This article aims to study the pronouncement made pursuant to the resolution of the General Directorate of Legal Security and Public Trust of the 30th March 2021.
In order to understand the supposed objective of the appeal, it is necessary to clearly establish the facts surrounding it. Succinctly, a joint-stock company increases its share capital by establishing, as conditions of the issue, an initial paying up of 25% of the nominal value, and the remainder within a term of 15 years. The new shares are subscribed by a sole shareholder who, two years later, is required by the management body to carry out the pending paying up, even though the shareholder does not do so. Against this background, the sole director, following the legal provision contained in article 84 of the Spanish Companies Act (LSC – Ley de Sociedades de Capital), decides to transfer the shares by means of a public auction, although the auction was not successful. As a result of this, the share capital was reduced, in accordance with the third paragraph of this provision: “If the sale cannot be made, the share will be amortised, with the resulting reduction of share capital, with the amounts already paid up remaining for the benefit of the company”.
When the corresponding public deed, which brings the agreements on the reduction of capital into public, was received at the commercial register, the registrar detected, among other defects, that relating to the need or not to comply with the requirements of article 335.c of the LSC, which establishes the amortisation regime of own shares acquired free of charge.
This article establishes that the creditors are not able to oppose the reduction of capital when said reduction is made using profits or free reserves, or by means of the amortisation of shares acquired by the company free of charge. In this case, it is necessary that the amount of the nominal value of the amortised shares or of the reduction of the nominal value of said shares is assigned as a reserve, which can only be drawn upon under the same conditions as required for the reduction of share capital. In the case in question, no type of reserve is established.
In order to be able to assess whether the regulations alleged by the registrar can be applied, one has to determine whether the prior acquisition by the company, free of charge, of the shares subject to the subsequent amortisation has been carried out. Just as the Notary, who authorised the deed, in the appeal against the assessment of the registrar, alleged, this is not a case of the amortisation of own shares of the company which were never acquired at an onerous cost nor free of charge. It is, in the Notary’s words, “a special procedure established by the law in order to exclude a non-complying shareholder who has evidently caused damage to the company due to a lack of commitment, which should rather be assimilated to a reduction due to losses or a cancellation of issued shares”.
With regards to the acquisition of the shares, the General Directorate stipulates that, in the moment immediately prior to the reduction of capital, the company is the owner of several own shares acquired free of charge in relation to those which the principle of contribution has been fulfilled; their amortisation does not involve any possession of company assets, but rather an accounting entry for the release of funds assigned to the company capital and with the same requirements as for the reduction of capital.
However, for the purposes that are of interest here, the governing body continues to say that the factual situation of the aforementioned article 84 is identified due to the non-collection of a pending paying up, which falls on the shares which are not owned by the company and which, therefore, could hardly have been acquired free of charge. It stipulates that, as this is a successive contribution (the paying up of 75% of the nominal value is still pending), the initial paying up has remained for the company’s benefit without being assigned to a special reserve fund not subjected to any kind of locking.
The General Directorate upholds the appeal, revoking the registrar’s decision, saying that the law in article 84 is limited to establishing the obligatory nature of the reduction of capital due to a failed attempt to sell, and that the disparity of the factual situation described in the case cannot be subjected to the same regime, given the differences which separate the different regulations of the articles 335.c and 84 of the LSC. However, it does not mention what the applicable solution to the case in question must be; although, by revoking the registrar’s decision, it is admitting that it is not necessary to constitute a reserve, by mandate of article 335.c, so it seems that it is referring to the common requirements and procedures of share capital reductions.
Jaime Madero
Vilá Abogados
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