An “SAS” (Simplified Joint-Stock company) share buyer’s appeal displaced due to the pre-emption right of a shareholder

Feb 7th, 2016

In a May 6, 2014 decision, the request of a third party buyer was ruled inadmissible by the Paris Court of Appeal on the ground of lack of standing to bring proceedings. The Court considered that the buyer, who was displaced after the exercise of a statutory pre-emption right, could not request the annulment of said pre-emption right and the transfer of shares to himself. However, he could claim damages against the seller who violated the pre-emption right.

In this particular case, the holding companies of two industrial groups had created a common subsidiary whose statutes established preemptive rights in case either one of the companies were to sell its shares in the subsidiary. As one of the holdings had notified its intention to sell, the second company decided to exert its statutory preemptive right on the shares to be sold. The displaced buyer then sought to have the sale annulled on the ground of a wrongful exercise of the pre-emption right, and to have the shares transferred to him.

To dismiss the buyer’s motion, the Court of Appeal considered that, as a third party to the company (thus to its bylaws), there was no legal link whatsoever between the buyer and the beneficiary of the statutory preemptive right. Although it was in the buyer’s interest to request the annulment of the pre-emption he did not, however, have the standing to do so. This decision was confirmed by the Court of Cassation in a decision dated February 2, 2016.


Feb 7, 2016 |  Corporate law