareholder of a simplified joint-stock company transfers their shares to a third party without respecting the right of first refusal provided for in the articles of association.

One of the other shareholders files a lawsuit to have the transfer declared null and void.

The transferor attempts to introduce a rule from a different legal framework into the debate: in the context of shareholders' agreements, case law requires proof of fraudulent collusion between the transferor and the transferee to annul a transfer (Court of Cassation, Mixed Chamber, May 26, 2006, No. 03-19.376). They argue that the same condition should apply here.

The Court of Cassation rejects the appeal's argument, citing Article L. 227-15 of the French Commercial Code: "Any transfer made in violation of the statutory clauses is null and void."

Why such a difference in the legal framework?

A shareholders' agreement is by nature a contract between shareholders and is not enforceable against third parties. Consequently, the nullity of a transfer requires proof of fraudulent collusion on the part of the transferee.

Conversely, the articles of association are public and enforceable against everyone, and failure to comply with them results in an immediate sanction.