Unless the agreement or surrounding circumstances indicate otherwise, a shareholders’ agreement with no express end date is presumed to remain in force for the remaining legal life of the company.
As a result, a signatory cannot normally terminate it unilaterally as if it were an open-ended contract.
For founders, investors, family shareholders, and corporate groups, the practical consequence is significant:
Silence on duration no longer creates an easy exit. It may bind the parties for several decades.
Executive Summary
The duration of a shareholders’ agreement is a central issue in French corporate governance.
These agreements may contain:
- rights of first refusal;
- transfer restrictions;
- approval rights;
- governance commitments;
- voting arrangements;
- non-compete obligations;
- liquidity provisions;
- and rules governing family or investor control.
For many years, French case law created uncertainty when an agreement did not contain a clear expiration date.
In a March 11, 2026 decision, the Commercial Chamber of the French Cour de cassation clarified the rule.
A shareholders’ agreement without an express term is now presumed to have been entered into for the remaining duration of the company, unless evidence within or outside the agreement demonstrates a different intention.
Because the duration of a French company is limited by law and stated in its articles of association, the agreement is treated as a fixed-term contract rather than a contract of indefinite duration.
The parties cannot therefore terminate it freely before that term.
How French Case Law Evolved
The 2026 decision is best understood as the final stage of a progressive shift in French case law.
The 2007 Position
In a November 6, 2007 decision, the Commercial Chamber reviewed a shareholders’ agreement that applied for as long as the parties remained shareholders together.
The Court accepted that the agreement had no sufficiently certain termination date.
It was therefore treated as a contract of indefinite duration, which could be terminated unilaterally subject to reasonable notice.
This approach created a potential escape route from long-term shareholders’ agreements.
The 2023 Decision
The Cour de cassation changed direction on January 25, 2023.
It held that a shareholders’ agreement expressly entered into for the life of the company was not a prohibited perpetual commitment.
A French company’s duration is stated in its articles of association and may not initially exceed 99 years.
The duration was therefore considered determined, even where the agreement could remain in force for several decades.
A party could not terminate the agreement unilaterally merely because its term was particularly long.
The 2026 Rule
The March 11, 2026 decision goes further.
The agreement in question did not expressly state that it would last for the duration of the company.
The Cour de cassation nevertheless established the following presumption:
A shareholders’ agreement with no express term is presumed to have been concluded for the remaining duration of the company, unless intrinsic or extrinsic evidence shows otherwise.
The logic has therefore been reversed.
Previously, silence could support the conclusion that the agreement was open-ended.
Today, silence generally links the agreement to the company’s remaining legal life.
What Happened in the 2026 Case?
The dispute involved an agreement designed to preserve control of a corporate group within a family.
The arrangement was intended to remain effective while the family retained at least 51% of the company’s control.
After the death of one of the main shareholders, his heirs attempted to terminate the agreement unilaterally.
The lower court accepted the termination.
The Cour de cassation overturned that reasoning.
It held that, in the absence of evidence supporting another duration, the agreement had to be presumed to remain in force for the company’s remaining legal life.
The heirs could not therefore terminate it unilaterally.
What This Changes for Shareholders
Old Agreements May Be More Binding Than Expected
A historical shareholders’ agreement may contain no express termination date.
Parties may have assumed that this silence allowed them to leave by giving notice.
After the 2026 decision, that assumption is risky.
The agreement may remain enforceable until the company’s current expiration date.
Transfer Restrictions May Continue for Decades
A right of first refusal, lock-up obligation, approval mechanism, or transfer restriction may continue to apply even when one party wants to sell its shares.
This can directly affect:
- fundraising;
- acquisitions;
- family succession;
- management buyouts;
- private equity exits;
- and strategic investments.
Governance Rights May Survive Changes in Strategy
Voting commitments, board appointment rights, reserved matters, or dividend policies may continue to bind the parties long after the commercial context has changed.
Without a clear review or exit mechanism, an agreement drafted for one stage of the company’s development may constrain a later transaction.
Heirs and Successors Require Particular Attention
The agreement should state whether it binds:
- heirs;
- legal successors;
- holding companies;
- transferees;
- and entities controlled by a signatory.
The 2026 case demonstrates how duration and succession issues can become inseparable.
Practical Examples
Fundraising
A startup prepares a new investment round.
An old shareholders’ agreement contains a right of first refusal but no end date.
The founders assume that they can terminate it before the financing round.
Under the new presumption, the agreement may still bind them until the end of the company’s current legal duration.
The transaction may require the consent of all relevant signatories or a formal amendment.
Strategic Sale
A shareholder wants to sell its interest to an industrial investor.
A legacy agreement imposes approval rights and governance restrictions but contains no termination provision.
The shareholder may not be able to escape those obligations by sending a unilateral termination notice.
Family Business Succession
A family shareholders’ agreement is intended to preserve majority control.
Years later, heirs want to reorganize or sell their holdings.
If the agreement contains no clear end date, it may still apply for the company’s remaining life and prevent an individual exit.
Is the Presumption Absolute?
No.
The Cour de cassation created a rebuttable presumption.
A court may reach a different conclusion where intrinsic or extrinsic evidence shows that the parties intended another duration.
Intrinsic Evidence
Intrinsic evidence comes from the agreement itself.
Examples may include:
- clauses linked to a specific transaction;
- references to an investment period;
- temporary governance arrangements;
- milestone-based obligations;
- or provisions implying a shorter duration.
Extrinsic Evidence
Extrinsic evidence comes from circumstances outside the agreement.
Examples may include:
- negotiation records;
- correspondence between the parties;
- investment documentation;
- the economic purpose of the agreement;
- or consistent conduct showing that the agreement was intended to be temporary.
This makes the preservation of negotiation history especially important.
Why This Matters for CEOs and Investors
For business leaders, the duration of a shareholders’ agreement is not a technical drafting issue.
It can determine whether the company is able to:
- raise capital;
- admit a strategic investor;
- reorganize control;
- complete an acquisition;
- implement succession planning;
- or sell the business.
A right drafted years earlier can become a major obstacle when a transaction must move quickly.
The legal function therefore protects more than contractual validity.
It protects the company’s future strategic flexibility.
Frequently Asked Questions
How long can a French shareholders’ agreement last?
A shareholders’ agreement can be concluded for a fixed duration, including the remaining legal life of the company.
A company’s initial duration may not exceed 99 years, although it may later be extended.
Is an agreement lasting for the company’s lifetime a perpetual commitment?
No.
The Cour de cassation confirmed in 2023 that an agreement entered into for the life of the company is a valid fixed-term contract and not a prohibited perpetual commitment.
What happens when the agreement has no end date?
Since the March 11, 2026 decision, it is presumed to last for the company’s remaining duration unless evidence shows that the parties intended otherwise.
Can a shareholder leave the company but remain bound by the agreement?
That depends on the wording of the agreement.
The document should specify the effect of a transfer, loss of shareholder status, succession, and continuing obligations.
Can the parties rebut the 2026 presumption?
Yes.
Intrinsic or extrinsic evidence may demonstrate that the agreement was intended to have a different duration.
Should existing agreements be amended?
Agreements without a clear duration or exit mechanism should be reviewed, especially before fundraising, restructuring, succession, or a sale.
Key Takeaways
The March 11, 2026 decision establishes four important principles:
- Silence on duration does not normally create an open-ended agreement.
- The agreement is presumed to last for the company’s remaining legal life.
- A signatory cannot ordinarily terminate it unilaterally.
- Clear duration and exit provisions are now essential for preserving strategic flexibility.
The safest practical rule is straightforward:
Every shareholders’ agreement should state not only how the parties work together, but also when and how they can stop doing so.
Conclusion
The Cour de cassation’s new position strengthens the stability of shareholders’ agreements.
It also increases the risk created by imprecise drafting.
An agreement with no express duration may now bind shareholders for decades and affect future transfers, fundraising, governance, and succession.
The real risk is no longer simply an agreement that lasts too long.
It is an agreement whose duration was never consciously negotiated.