Article 348.bis, which recognizes the right of exit of a minority shareholder due to failure to distribute dividends, entered into force on the 1st of January 2017 after the suspension of its validity by means of a transitional provision of the Corporate Enterprises Act, approved on the 2nd of October 2011.
Company law and corporate governance refer to the appropriate company management and control structures as well as the rules which regulate the power relation between owner, administration board, etc. Its function is to protect the interests of the company and its shareholders and to eliminate, mitigate or resolve any conflict.
The main differences between the Spanish public limited liability company (SA or Sociedad Anónima) and the limited liability company (SL or Sociedad Limitada) are in terms of minimum capital stock, payment upon formation, transfer of shares or stakes or contributions to the share capital, among others.
A general partnership is a contract through which two or more people agree to a share capital, with the purpose of undertaking a business activity and distributing the profits. It is an obsolete and uncommon form in the Spanish commercial market, for which, on numerous occasions, it is necessary to transform such partnerships into an LLC or corporation.
For legal existence in Spain, companies must fulfil important formalities. The so-called “corporate housekeeping duties” include the registration of the company with the commercial register, the keeping of the minutes of all the meetings of the shareholders and management, the careful management of an accounting and the timely submission of the annual accounts.
The modification of the legal headquarters of a company in Spain has traditionally been the responsibility of the general meeting. The LSC now expedites this procedure with the entry into force of the 15/2017 Royal-Decree-Law providing a new interpretation of article 285 of the LSC and thus clarifying that the change of the registered office will be the responsibility of the Administrative Body.
The Corporate Enterprises Act in Spain requires an agreement on the appointment of a managing director if the executive power is vested in a board member. The appointment of the managing director shall require the favourable vote of two-thirds of the board members.
Conflicts between shareholders may be one of the main causes of the termination of many companies. The best solutions for conflicts are to prevent and avoid them. These solutions may consist of procedural protocols that include clauses or formulas of resolution in a company’s own statues, or by using extrajudicial dispute resolution mechanisms.
Many entrepreneurs or managers decide to “let a company die” or fail to communicate to the Spanish Treasury its inaction, understood as the discontinuation of activities set out in its corporate purpose and statutes and not generate income from these activities.
Under Spanish Law, there are different options to seek compensation for breach of a shareholder’s agreement, which are agreements that, although not mandatory, are highly recommended since they prevent future problems between partners and a company.
Among the objectives of the Code of Good Governance are: to manage the maximum levels of competitiveness of Spanish companies, to generate trust and transparency for national and foreign shareholders and investors, to enhance the internal control and corporate responsibility of companies and to assure the adequate distribution of functions, tasks and responsibility within companies.