If you are a shareholder of a company to which you have granted advances in the form of a shareholder current account, how can you get the company to refund your current account? Is it possible and under what conditions?
The fundamental principles When the shareholder requests the repayment of their current account, the company cannot refuse repayment (even due to financial difficulties). It also cannot limit the repayment to the amount its cash flow can support. However, the company can request payment terms (limited to 2 years) to repay the current account.
Different modalities The repayment of your current account will be made according to different modalities. Especially, whether there are specific clauses in the company’s articles of association or if you have concluded specific agreements at the time of the advances.
In the absence of statutory or conventional provisions, you can generally request immediate and full repayment of your current account at any time.
This principle is subject to a number of exceptions related to certain specific circumstances:
- The company cannot refuse repayment by opposing a difficult financial situation. However, the judge may grant payment terms, up to two years. Thus, delaying or staggering the repayment.
- It is possible to offset the current account with a debt of the shareholder to the company. However, if it is certain, liquid, and due.
- In the event of insolvency proceedings opened against the company (judicial reorganization or judicial liquidation), two periods are distinguished. Before the judgment opening the insolvency proceedings, the shareholder can offset their current account with the debts they owe to the company. For example, the share capital they have not yet paid. After the opening judgment, no further repayment of the current account can be made. The shareholder then becomes a creditor of the company like any other. In such a case, there is a high risk of losing the entire current account.
In the presence of statutory clauses or specific agreements concluded with the company, these are the clauses or agreements that apply. Several types of clauses can be encountered, the most common of which are as follows:
- The blocking convention This is an agreement by which the advance is granted for a specified period. The sums are blocked in the account for a defined period. Repayment is therefore scheduled from a specified date, from the conclusion of the contract. This type of agreement can also result from a clause in the articles of association. In this case, it can apply to all shareholders holding a current account.
- The notice clause The parties may provide that the shareholder may request repayment of their current account at any time subject to notice. Failure to comply with this notice would engage the liability of the shareholder.
- The procedure clause The parties may agree to implement a specific procedure to allow the shareholder to obtain repayment of their shareholder current account. Failure to comply with this procedure would justify the refusal of repayment by the company.
- The priority transfer clause This clause implies that the shareholder does not request repayment of their account before a third-party creditor of the company (often the bank) is fully satisfied. It is similar to the “last-in-line” clause, which applies in the event of insolvency proceedings. This clause requires the shareholder to be reimbursed after all the company’s creditors.
Any other type of clause is generally valid. For example, a clause providing for the repayment of current accounts subject to sufficient cash flow if repayment does not depend solely on the company’s will.
In conclusion, to obtain reimbursement of your current account, it is necessary to verify whether there are any current contractual provisions. Especially, statutory clauses or specific agreements. In the absence of such provisions, it is necessary to check the company’s situation (insolvency proceedings, financial situation) to avoid any subsequent litigation risks.
Repayment in case of reorganization or judicial liquidation of the company After the opening of insolvency proceedings, the company no longer has the right to repay the shareholder’s current account. The shareholder must therefore, like any creditor, declare their claim to the judicial administrator or the judicial liquidator.
In this case, the shareholder is reimbursed after the preferred creditors of the company and if the company’s finances allow it