What exactly is an associate’s pact in France? Why is it useful?

Creating an associate pact

The associate’s pact is a convention among associates in a company that is submitted when a company is registered.

The characteristics of the associate’s pact

For starters, it’s worth noting that not all associates have to sign this pact. In fact, those that don’t might never learn about this pact at all! Indeed, it is a secret document that doesn’t have to be made public, unlike a company’s by-laws, for example.

Generally, this pact defines when it will end. It can be decided that it will end after a certain date, after a certain event, or whatever term is defined in the pact. However, it’s also possible for this pact to end if all associates decide to repeal it.

What’s in the associate’s pact?

The associate’s pact can contain quite a few different clauses. For example, it can have:

  • A pre-emptive clause: if an associate wants to sell his shares, other associates have priority if they want to buy them
  • An agreement clause: an associate can only sell his shares if the other associates agree
  • A unanimous agreement clause: certain decisions cannot be taken unless all associates agree
  • A clause on the division of benefits