Transferring shares between a French company and a UK company—whether upstream or downstream—remains a popular way to streamline a group, welcome a new investor or prepare a disposal. The move blends legal, tax and governance hurdles on both sides of the Channel that you must clear before signing the term sheet.
Legal and Tax Framework of a Cross‑Border Contribution
1.1 Legal backdrop
- Capacity and corporate approvals: confirm the powers of shareholder meetings and boards (AGO/AGE in France, Board and General Meeting in the UK) and check the articles of association.
- Forms of contribution:
- Pure share‑for‑share exchange: new shares issued by the beneficiary company.
- Contribution for consideration: payment in cash or recording of an intra‑group debt.
- Partial asset contribution or cross‑border merger: note post‑Brexit restrictions on the UK side.
- Public filings: legal notice and clerk filing in France; Companies House submissions in the UK (Form SH01 for new issue, SH03 for buy‑back).
1.2 Tax relief regimes
| Country | Relief regime | Key condition | Effect | Legal basis |
|---|---|---|---|---|
| France | Art. 150‑0 B ter CGI | Hold the received shares ≥ 3 years | Capital‑gain deferral | BOI‑RSR‑PMEC‑30‑10 |
| United Kingdom | Share‑for‑Share rollover relief | Exchange of qualifying shares | Latent gain postponed | TCGA 1992, s. 135 |
Watchpoint: an early disposal or exceptional dividend distribution can trigger immediate taxation of the deferred gain.
1.3 Double taxation and treaty relief
The France–UK double‑tax treaty dated 19 June 2008 (Art. 13) allocates capital‑gain taxation to the transferor’s state of residence, with a credit mechanism. Use Forms 5000‑FR/5003‑FR to claim withholding‑tax relief on dividends after the contribution.
Securing the Transaction
2.1 Enhanced due diligence
- Legal: chain of title, pre‑emption or consent clauses, shareholder agreements.
- Tax: latent gains, potential withholding taxes, UK central management & control substance test.
- Financial: off‑balance‑sheet liabilities, banking covenants that a change of control may trip.
2.2 Guarantees and administrative comfort
- Warranty & indemnity (W&I) or tailored asset‑and‑liability guarantee with appropriate cap and threshold.
- Tax rulings: French ruling request or HMRC non‑statutory clearance to lock in eligibility for deferral/relief.
- W&I insurance for sizeable deals (> €30 m) where the seller’s guarantee is limited.
Control and Governance Consequences
3.1 Change‑of‑control triggers
- Crossing French AMF thresholds (30 %, 50 %, 90 %) can force a mandatory tender offer.
- Review pre‑emption, tag‑along and drag‑along clauses to maintain investor balance.
3.2 Updating corporate bodies
A reshaped cap table may call for:
- redistribution of board seats;
- adjusted quorums and super‑majority rules;
- amendments to articles and shareholders’ agreement.
3.3 Post‑closing filings
- Update the UBO Register in France or PSC Register in the UK within 30 days.
- Notify competition authorities where thresholds are met (French Competition Authority / CMA).
Operational Checklist
- Feasibility study: net tax impact and UK substance test.
- Structured data room and NDAs.
- Term sheet: valuation, exchange ratio, conditions precedent.
- Legal documents: contribution agreement, warranties, corporate approvals, share issue.
- Filings & clearances: tax ruling, clerk/Companies House, stamp‑duty exemption.
- Post‑closing follow‑up: register updates, monitor holding period for gain deferral.
Bespoke France–UK Legal & Tax Support
Our bilingual team guides you through:
- Strategic analysis (holding structure, cash‑out vs deferral).
- Drafting & negotiation of contribution deeds and shareholders’ pacts.
- Tax security (rulings, DAC6 compliance, transfer‑pricing files).
- Coordination with notaries, statutory auditors, accountants, HMRC and the French Non‑Resident Tax Office.
Need a safe roadmap? Contact us for a tailored diagnostic in line with French and UK regulations.
Disclaimer
This material is for general guidance only and does not constitute exhaustive legal advice. Always seek professional counsel before acting.
