A gift of shares in a SARL (French private limited company) must be made before a notary, on pain of nullity. Shares in a limited liability company cannot be represented by negotiable securities: they therefore fall outside the scope of the hand-to-hand gift (don manuel), which requires physical delivery of the thing given. A private deed (acte sous seing privé) therefore transfers no shares and does not confer shareholder status on the beneficiary.
The essentials
- A gift of SARL shares requires a notarial deed; failing that, the gift is void.
- SARL shares cannot be represented by negotiable securities: the hand-to-hand gift, which rests on physical delivery of the thing given, is closed to them.
- The beneficiary of a gift of shares recorded in a mere private deed does not acquire shareholder status.
- Without shareholder status, a person relying on such a gift cannot bring liability proceedings against the managers on that basis.
- The validity of a gratuitous transfer of shares may be challenged years after the instrument, including during insolvency proceedings concerning the company.
A gift of shares recorded in a private deed
The commercial chamber holds that shares in a SARL cannot be the subject of a hand-to-hand gift, so that a gift of such shares requires a notarial deed (Com., 11 February 2026, No. 24-18.103). In 2002, a shareholder, who was also the manager (gérant) of a limited liability company, transferred part of their shares to a third party free of charge, by private deed. The beneficiary then relied on shareholder status to bring liability proceedings against the successive managers and the company, whom they accused of breaches. The company was subsequently placed in judicial reorganisation (redressement judiciaire), and an offer to acquire the business was then approved.
The managers raised a plea of inadmissibility (fin de non-recevoir) based on the claimant's lack of standing (qualité à agir): without a notarial gift, the claimant had never become a shareholder. The decision under appeal (CA Papeete, 11 April 2024, No. 14/00643) had rejected that objection, holding that company shares may be the subject of a hand-to-hand gift and that the shares had been transferred through the exercise of the corresponding shareholder rights. The Cour de cassation (France's highest civil court) quashes that analysis and, ruling without remittal, declares the claimant's action inadmissible.
The reasoning combines two provisions relied on in the decision: Article 931 of the French Civil Code, which requires gifts inter vivos to be made in notarial form, and Article L. 223-12 of the French Commercial Code, under which shares in a SARL cannot be represented by negotiable securities. A hand-to-hand gift requires physical delivery of the asset given: it cannot therefore relate to non-negotiable shares (free translation).
It follows that shares in limited liability companies cannot be the subject of a hand-to-hand gift.
What is a gift of shares worth without a notary?
A gift of SARL shares made by a simple private deed does not transfer ownership of the shares, and its beneficiary does not become a shareholder. The consequence is immediate for a person who believed they held shareholder rights: they cannot base a claim in court on a status they never acquired. In the case under review, the liability claim brought against the managers and the company falls on that ground alone, without any examination of the alleged breaches.
The second lesson concerns the conduct of the parties after the instrument. The beneficiary had exercised the rights attached to the shares, and the lower court judges had seen in this proof of an effective transfer. The commercial chamber rejects that reasoning: exercising shareholder rights in fact does not replace the form required for a gift. A consistent practice, even a long-standing one that has gone unchallenged for years, does not create title to the shares.
What the decision confirms about gifts of securities
The solution rests entirely on the non-negotiable nature of SARL shares, and not on any general hostility to gratuitous transfers of securities. The commercial chamber first restates the logic of the hand-to-hand gift before drawing the consequence for company shares.
It follows from the first of these provisions that, although all instruments effecting a gift inter vivos must, on pain of nullity, be executed before a notary, an exception is made for the hand-to-hand gift, which exists only by virtue of the actual delivery by the donor of the thing given, effected in such conditions as to ensure the donor's final and irrevocable dispossession.
The scope of the decision must be measured precisely. It settles the fate of gifts of shares in limited liability companies; it says nothing about transfers made for consideration, nor about other corporate forms. The quashing is without remittal, which brings the dispute over admissibility to an end, and the other complaints are not examined: the mismanagement (faute de gestion) alleged remains outside the scope of the decision.
What to check before transferring shares by way of gift
Every gratuitous transfer of SARL shares must be drawn up by a notary, failing which the transaction is exposed to nullity, including long afterwards. The risk does not materialise at the time of signature, but on the day a third party has an interest in challenging shareholder status: a dispute between shareholders, liability proceedings, insolvency proceedings or a sale transaction.
The same vigilance applies to anyone intending to act in the capacity of shareholder. Before starting litigation based on that status, the chain of successive transfers deserves to be reconstructed document by document, from the incorporation instrument to the last transfer. A formal irregularity in an old gift is enough to defeat the claim, whatever the merits of the substance. In principle, the party whose action is declared inadmissible also bears the cost of the proceedings.
The checks to make before acting as a shareholder
- Check that every gratuitous transfer of the company's shares was received by a notary.
- Reconstruct the full history of shareholdings before bringing an action based on shareholder status.
- Do not rely on the prolonged exercise of shareholder rights: it does not amount to title to the shares.
- Anticipate a challenge to shareholder status as a defence in its own right in a dispute between shareholders or against an executive.
Frequently Asked Questions
Can shares in a French SARL be gifted by a simple private agreement between family members?
No. Under the commercial chamber decision of 11 February 2026, a gift of shares in a limited liability company must be made before a notary. Because such shares cannot be represented by negotiable securities, they cannot be the subject of a hand-to-hand gift, which requires physical delivery of the asset given. A private deed therefore exposes the gift to nullity, with no time limit set by this decision.
Is voting at general meetings and receiving dividends enough to become a shareholder?
No. In the case decided on 11 February 2026, the lower court judges had held that the shares had been transferred through the exercise of the corresponding shareholder rights. The Cour de cassation rejects that reasoning: exercising shareholder prerogatives in fact does not make up for the absence of a notarial deed. Shareholder status is proved by a valid title, not by conduct, however consistent over several years.
What happens if I have already sued believing I was a shareholder but my gift was void?
The claim is declared inadmissible for lack of standing, without the court examining the merits of the complaints raised. That is precisely the outcome of the decision of 11 February 2026: the Cour de cassation, ruling without remittal, declared the liability claim against the managers and the company inadmissible and ordered the claimant to pay the court costs. The alleged breaches were never examined.
Why does French law require more formalities for a gift than for a sale?
The formal requirements surrounding gifts serve a protective function. A person who parts with property without consideration receives nothing in return: appearing before a professional ensures that they measure the scope of their commitment and that the intention to give is established beyond doubt. A sale, in principle, involves consideration that is enough to show the parties have reflected. This difference explains the strictness attached to gratuitous transfers.
How can shareholder status be evidenced in an unlisted French company?
Shareholder status is demonstrated by a complete and consistent chain of title. It is prudent to keep the incorporation instrument, the up-to-date articles of association, each successive transfer instrument and the collective decisions recording those movements. An irregular transfer in the chain weakens every transfer that follows. Before any transaction or litigation, reconstructing this history avoids discovering the difficulty at the moment an opponent raises it.