LE CADRE DIRIGEANT EST UN « BADLEAVER »

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Giving shares to an executive is fashionable. But everything is done to get rid of him if something goes wrong.

First, they are fired for misconduct.

Then ‘badleaver’ clauses make it possible to buy back his shareholding at a low price.

The decision of the Court of Cassation of 7 July 2021 illustrates this.

The employees of a company form a holding company whose articles of association provide for the exclusion of the partner whose employment contract is terminated. One of them is dismissed. A meeting then amends the holding company’s articles of association to impose a downward adjustment of the price of his shares on the departing partner. As a result, the holding company notifies the former employee of his exclusion. On a reduced value.

The excluded executive contests the valuation. He obtains the appointment of an expert by order of the president of the Paris Commercial Court, which is not subject to appeal under the law (art 1843-4 of the Civil Code). Except in the case of excess of power.

The holding company therefore argues that there is an excess of power:
The challenge to the meeting amending the articles of association falls within the exclusive jurisdiction of the “commercial court”.
The “president of the commercial court” intervening on the basis of Article 1843-4 of the Commercial Code cannot decide on such a challenge.

The Court of Cassation has ruled in this sense. (Cass com, 7 July 2021, n° 19-2369)

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