A pre-emption clause generally provides that in the event that a shareholder contemplates to transfer its shares, the selling shareholder must notify such contemplated transfer to the beneficiaries of the pre-emption right and to the company itself.

The pre-emption clause should detail the information which the selling shareholder must provide upon notification in order to enable the beneficiaries of the pre-emption right to exercise such right.

Account should be taken in this respect of French case law, according to which pre-emption clauses should be given a strict interpretation.

Thus, if a pre-emption clause does not impose on the seller to inform the remaining shareholders – beneficiaries of a pre-emption right – of the identity of the purchaser, such shareholders will have no right to require that such identity be disclosed.

Similarly, if a pre-emption clause does not oblige the selling shareholder to disclose the share purchase agreement (or the modalities of payment or re-adjustment of the purchase price), the beneficiaries of the pre-emption right will not be in a position to force the selling shareholder to disclose such information.

A pre-emption clause should therefore be drafted in such a way so as to impose on the selling shareholders to disclose to the remaining shareholders (or other beneficiairies of the pre-emption right) any and all information which may be relevant for the exercise of their pre-emption right, including:

• the identity of the proposed purchaser, including that of any other entities or shareholders who ultimately control the purchaser,
• the price offered for the purchase of shares (including any revision of re-adjustment mecanisms),
• etc.

Can a shareholder exercise its pre-emption right even if the selling shareholder has failed to notify its intention to sell?

According to French case law, the notification of the contemplated sale by the selling shareholder is only aimed at informing the beneficiary of the pre-emption right of the seller’s intention to sell.

Consequently, the exercise of a pre-emption right even in the absence of a notification, by the seller, of its intention to sell, should be valid.