Transferring company shares, or buying them, is a common operation in the life of an SARL: a new investor coming in, a partner leaving, a family succession. Yet this operation follows precise rules, and failing to observe them can undermine the very validity of the transfer, with potentially serious consequences for both buyer and seller.
What the Articles of Association Provide: The Approval Clause
Unlike shares in a joint-stock company, SARL units are often subject to an approval clause when a transfer is planned in favor of a third party outside the company. This clause requires obtaining the other partners' consent under the terms set out in the articles of association before the transfer can take effect. Skipping this step exposes the transfer to a later challenge by partners who were not consulted.
The approval procedure generally follows a precise formal process: notifying the other partners of the planned transfer, allowing a response period, and, where provided for, a priority buyback mechanism in case of refusal. This formality, often seen as an administrative burden, actually protects the balance between partners by preventing an unwanted third party from entering the company's capital.
How Are the Transferred Shares Valued?
Valuing company shares is often the most delicate point of the negotiation. Several methods exist — book value, earning capacity, comparison with similar transactions — and the choice of method directly affects the price agreed. When disagreement persists between seller and buyer, or between partners exercising a pre-emption right, bringing in an independent expert often helps resolve the situation on an objective basis.
It is also worth distinguishing the value of the company as a whole from the proportional value of the shares being transferred: a minority stake, which carries no control over decisions, is often negotiated at a discount to its strictly proportional theoretical value — something that sometimes surprises sellers unfamiliar with valuation practices.
The Formal Steps of a Share Transfer
Once agreement is reached on price and terms, the transfer must be formalized in a written deed, then made enforceable against the company and third parties through the formalities required by law — notifying the company, filing with the commercial court registry, and updating the trade register. Until these formalities are completed, the transfer remains unenforceable against the company and third parties, which can create significant legal uncertainty for the buyer.
Tax Consequences Not to Overlook
Every share transfer carries tax consequences for the seller, notably regarding the capital gain realized, and sometimes registration duties borne by one party or the other depending on what is agreed. These aspects must be anticipated before negotiations begin, as they directly affect the net price received by the seller and the real cost borne by the buyer.
How the tax burden is split between the parties is often a negotiation in its own right, separate from the price itself, and is best clarified in writing from the initial agreement in principle to avoid any misunderstanding at final signing.
Common Pitfalls to Avoid
Among the most frequent difficulties are the absence of a liability warranty from the seller — exposing the buyer to debts or disputes predating the transfer that they were unaware of — or a valuation carried out without a prior audit of the company's accounts. A prudent buyer will always insist on access to the company's accounting and legal records before finalizing the deal. It is also worth checking for any personal guarantees given by the seller on behalf of the company — to banks, landlords, or suppliers — since whether they transfer or continue after the sale is never automatic and must be expressly negotiated between the parties, or the seller may remain on the hook for debts that are no longer theirs.
Protecting Minority Partners
In companies with several partners, a share transfer can substantially alter the balance of power. Contractual mechanisms — joint exit rights, a pre-emption clause, an anti-dilution clause — help protect minority partners from a transfer that would upend their position without their consent or without their being able to benefit from it fairly. Joint exit rights deserve particular attention: they allow a minority partner to require that their own stake be bought out on the same terms negotiated by the majority partner who is selling, preventing them from ending up, against their will, as a partner of a new shareholder they never chose.
When Should You Consult a Lawyer?
Whether transferring or acquiring company shares, legal support helps secure every stage of the operation: reviewing the articles of association, negotiating warranties, drafting the transfer deed, and completing the formalities needed to make it enforceable. This diligence avoids later disputes that are often costly, in both time and money, for parties who nonetheless believed they had concluded a simple transaction.
The Cabinet Kaboury, in Rabat, supports partners, sellers, and buyers in securing their share-transfer transactions, from the initial review through completion of all required legal formalities.