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Comparative law France–Monaco: preference shares and the 2025 reform

26/05/2025
Monegasque Law No. 1.573 of 8 April 2025 thoroughly modernised company law in Monaco by introducing, for the first time, a clear regime for preference shares (Articles 56 to 58). This mechanism, already well established in French law, allows companies to issue shares with special rights, thereby offering greater legal and financial flexibility.
 


What is a preference share?

It is a share that confers on its holder rights that differ from those of ordinary shares. These rights may be financial, political or informational. They may be issued with or without voting rights, on a permanent or temporary basis, depending on the articles of association.

Examples of special rights:
  1. Financial rights:
    1. Priority or increased dividends
    2. Right to liquidation proceeds before other shareholders
    3. Increased share in profits
    4. Better fortune clause
  1. Political rights:
    1. Removal or modification of voting rights
    2. Veto right on certain strategic decisions
    3. Statutory right to appoint a director
  1. Information rights:
    1. Enhanced right of inspection
    2. Special report by the auditor on compliance with these rights


France vs Monaco

In France, these shares are governed by the Commercial Code and are widely used in joint stock companies (SA, SAS, SCA) to organise governance or attract investors while preserving founding control.
In Monaco, the 2025 reform now aligns the regime with this model, while introducing similar framework conditions:
  1. Limitation to 50% of the capital for non-voting shares
  2. Cap of 25% for listed companies
  3. Exclusive power of the extraordinary general meeting for any issue or conversion
A specific control mechanism is also being introduced in Monaco: holders of preference shares may, at a special meeting, appoint an auditor to verify that their specific rights are being respected.
 


A strategic tool for investors and founders


The convergence of the French and Monegasque regimes enhances the Principality's attractiveness. It now allows Monegasque companies to structure their capital in a sophisticated manner and to welcome investors with tailored rights, while securing relations between shareholders.

It is worth noting that the particular distribution of rights must be taken into account when identifying the beneficial owner within the meaning of Law No. 1.362 of 3 August 2009 on the fight against money laundering, terrorist financing, the proliferation of weapons of mass destruction and corruption, in the context of registration in the register of beneficial owners.


For more information, please contact Stephane Alexandre, Head of Legal: s.alexandre@rosemont.mc