An undertaking to sell (promesse de vente) triggered by the termination of an executive's office remains enforceable against the personal holding company (holding patrimoniale) that acceded to it when the shares were transferred. The condition relating to dismissal is not potestative. Potestative character is assessed only in the person of the debtor of the obligation, here the promisor, who does not control the decision of the competent corporate body.
Key points
- The transfer of shares to a personal holding company does not release the promisor executive from the undertaking to sell where that holding company has acceded to the undertaking, in addition to the shareholders' agreement (pacte d'associés).
- The potestative character of a condition, sanctioned by nullity of the obligation, is assessed only in the person of the debtor, under Article 1304-2 of the French Civil Code.
- The dismissal of the president by a supervisory committee does not depend on the executive's will: the condition relating to the termination of office is therefore not potestative.
- The beneficiary of the undertaking may obtain performance from the holding company, which is bound by the promisor's obligations, including signing the share transfer order (ordre de mouvement) for the shares.
An undertaking to sell exercised after the executive's dismissal
The commercial chamber dismisses the appeal to the Cour de cassation (Com., 11 February 2026, No. 24-18.443): the holding company that acceded to the undertaking to sell is the debtor under it. The condition relating to the termination of the executive's office is not potestative, as it does not depend on the debtor's will. A third complaint did not warrant a specifically reasoned decision, pursuant to Article 1014, second paragraph, of the French Code of Civil Procedure.
In 2017, an investment company acquired the majority of the shares in a company whose executive was its president and a shareholder. On 14 December 2017, the shareholders entered into a shareholders' agreement providing for cross undertakings to sell and to buy the executive's shares, for the benefit of the majority shareholder in the event of the termination of their office. On 30 September 2020, the executive gave notice of the transfer of their shares to their personal holding company. The supervisory committee dismissed them on 7 October 2020. The majority shareholder then notified the exercise of the undertaking to sell to the holding company, which refused to comply.
The decision under appeal (CA Paris, 23 April 2024, No. 21/19606) ordered the holding company to deliver a share transfer order transferring the shares to the beneficiary of the undertaking, together with the corresponding registration form. The executive and their holding company brought an appeal to the Cour de cassation, arguing that the holding company, a separate legal person, was not bound by the undertaking and that the obligation to sell was void as potestative.
On the first point, the lower court judges found, in the exercise of their unfettered discretion, that the company receiving the shares fell within the category of free transfers provided for in the shareholders' agreement and that it "had acceded not only to the shareholders' agreement but also to the undertaking to sell" (free translation). The holding company was therefore bound by that undertaking.
On the nullity relied on, the commercial chamber first sets out the rule of assessment, then verifies who bore the obligation in dispute. The promisor executive was the debtor of the obligation to sell, their holding company stepping into their rights. The dismissal, decided by the supervisory committee, was beyond their control. The obligation to sell is therefore not void.
It follows from Article 1304-2 of the French Civil Code that the potestative character of a condition, sanctioned by nullity of the obligation, is assessed only in the person of the debtor.
Is the personal holding company bound by the executive's undertaking?
The holding company that receives the shares and accedes to the undertaking to sell becomes the debtor under it, despite its separate legal personality. The shareholders' agreement classified a transfer to a personal holding company among the free transfers, provided that the holding company acceded to the undertakings. The receiving company met the definition of a personal holding company set out in a schedule to the shareholders' agreement, which was not disputed. Its accession covered both the shareholders' agreement and the undertaking to sell. The beneficiary could therefore require performance from it.
An executive who places their shares in their holding company ahead of a foreseeable dismissal does not neutralise the buy-back clause. According to the decision under appeal, the prohibition on the promisor transferring their rights and obligations under the undertaking could not usefully be relied on, since the transfer formed part of a personal asset management operation of which the executive remained the ultimate beneficiary. The consequence is concrete: the holding company must sign the share transfer order and the form required to register the transfer of the shares.
The identity of the debtor governs the analysis of potestativity. The promisor executive had undertaken to sell their shares in the event of the termination of their office. The dismissal was a matter for the supervisory committee, not for them. The fact that the beneficiary of the undertaking is the majority shareholder, carrying real weight in that decision, does not shift the analysis to that person. The obligation to sell remains valid.
Potestative condition: in whose person is it assessed?
The potestative character of a condition is assessed in the person of the debtor of the obligation in dispute, not in that of the creditor. The appeal to the Cour de cassation argued that the beneficiary, having become debtor of the price by exercising the option, in fact controlled the triggering of the condition. The commercial chamber rejects this shift in the point of analysis. The question remains that of the power of the debtor of the obligation whose nullity is invoked, here the obligation to sell the shares.
The solution also rests on the interpretation of the shareholders' agreement and of the deed of accession (acte d'adhésion), which falls within the unfettered assessment of the lower court judges. An agreement drafted differently, or an accession limited to the agreement alone without the undertakings, would call for a different analysis. As the case law stood on 11 February 2026, the rule for assessing potestativity is clearly stated. The extent of the holding company's commitment remains, for its part, a question of contractual drafting.
What should be checked in an agreement providing for cross undertakings?
A buy-back clause triggered by the termination of office withstands the criticism of potestativity and survives the transfer of the shares to a holding company controlled by the executive. The points requiring attention lie in the drafting of the shareholders' agreement, of the undertaking and of the deed of accession.
- Check whether the shareholders' agreement makes a free transfer to a holding company conditional on accession to the undertakings, and not only to the agreement itself.
- Read the exact subject matter of the deed of accession: its scope determines the extent of the commitment assumed by the holding company.
- Identify the debtor of each obligation before relying on a potestative condition, since the analysis is carried out in that person.
- Anticipate the interaction between dismissal ad nutum and the buy-back clause: the trigger is then beyond the promisor executive's control.
- Assess the effect of a valuation at market value on the date of departure, as provided for by the undertaking.
Checks to carry out before transferring shares to a holding company
Before any transfer of shares to a personal holding company, reading the shareholders' agreement, the undertakings and the draft deed of accession together determines the actual extent of the commitment transferred. The executive checks whether a free transfer is conditional on accession to the undertakings, and what exactly the deed they arrange to have signed covers. The beneficiary of an undertaking checks, for its part, that the accession refers to the undertaking itself, and not only to the agreement. The argument based on the holding company's separate legal personality did not succeed here. Nor did the one based on potestativity, since the triggering event was beyond the control of the debtor of the obligation to sell.
Frequently Asked Questions
Can transferring shares to a holding company avoid an undertaking to sell?
No, not where the holding company has acceded to that undertaking. In the case decided on 11 February 2026, the shareholders' agreement allowed a transfer to a personal holding company only if that company acceded to the undertakings. Having acceded to both the agreement and the undertaking to sell, the holding company became the debtor under it, and the beneficiary obtained performance, despite its legal personality being separate from that of the executive.
Is a clause requiring an executive to sell shares on dismissal void?
The clause remains valid where the triggering event does not depend on the will of the executive, who is the debtor of the obligation to sell. The potestative character of a condition, sanctioned by nullity, is assessed only in the person of the debtor. Since dismissal decided by a supervisory committee is beyond the executive's control, the obligation to sell is not void, even if the beneficiary of the undertaking is the majority shareholder.
Does a deed of accession signed by my holding company also cover undertakings to sell?
That depends on how the deed of accession is drafted. In the case decided, the holding company declared that it acceded to the shareholders' agreement and, separately, to the unilateral undertakings to sell and to buy entered into by the executive. The judges inferred that it was bound by the undertaking. A deed referring only to the agreement calls for a different analysis, particularly in the light of clauses making a free transfer conditional on accession to the undertakings.
Does separate legal personality shield a holding company from its sole shareholder's commitments?
Separate legal personality distinguishes a company from its shareholder, but it does not erase a commitment that the company itself has accepted. Where a holding company accedes to a contract or declares that it takes over a shareholder's rights and obligations, it binds itself personally. As a matter of principle, the company's legal autonomy is therefore not enough on its own to defeat performance of a commitment given in those circumstances.
How can a buy-back clause for a departing executive's shares be secured?
Identify precisely the triggering events, the body competent to record them and the method of calculating the price. State who owes the obligation to sell and who has the option to buy. Provide for the fate of the clause where the shares are transferred to a company controlled by the executive. As a matter of principle, the more objective the trigger and valuation criteria, the less scope there is for dispute.