Article 393 of the Spanish companies Act (Ley de Sociedades de Capital – LSC)  allows the payment in kind of the liquidation quota to partners insofar as it establishes: “Unless the partners unanimously decide otherwise, they shall be entitled to receive their liquidation quota in cash”.

The question arises as to when this unanimous agreement should occur.

In the resolution of the Directorate General of Legal Security and Public Trust (Dirección General de Seguridad Jurídica y Fe Pública-DGSJFP – DGRN) of 14th  February 2019, the Registrar refused the registration of the public deed of 15th  May 2018 pursuant to which the liquidator adjudicated to the partners certain parking spaces and other business premises assigned as parking spaces and storage facilities, for two reasons:

  • Infringement of the provisions of in article 393 of the LSC, which protects and safeguards the principles of proportional distribution, equal treatment and the integrity of the provision;
  • Being contrary to the Judgments of the Supreme Court of 8th October 1963, 5th May 1965, 14th June 1968, 1st March 1983 and 31stMay 1985 and the Resolutions of the Directorate General of 13th February 1968 and 5th November 1997.

The liquidator of the company filed an appeal against the decision of refusal on the basis of the following facts:

  1. On 26th June 2015 the general extraordinary meeting was formalised in a notarial deed, in which the way in which the liquidation of the company should be carried out and the adjudication to the partners of the real estate property consisting of parking spaces, in proportion to their percentages of participation, based upon the values established by the Company of Appraisers was unanimously passed.
  2. The extraordinary general meeting was held on 22nd June 2016 in the presence of a notary, in which it was agreed to perform the adjudication to each partner, before a notary public, of the parking spaces or the corresponding aliquot part thereof in accordance with their participation in the company, and also in accordance with what was agreed in the meeting of 26th June 2015, by drawing lots and assignment, so that, once the final balance of the liquidation is approved, the public deeds of adjudication may be granted. This agreement was passed with a vote in favour of 75.25% of the capital of the company, with a dissenting vote of 24.75%.
  3. On 13th June 2017 a notarial deed of drawing lots was drafted for the adjudication of the real estate to the partners.
  4. The extraordinary general meeting was held before the notary public on 29th January 2018 in which the partners representing 24,75% of the share capital voted against the agreement of adjudication.
  5. The public deed of liquidation with approval of the liquidation balance sheet and adjudication of the corporate assets to the partners was granted on 15th May 2018.

Likewise, the liquidator called upon the following legal arguments:

  1. A corporate agreement is a unilateral act made by a legal entity, which binds all the members of the corporate body (the Meeting) not only those voting in favour thereof (article 159.2 of the LSC.
  1. The meeting held on 26th June 2015 unanimously passed the resolution to proceed with the adjudication of the assets through the distribution thereof to the partners, taking into account their percentage of participation, via the adjudication of diverse real estate property. Said agreement was not challenged, therefore the action to file a claim expired. If the suspension of the registration were to be confirmed, it would amount to de facto consenting to an extemporaneous challenge of corporate resolutions adopted unanimously on 26th June 2015.
  1. Infringement of the doctrine of one’s own actions, since the agreement passed on 26th June 2015 unanimously approved the way to proceed with the liquidation of the company and the distribution of its assets among the partners, which could not be modified in the subsequent meeting of 29th January 2018.

The Directorate General dismissed the appeal and confirmed the challenged decision deeming that:

  • In cases in which the right of the partner to the liquidation quota is satisfied through the adjudication of certain assets, it is essential that the unanimous agreement of the partners is passed once the divisible liquid assets have been determined and likewise the way in which they are divided and adjudicated to the partners, providing that a liquidation project has been approved, in order to guarantee the right of the partner to the full resulting liquidation quota.
  • Given that the LSC does not have a complete regulation in this area and given the nature of the division of the corporate assets as an act of partition, the regulations governing the partition of the inheritance must be taken into account (ex. Art. 1.708 of the Civil Code and 234 of the Commercial Code) as well as the principles of unanimity and equality established in articles 1.059 and 1.061 of the Civil Code.

In conclusion, a generic resolution of “in natura” adjudication is not sufficient, such as that passed unanimously in the general meeting of 26th June 2015, which did not determine the exact way in which the adjudications must be carried out. The resolution passed by the general meeting on 29th January 2018 approving the final balance of the liquidation and the proposal for the distribution of the corporate assets was not unanimous and explicit opposition existed from partners representing 24.75% of the capital, so that the requirement for unanimity set forth in article 393 of the Spanish Companies Act was not fulfilled which must refer to the time at which the divisible corporate assets and the manner of dividing and adjudicating them to the partners was determined, after the approval of the liquidation project.

 

 

Mireia Bosch

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

23rd July 2021