A shareholder wants to leave my startup: what are the legal steps?

A shareholder’s departure is a sensitive moment in a startup’s life. Beyond the personal and business dimensions, it is a company-law issue governed by legislation, the articles of association and the shareholders’ agreement. Recall that a company is a contractual arrangement between several people who agree to contribute assets or their skills to a joint undertaking and share the profits (Code civil, art. 1832). A shareholder’s exit must therefore respect this framework, supplemented by the Code de commerce rules available on Legifrance.

1) Start with the right approach: reread the articles and shareholders’ agreement

Before discussing price or timing, identify the applicable clauses precisely:

• Approval and pre-emption clauses (who can buy, in what order, with what vote).
• Temporary transfer restrictions, lock-up or tag/drag along.
• Mechanisms for good leaver / bad leaver departures, often decisive for price and timing.
• Procedure for exclusion (possible in an SAS if provided for in the articles, with procedural safeguards).
• Promises to sell/buy, shotgun (buy or sell), price-valuation arrangements.

If you have not yet formalised these points, see our guide to the key clauses of a shareholders’ agreement and, for articles of association, how to adapt SAS articles to a startup.

Also check for blind spots: the treatment of intellectual property rights, confidentiality and any non-compete/non-solicitation obligations, and any concurrent corporate office or employment contract.

2) Choose the appropriate exit route (SAS/SARL)

2.1 Voluntary sale to another shareholder or a third party

In an SAS, shares can be freely transferred unless the articles require approval. In an SARL, transferring shares to a third party is generally subject to approval (the articles may adjust voting majorities). The precise procedure and deadlines usually appear in your corporate documents and draw on the rules published by Service Public Pro.

Practical points to watch:

• Form of the instrument: a written instrument is essential (a privately signed instrument is sufficient). No notarised instrument is required for an ordinary SAS/SARL share transfer, whatever the amount.
• Tax registration: filing with the tax authority within 1 month, with registration duties. As an indication, the duty is often 0.1% for transfers of shares in an SAS/SA and 3% (after a proportional allowance) for shares in an SARL, according to Service Public Pro information sheets.
• Capital gains: the selling shareholder is taxed under their applicable regime (flat-rate levy or progressive scale after allowances, where applicable). Anticipate the tax impact with your adviser.
• Corporate registers: update the share transfer register (SAS) and/or the register of shareholders (SARL). No publication in a legal announcements journal (JAL) is required for a straightforward share transfer.
• Court registry: no mandatory filing for a straightforward transfer, unless accompanied by a change to the articles (e.g. capital) or officers.

The price is set under the arrangements in the agreement/articles. In the event of disagreement, practice is to use an independent expert to determine value. Common methods (comparables, DCF, multiples) are presented in Bpifrance resources.

2.2 Company buyback and capital reduction

When no one wishes or is able to buy, the company can arrange a buyback of its own shares followed by a capital reduction. This technical transaction requires a shareholder resolution at an extraordinary general meeting, equal treatment of shareholders, publicity formalities and court-registry filing. Refer to the procedures summarised by Service Public Pro and the legal framework published on Legifrance. Watch the financial balance (solvency test) and sequence of operations.

2.3 “Forced” exit: exclusion under the articles and good/bad leaver clauses

In an SAS, an exclusion clause can permit a shareholder’s departure when objective conditions are met (for example, serious breach or departure of an employee-founder). The procedure must allow both sides to be heard and respect defence rights, otherwise it may be invalid. good/bad leaver clauses often require a forced sale with a price formula (discount for serious misconduct). Ensure a robust valuation mechanism (third-party expert) and clear practical execution (deadlines, escrow, valid electronic signatures), consistent with your shareholders’ agreement.

2.4 The special case of sociétés civiles

If your vehicle is a civil company (asset-holding company, IP-holding SCI, etc.), a right to withdraw for just cause may exist, with reimbursement of the shareholder’s interest. This specific regime is governed by the Code civil, available on Legifrance. Check your articles carefully and, if necessary, provide for a valuation clause entrusting the task to an independent expert.

3) Valuation and price: method, evidence and neutrality

Valuation brings tensions to a head. To reduce litigation risk:

• Apply the specified method in the agreement/articles (DCF, comparables, revenue/EBITDA multiple, market value).
• Bring in an independent expert if views differ substantially, using a shared data set (data room) and a clear audit scope.
• Document the adjustments (net debt, working capital requirement, earn-out, warranty clauses) and payment timetable.
• Draft a letter of intent (LOI), followed by a comprehensive share transfer agreement (representations and warranties, conditions precedent).

The practical guides from Bpifrance help structure the method and financial indicators.

4) Operational checklist (typical 30-day schedule)

• Days 0–5: reread the articles/agreement, identify exit and approval clauses; map affected contracts (clients, employees, IP). See adapting SAS articles.
• Days 5–10: choose the route (internal/external transfer, buyback/capital reduction, exclusion), define the pricing method and timetable.
• Days 10–20: negotiate and sign the LOI; organise the data room and due diligence; prepare the transfer instrument and general-meeting resolutions. If necessary, use mediation.
• Days 20–30: sign the transfer; register it for tax within 1 month; update the registers and, if necessary, the RBE through the INPI single portal; revoke IT access and restate confidentiality obligations (CNIL guidance).

Frame the process through clear governance (meeting notices, minutes, powers), consistent with your articles and the officers’ roles.

5) HR, IT, confidentiality and intellectual property

• Access and data: immediately revoke access to tools, establish a device-return procedure and GDPR-compliant deletion/archiving (see recommendations from the CNIL).
• Confidentiality: restate existing clauses and, if necessary, sign a confirmation of post-departure confidentiality.
• Non-compete / non-solicitation: check validity (duration, scope, financial compensation) and how they interact with the exit; our good practice is detailed in the guide to non-compete obligations in startups.
• Intellectual property: if the shareholder contributed code/creations, secure the chain of title and, if needed, formalise an assignment of IP rights to the company.

6) In a deadlock: amicable methods and the court

First favour mediation/conciliation to reach a constructive resolution. Failing that, a court can decide certain issues (for example, appoint an expert to set the price or establish a situation of paralysing disagreement). The Justice.fr portal describes legal remedies and amicable methods.

Bear in mind that an uncontrolled conflict can lead to judicial dissolution for disagreement that prevents the company from functioning normally. This is why a robust agreement and documented process matter. A useful practical overview of the options also appears in this guide for non-lawyers: “A shareholder wants to leave the company: organising their withdrawal”.

Common points to watch

• Myth: “You need a notary above €1,500.” False for SAS/SARL share transfers; a privately signed written instrument is sufficient in practice.
• Omission: publication in a legal announcements journal. Unnecessary for a straightforward share transfer (excluding capital/articles transactions).
• Negligence: failing to update the share transfer register (SAS) or the register of shareholders (SARL) and, where applicable, the RBE through the INPI.
• Uncertainty: a price “to be determined by an expert” without a timetable or scope. Define the expert’s assignment and valuation timetable.
• Compliance: failing to revoke access and ignoring the GDPR. Follow recommendations from the CNIL.

Quick FAQ

Is the agreement of the other shareholders required? Often yes: statutory approval in an SARL for a transfer to a third party, and approval under the articles is common in an SAS. Refer to your articles/agreement and Service Public Pro information sheets.

What formalities follow the transfer? Tax registration within 1 month, updating corporate registers and possibly updating the RBE through the INPI single portal. No legal announcement for a straightforward transfer.

Can a shareholder be excluded? Yes, in an SAS if the articles allow it and the procedure is fair and allows both sides to be heard. Obtain advice to safeguard the decision (see the framework on Legifrance).

How is the price determined? Follow the formula in the articles/agreement or appoint an independent expert. Common methods are detailed by Bpifrance.

What should you do in a deadlock? Start mediation. Failing that, apply to the court (see Justice.fr) to secure the valuation or prevent a paralysing disagreement.

To anticipate these situations, strengthen your shareholders’ agreement, articles and internal processes now. Also consult our practical guides: shareholders’ agreement, SAS articles of association and non-compete obligations in startups.