NETLEX, your legal advisor in Marbella
In most of the occasions in which several subjects join forces to start a business or economic activity in Spain, they use a Spanish limited liability company as a vehicle to develop this idea.
If there are several partners, and the rights and obligations that they are going to have are not regulated correctly from the beginning, there is a high risk that sooner or later friction will appear, which could affect the survival of the company.
The relationships of the partners with a commercial entity in Spain are regulated in the existing legal regulations (capital companies law) in the statutes that are incorporated in the founding deed of the Spanish company. The problem is that the corporate bylaws, sometimes are excessively rigid (by legal provision) so that the partners who are part of that new society in Spain feel comfortable.
One way of accommodating the needs of all partners, seeking to make all of them feel comfortable, is to sign a pact or shareholder agreement.
A shareholder agreement in Spain is an agreement or document signed between some, or all, of the partners of a Spanish company in order to regulate aspects of the management of a company that cannot be incorporated into the statutes of a company.
These agreements bind the partners who sign it , and it can also bind the company itself when they are signed by 100% of the share capital.
The shareholders’ agreements in Spain, by means of which the partners intend to regulate, with the force of the mandatory link between them, aspects of the corporate legal relationship without using the channels specifically provided for in the law and the statutes, are valid as long as they do not exceed the limits. Taxes on the autonomy of the will (TS 6-3-09, EDJ 22853; 6-3-09, EDJ 22854).
Practical example for what a shareholders’ agreement could serve in Spain:
Let’s imagine that two partners intend to establish a commercial entity in Spain that will be dedicated to web design. One of the partners (capitalist partner) will hold 60% of the share capital, and the other partner will hold 40%, and will be the one who contributes work, talent and ideas to develop the business.
In such a situation, the majority shareholder could at any time take control of the company, fire the other shareholder or deny him access to the facilities and basically do “what he wants” with the company. Well, if the partners had signed a shareholders’ agreement, this situation could have been avoided.
Purpose of the shareholders’ agreement in Spain:
- Improve the position of the retail partner , with respect to what is established in the statutes.
- Regulate the position of the members signing the agreement with respect to the direction of the vote on certain matters that may be debated at the General Meeting.
- Regulate agreements related to the economic rights of the partners.
- Regulate agreements related to the transferability of shares or participations.
The capital companies law (article 29) establishes that the agreements that are kept reserved between the partners, without being incorporated into the company statutes, are not enforceable against the company. This means defining the exclusively internal scope of the effectiveness of such agreements.
Now, according to the recent jurisprudence of the Supreme Court, when these agreements are signed by 100% of the capital stock, the agreements signed could also be enforceable against the company, invoking for this purpose the general principles on own acts, abuse of law and good faith, doctrine of the lifting of the veil and fiction of the existence of a general meeting in the celebration of the shareholders’ agreement in Spain (among others, TS 24-9-87, EDJ 6642; 26-2-91, EDJ 2049; 3-18-02, EDJ 4286).
The breach of the obligations contained in the shareholders’ agreements in Spain constitutes a case of breach of contract, since they are merely mandatory.
Therefore, apart from the specific consequences that may have been agreed in the agreement itself for the case of non-compliance (eg, penal clause, execution of guarantees, etc.), the effects of non-compliance are redirected to the consequences generally foreseen in the civil rules for the breach of contracts: granting the compliant party the power to demand, alternatively, the fulfillment of the obligation or the resolution of the contract, being able to demand, in both cases and additionally, the compensation of the damages and losses caused.
Do not hesitate to contact Netlex, your lawyer firm in Marbella, for any tax and legal consultation!
