Private limited company share transfers: knowing is not the same as being notified.

A couple owns a private limited company (SARL) in equal shares (50/50), with both serving as co-managers.

They sign an agreement with a buyer: the wife sells her shares immediately, while the husband will sell his at a later date.

The wife's share transfer is unanimously approved at a general meeting, the draft agreement is attached to the minutes, and consent is granted.

The buyer joins the company as general manager. The husband remains president.

Relations deteriorate.

The husband then has the company summon the buyer to court to annul the wife's share transfer, arguing that the draft agreement was never formally notified (neither by registered letter with acknowledgment of receipt nor by a judicial officer) as required by Article L. 223-14 of the French Commercial Code.

The Court of Cassation upholds the annulment.

Actual knowledge of the draft agreement by all shareholders, even if perfect and accompanied by a unanimous vote, does not compensate for the lack of formal notification.

The formal requirements of Article L. 223-14 are a matter of public policy.