Challenges to corporate resolutions in the spanish company

With the aim of facilitating corporate governance of companies, the amendments to the Capital Companies Act in Spain (LSC) simplifies the regime on challenging resolutions and makes it difficult or eliminates the possibility of challenging resolutions for minor issues.

The main new features included in the Capital Companies Act are:

  • The disappearance of the distinction between void and voidable resolutions. Now, the only distinction is  between actionable resolutions and resolutions contrary to public policy
  • The law introduces the concept of “social interest injury” referring to when a resolution is imposed abusively and in pursuit of self-interest
  • A resolution must be contested within one year
  • To challenge a resolution, the shareholder must have been a shareholder before the resolution was adopted
  • Shareholders challenging a resolution must individually or jointly represent 1% of the share capital
  • In case a resolution cannot be challenged, the shareholders shall be entitled to compensation for damages
  • Resolutions contrary to public order can be challenged by any shareholder
  • Formal defects in the process of creating the resolution cannot be alleged when, having had the opportunity to denounce them at the appropriate time, such defects were not challenged

This article is not considered as legal advice

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