Resumption of company securities

What are the means and motivations for taking over shares in the company?

Acquiring 100% of a business’s capital is not necessary to gain control over it. In a limited liability company, holding more than 50% of the shares is sufficient for deciding on management policy and profit allocation. If someone holds 75% of the shares, they have control. Based on one’s financial capacity, shareholding can be increased over time.

THE ACQUISITION OF SHARES REPRESENTS A “BLOCK SALE”

Unlike purchasing a business, the buyer of a business for sale cannot choose what to acquire. The owner of a business for sale has rights proportional to their share in the company’s capital, which entitles them to receive profits or cover past or present debts.

DETERMINING THE PRICE

The value of a business for sale is harder to determine than a fund, as it depends on the evaluation of the business’s assets and liabilities.
It is common practice to engage a consulting firm to conduct this valuation. The firm can calculate the business’s value using different methods tailored to the specific business.

WHAT LEGAL GUARANTEES ARE THERE?

Legal guarantees are limited. The acquisition of shares does not grant any special rights over the business owned by the company. Without specific commitments, the buyer has little recourse against the seller of a business for sale. The buyer can take action against the seller if they can prove that:

• The company has been stripped of its assets
• The seller acted in a way that invalidated the buyer’s consent

LIABILITY GUARANTEE HAS BECOME MANDATORY

Since legal guarantees are weak, a contractual guarantee must be provided: the liability guarantee.
This guarantee protects against any undisclosed liabilities of the business for sale that are not recognized in the balance sheet and were incurred before the sale. It is necessary to explicitly and precisely state the presale events that could trigger this guarantee. Such events could include tax or social security adjustments, or liability claims, for example.

Two types of clauses exist: the pure liability guarantee and the price revision clause.

The pure liability guarantee
The seller commits to paying off creditors revealed after the transfer or reimbursing debts disclosed after the transfer, enabling the company to settle its liabilities.

The price revision clause
This clause is typically used when the price is paid in installments. The seller commits to directly reimbursing the buyer for the difference in share value related to the disclosed liabilities, resulting in a price reduction.

FORMALITIES FOR A COMPANY TRANSFER: STEP BY STEP

The transfer of shares is recorded in a single document. However, several documents must be prepared before signing. During the negotiation period, both parties are obligated to act loyally, and if one party improperly terminates negotiations, it is liable. During the audit period, it is advisable to sign a memorandum of understanding outlining the purchase terms and guarantees (explained above). Another procedure, depending on the type of company, requires obtaining the approval of the other partners, which usually involves a majority of partners representing half of the shares.

The transfer is recorded in either a private deed or a notarial deed.

Publicity of the transfer
For the deed to be enforceable, certain legal publicity measures must be taken. Firstly, the deed must be signed by the company in the presence of a bailiff. Secondly, two copies of the deed must be filed with the clerk of the commercial court and the Trade and Companies Register.

Registration fees
Registration must be completed within one month of the transaction.

Family transfer
In the case of a family transfer, the owner contributes the business to a new company created specifically for this purpose. The shares of the business to be transferred can then be more easily distributed during the succession process.

If one of the heirs intends to take over the shares of the company, they will have to buy back some or all of the shares from the other heirs.