- Category: Shareholders
Breaking an associate’s pact – The implications for a French company
In France, the associate’s pact is a contract that can be concluded when a company is created to provide a framework for the relations between shareholders/associates.
One of the main advantages of this pact is the fact that it’s confidential. Indeed, in principle, the only ones who know about this pact are those who are involved. As such, what happens if someone were to break this agreement?
What are the possible sanctions?
The associate’s pact is effectively a contract. Thus, as far as the law is concerned, breaking this pact is like breaking a contract, and the sanctions are the same; generally, you’ll have to pay damages. It’s also possible to force the one who didn’t obey this pact to do so.
It’s also possible to have certain clauses in this pact detailing what happens when the pact is broken. It could define a certain volume for the damages that are to be paid, or even force the pact to stop altogether.
What can happen to the pact?
As mentioned earlier, it’s possible for a clause to force the pact to end. However, if there is no such clause, then the pact will continue as normal.