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Partner agreement in SCI: definition and legal value
A partner agreement is a contract made between all or certain partners of a company, different from the law, which regulates their private relationships: governance, entry and exit of partners, voting rules, transfer of shares, confidentiality, conflict resolution, etc.
Legally, these agreements are generally private contracts, which have binding force: once legally concluded, they “function as law” between the signatories. In other words, everyone is obliged to respect the commitments they have made (article 1103 of the Civil Code).
The partnership agreement is only binding on the signatories and cannot be enforced against third parties or against partners who have not signed it, in accordance with the relative consequences of the contract (article 1199 of the Civil Code). This is an important point: an investor, purchaser of shares or the company itself, who is not a party to the agreement, cannot have obligations arising from an agreement imposed on them. It is therefore important to anticipate support from future partners.
Because the pact is an act outside the law, it is not included in the register and in principle remains confidential. To provide a specific date (useful in terms of proof or to prioritize third parties), you can register it with the tax administration or attach it to an authentic letter (article 1377 of the Civil Code).
Finally, the pact must not conflict with mandatory regulations applicable to the SCI or neutralize statutory clauses: in the event of a contradiction, the law will take precedence with respect to the company and third parties. Therefore, the agreement needs to be made in accordance with the law (management, authority, decision-making procedures, transfer approval, etc.), in particular with regard to articles 1846 to 1849 (management and powers) and 1.852 (rule of unanimity by default for decisions exceeding the manager’s authority) of the Civil Code.
Why should SCI always regulate shareholder agreements?
Whatever the configuration (family SCI, investment SCI between friends, professional or patrimonial SCI), partner agreements ensure social life and drastically reduce the risk of conflict.
First, because SCI is based on personae intuitions: the identity of partners and the stability of group numbers. The Civil Code already provides for certain protections, such as transfer agreements (control of the entry of new partners, article 1861), but pacts allow us to go further and anticipate concrete situations: separation of partners, protracted disputes, death or incapacity of a partner, need for liquidity, desire to exit, arrival of minority investors, etc.
Then, the shareholder agreement is useful to complement the law by setting out voting agreements between the signatories, conditions for the appointment and removal of managers, rules for consultation or additional information, mechanisms for resolving obstacles (gun, buy-sell, mediation/arbitration) and formulas for valuing shares in the event of redemption. This simplifies decision-making in a framework where, in the absence of statutory provisions, certain decisions must be taken unanimously, which becomes a source of paralysis in the event of differences of opinion.
Finally, the pact provides contractual sanctions in case of default by the signing party (damages, penalty clauses can be adjusted by the judge – article 1231-5), which makes everyone accountable and creates a real internal “code of conduct” for the partners.
Confidentiality: a strategic asset for partners
Unlike public laws, these pacts are not made public and are known only to the signatories. This confidentiality protects the asset strategy (asset arbitrage policy, transfer schedule, veto threshold, exit mechanism, valuation) and allows confidential negotiations in the event of the entry of a new partner. This does not take away anything from the binding force of the contract between the signatories and is related to relative effect (article 1199 of the Civil Code), which prevents third parties from enforcing the terms of the agreement against you.
Problems are easily avoided thanks to the counterparty agreement
In practice, the partners’ agreement avoids a large number of problems that may arise in the life of SCI:
- preventing forced sales of shares to undesirable third parties by combining pre-emptive rights, agreements and objective pricing formulas;
- it avoids deadlock during general meetings thanks to voting conventions and binding mechanisms;
- it establishes clear exit rules (forced buybacks in certain cases, timelines and prices) that avoid lengthy and expensive litigation;
- it protects SCI’s cash flow by monitoring partner checking accounts;
- this maintains the confidentiality of the cultural heritage strategy, where the law is public.
These advantages are due precisely to the contractual regime of the agreement (binding force between the signatories, relative effect on third parties).
Articles of Association vs. partner agreement: correct distribution of roles
How to write a SCI associate agreement: step by step method
1) Establishing a diagnosis: who does what, why, with what risks?
Start with an audit of the existing articles of association and organization: manager powers, decisions given to partners, majority rule, consent clauses, financial rights. Examine in particular articles 1846 to 1849 (management and powers) of the Civil Code and the default unanimity rule of article 1852. This diagnosis reveals the blind spots that a shareholder agreement must cover (information, voting, liquidity, conflicts).
2) Define the pact architecture and its scope
The pact must complement, and not conflict with, the law. It is useful to organize documents into sections:
- governance and information;
- transfer/in/out;
- financial rights;
- financing (current account, request for funds);
- non-competition and confidentiality;
- dispute resolution.
Each section announces its objectives (e.g. avoiding unwanted transfers), its rules (prevention, approval, pricing formulas) and sanctions (penal clauses, forced repurchases).
3) Governance, voting and information: organizing decision making
In SCI, managers bind the company within the boundaries of the company’s goals, and some managers in principle have separate powers. The agreement can:
- determine the voting commitment of the signatories of important decisions (voting agreements),
- establishing contractual veto rights over certain resolutions,
- supervise the appointment/dismissal of management,
- organize periodic reporting.
Remember that, legally, decisions that exceed the manager’s authority must respect the provisions of the articles of association, and, if not, there must be unanimity of the partners. A shareholder agreement cannot change these rules with respect to the company, but it can oblige its signatories to vote accordingly and provide sanctions if they do not honor their commitments.
4) Entry and exit of partners: safe capital
The Civil Code regulates the transfer of shares in civil companies: the partners’ agreement is a rule that can be adapted to the articles of association, with possible adjustments for intra-family transfers. The pact could strengthen this framework by combining pre-emptive rights, resale rights, temporary inalienable rights (justiciable and time-limited), and by establishing valuation methods (friendly expertise, indexed formulas). Also think about cross-buy/sell promises in the event of the death, incapacity, or departure of a key partner.
In terms of formalities, every transfer must be recorded in writing and can be implemented against the company based on the conditions determined by law. Again, a pact binds only its signatories but allows the behavior to be adopted to be regulated in advance (notification, schedule, price), under a penalty clause.
5) SCI financial rights and financing
Furthermore, the partners’ agreement can:
- align distribution rules (reserve policy, dividend payments/net rent),
- monitor partners’ current accounts (upper limits, possible interest, payment terms),
- organize fundraising calls in case of employment or cash flow difficulties.
The goal is to avoid situations where partners hinder the life of the company by systematically refusing to finance important expenses.
6) Prevent and handle conflict: from “deadlock” to an orderly exit
In case of conflict, plan a gradual procedure: caution, conventional mediation, possible arbitration, then an unblocking mechanism (shotgun/Russian roulette, Texas gunfight auction, buy-sell at a predetermined price, or can be determined by an expert).
This clause is more effective because it refers to clear deadlines and unassailable pricing methods. Therefore, these things must remain proportional and in accordance with the interests of society.
7) Confidentiality, non-competition and loyalty
As seen previously, this agreement is confidential because it is not made public. It may contain a detailed confidentiality clause, accompanied by a penalty clause. Non-competition clauses targeting identical or related activities within the scope of SCI are possible if necessary to protect legitimate and proportionate interests (time and space limitations). Recall, in the background, the general obligation of good faith in the performance of contracts.
8) Legal compliance and articulation with laws
Before signing, test each clause by paying attention to two things: public order (no violation of a partner’s important rights, no total deprivation of voting rights, no permanent paralysis of corporate bodies) and consistency with the articles of association. If a contradiction occurs, the law will take precedence at the community level.
To make certain rules more enforceable, consider incorporating similar rules into law (e.g. strengthening consent), while retaining the pact’s flexibility for more developed mechanisms (assessment, information, etc.).
9) Signature, specific date and proof
To be valid, a clear partner agreement must be signed. The signature can be handwritten or electronic. For proof and precedent against third parties, provide a specific date on the agreement: registration with the business tax service, confirmation with an authentic deed (notary), or transformation into a lawyer’s deed.
Advice : Consider systematically registering new partners (attached adhesion form) and updating the signatory list.
10) Should you be accompanied by a legal professional?
Lastly, know that there is no law that requires you to use a lawyer or notary to draw up a partner agreement.
However, support is highly recommended as soon as a sensitive situation occurs:
- forced purchase clause,
- intra-family transmission,
- cutting (ownership of proceeds/naked),
- the presence of non-family investors,
- coexist with the marriage regime,
- choice of arbitration mechanism.
The legal professional guarantees the legality, articulation with the law and taxation of the operation (transfer price, registration fees, current account regime), and can present documents in the form of a lawyer’s deed to strengthen its evidentiary power.
