A distinction should be made between serious offences (bribery and corruption, falsified documents, extortion) and the breach of rules and regulations applying to the company’s business. There are many criminal offences which support rules in the consumer field, environmental law, urban planning, data protection, as well as company law more directly.

It would first be necessary to look at the articles of association of the company as well as to determine the type of company. Certain companies by law are subject to restrictions on the sale of shares to third parties. In a SARL for example it will be necessary to seek the approval of existing shareholders before a sale can be made to a third party. In other forms of company an approval process may also be required by the articles of association such as by the Board of Directors or by the other shareholders.

Another factor which can restrict the sale of shares are pre-emption rights which could be granted to other shareholders to enable them to purchase the shares before they are offered to a third party. Pre-emption clauses are usually drafted in a fairly detailed manner and the process needs to be complied with before a sale to a third party could become possible.

There can be restrictions on the sale because the shareholders have undertaken not to sell their shares for a given period of time; the purpose of such an undertaking is to provide support of their investment to the company during for example its formative stages.

The carrying out of due diligence on the company is a vital initial step, covering the ownership of shares and property, employment, contracts …

The sale and purchase agreement should include a set of warranties and representations about the target company.

First, it needs to be clear what is being sold: the business and assets or the shares of the company. The liabilities of the vendor in regard to the purchaser will be different according to the nature of the sale.

It will be important to verify the legal and financial capacity of the purchaser. Before any pre-contractual negotiations are envisaged, a letter of confidentiality should be considered.

Post-sale, it will be important to monitor that the purchaser has carried out any formalities which ensue from the sale such as a change in directors appearing on the public company and commercial register.

A shareholder agreement, known in French as a pacte d’associé or pacte d’actionnaire, is an agreement between some or all of the shareholders which is in addition to the articles of association. It contains right and duties of the shareholders which are only binding between the signatories. The contents are frequently undertakings as to how the company is to be managed or promises to sell if certain events occur. The shareholder agreement is not disclosed to the public.

In French law, a self-dealing agreement is called a convention réglementée. It is an agreement between the company and one of its directors or a shareholder with a shareholding above a certain threshold. A self-dealing agreement needs to be approved by the relevant decision-making body of the company.

A company will be bound by the actions of its CEO in regard to third parties, notwithstanding the fact that the director has acted ultra vires or in excess of his or her powers.

The first question is to determine what type of company the CEO works for. Certain positions in certain types of companies can be removed at will without the need to give reasons; such is the case of the President and members of the board of directors of société anonyme (SA). On the other hand in certain other types of companies, for example a SARL, justifiable grounds need to be given for the removal of the CEO and failure to provide justifiable grounds could give rise to a claim for damages. In principle the termination in all cases will be without notice and will take immediate effect. Sometimes difficulties of a formal or procedural nature can arise particularly in companies in which the CEO has the sole right to call meetings of shareholders; it may then be necessary to circumvent the CEO in order to call a meeting at which the CEO will be removed.

The answer depends on the type of director. The president of a board of directors of a société anonyme can be removed at any time without notice. However, in the case of a managing-director (director general) or a Gérant, justifiable grounds for the termination are required. It is important to note however that in principle the director will not, in France, have a contract of employment with the company; thus the rules on the termination of a contract of employment would not apply.

The minority shareholder has a right to information about the company accounts. It can put questions to the director or board of directors. Subject to certain thresholds in terms of shareholdings, they can seek the appointment by a court to undertake an expert report on the management.