International Newsletter : M&A and Private Equity
Maëliss Bourbon
New mandatory formalities for transfers of shares in real estate-predominant companies
France has introduced new mandatory formalities for transfers of shares or interests in real estate-predominant companies, effective June 27, 2026. The reform strengthens France’s anti-money laundering framework and has immediate practical implications for domestic and cross-border transactions.
Prior to the reform, shares or interests in real estate-predominant companies could be transferred by a simple private agreement (acte sous seing privé), without the involvement of a regulated professional. New Article 1865-1 of the French Civil Code (introduced by Law No. 2026-534 of June 25, 2026) now requires, under penalty of nullity, that transfers occurring in France be recorded in a notarial deed, a deed countersigned by a lawyer or, in certain circumstances, a deed drawn up by a chartered accountant.
The chartered accountant route is narrow in practice, as it is only available where drafting the deed is directly ancillary to an existing accounting or tax-filing engagement for the company concerned. All three professionals are subject to anti-money laundering obligations.
The reform applies to any transfer of shares or interests in a personne morale à prépondérance immobilière (“PMPI”), a category broader than the familiar société civile immobilière (SCI). It covers unlisted civil entities, regardless of nationality, whose assets consist mainly of French real estate or real property rights, or interests in other PMPIs. Its extension to unlisted commercial companies is widely considered likely, although the point remains debated. Certain collective investment vehicles, including SCPIs and OPCIs, are excluded, though their real estate subsidiaries may still qualify as PMPIs. Importantly, real estate predominance is assessed by taking into account operating real estate used in a business, not only investment property.
The reform may therefore apply well beyond traditional asset-holding structures. A significant body of legal commentary considers that “transfer” should be interpreted broadly, covering not only sales but also gifts, contributions (apports), exchanges, buy-back-and-cancellation transactions and transfers of bare ownership (nue-propriété). The position on transfers of usufruct alone remains debated, although the prevailing view favours a broad interpretation. Mergers and other universal transfers of assets are excluded.
Cross-border transactions require particular attention. The new requirement may apply where the target company is foreign but meets the French tax-law definition of a PMPI, notably where the transfer deed is executed in France or must be registered in France. Separately,
French tax law (Articles 635 and 726 of the French General Tax Code) already requires certain transfers of interests in PMPIs carried out abroad to be recorded in an authentic deed received by a French-practising notary before registration in France. These overlapping requirements call for careful coordination, while some cross-border scenarios remain to be clarified.
Non-compliance renders the transfer void. The prevailing view is that this constitutes an absolute nullity (nullité absolue), given the anti-money laundering purpose of the reform. If confirmed, this would mean that the defect cannot be waived or cured after the fact, although this characterisation has not yet been tested in the courts.
An action to void a non-compliant transfer remains subject to the ordinary five-year limitation period. In a related measure, new Article 635-0 A of the French General Tax Code empowers the French tax authorities to refuse to register the transfer unless a qualifying deed is provided.
In practice, the reform affects transaction planning in three ways: (i) higher execution costs, as a regulated professional is now mandatory; (ii) longer timelines for onboarding and anti-money laundering checks; and (iii) greater legal certainty, through authenticated transaction dates, confirmed availability of funds at signing, certified capital gains calculations, and reduced fraud and dispute risk.
Clients holding French real estate through holding companies, joint ventures or multi-tiered group structures should therefore assess at an early stage whether any contemplated transfer may fall within the new regime, particularly in cross-border transactions. Clients who have already signed a transfer of PMPI shares or interests since June 27, 2026 without following the new formalities should promptly assess the implications.
Maëliss Bourbon, Counsel