The right of separation provided for in articles 346 onwards of the Spanish Companies Act considers, among other questions, the moment in which the status of being a partner (shareholder) is lost, and the moment in which the credit, or the right to receive liquidation proceeds, is understood to arise. This latter issue is particularly relevant within the framework of insolvency proceedings.

Judgement 4/2021 of the Supreme Court, of 15th January 2021, considers both questions in depth, although the final decision was not unanimous among the members of the court, leading to a particular dissenting vote.

a) The moment when the status of being a partner (shareholder) is lost.

The Spanish Companies Act does not clearly establish at which moment, after the separation right has been exercised, the partner (shareholder) loses their status. On the other hand, the Law on Professional Companies establishes that the separation right is effective from the moment of notification. There is no jurisprudential precedent which clarifies the situation. The draft bill of the Commercial Code proposed that the partner (shareholder) would be officially separated from the company when they had either been paid or consigned the value of their stake in the company.

With regards to this judicial void, there are 3 possible moments under discussion:

    • When the partner (shareholder) informs the company of their desire to separate.
    • When the company receives this request from the partner (shareholder).
    • When the reimbursement of the partner’s (shareholder’s) quota has been paid or consigned.

The Supreme Court understands that, once the process of the separation of the partner (shareholder) has been initiated, the acts to be carried out by the company are due or mandatory acts which are not optional. The procedure starts when the partner (shareholder) communicates their wish to separate from the company. However, for the intended effects of this communication to be produced, namely the termination of the link between the partner (shareholder) and the company, communication alone is not enough, for the corporate relationship must have been liquidated. The Ruling of 15th January 2021 establishes that such liquidation shall take place when the partner (shareholder) is paid the value of their stake, and not merely when the reimbursement right arises. Meanwhile, the partner (shareholder) maintains ownership of their rights (art. 93 SCA) and conserves their obligations as a partner (shareholder).

We must ask ourselves whether the consignment of the fair value of the membership interests to be redeemed must be understood as a term equivalent to ‘payment’. However, this aspect is not resolved by the Supreme Court in the aforementioned ruling. In our opinion, the concept of consignment implies an assurance of payment, but it does not constitute a payment with discharging effects until the funds are released or are at the disposition of the outgoing partner (shareholder), at which point the partner (shareholder) may be deemed to have been paid. In any case, the thesis of the Court is reprehensible, for it seems to condemn the partner (shareholder) to continue being tied to the company until the company has reimbursed them, and this is despite the termination of the affectio societatis and the formal representation of the intention to no longer be a partner (shareholder), without the opposition of the company. The act of reimbursement remains in the hands of the activity of the company, and if in the meantime it is not executed, we find ourselves in the situation where the partner (shareholder) continues to be a partner (shareholder), and thus we can imagine paradoxes such as that of partners’ (shareholders’) meetings where the decisions of certain matters depend on qualified quorums for which the vote is required of the partner (shareholder) who has requested separation from the company, and yet said partner (shareholder) will not attend the meetings because they no longer feel or consider themselves part of the company. Furthermore, taking part in the meetings in light of their announcement of their intention to separate would be completely inconsistent.

b) The insolvency classification of the credit derived from the exercise of the separation right.

The SCA does not specify when the right of reimbursement of the membership interests of the partner (shareholder) who has requested separation emerges. The Supreme Court understands that a reading of articles 347.1, 348.2 and 348 bis of the SCA leads to the conclusion that the right emerges on the date on which the company receives the communication from the partner (shareholder) who is exercising their separation right. It is also based on the ruling of the Supreme Court 32/2006 of 23rd January, in which it was declared that the reimbursement right is immediate upon exercising the act of separation, despite the fact that, at that time, the operations of valuation provided for by the law have still not been undertaken.

In light of the above, in terms of insolvency, exercising the separation right gives rise to a credit which belongs to the partner (shareholder), a right similar in nature but not identical to the right to receive patrimony as a result of the liquidation of their stake in the company capital. In the case of liquidation, the partner (shareholder) only has a right to receive the amount once the credits of third parties have been fulfilled.

The reimbursement right will be considered a subordinated credit. The right to receive the liquidation proceeds is not strictly speaking an insolvency debt capable of being classified. For this reason, the liquidation proceeds remain detached from the insolvency procedure and will be paid (as long as funds allow) after the insolvency creditors have been satisfied. This is justified because the credit right only arises when the final liquidation balance sheet and the distribution plan of the company assets among the partners (shareholders) has been approved.

Within the framework of the insolvency proceedings, the situation of the partner (shareholder) who exercises the separation right is not the same as that of the partner (shareholder) of a liquidated company. The right of the former emerges when the company receives a communication from the partner (shareholder) expressing their desire to separate. However, for the latter, the right only emerges after the liquidation of the company has occurred. Consequently, if the communication of the separation right was prior to the declaration of insolvency, the credit of the separated partner (shareholder) is included in the insolvency procedure, while the liquidation proceeds are not subject to insolvency rules, as they come after the credits of all of the other creditors of the company.

Finally, the aforementioned ruling of 15th January 2021 recalls that the partner (shareholder) who provides capital to the company becomes an investor with the right to receive economic gains, and in this case, to the reimbursement of the amount contributed. In that sense, with regard to the right to receive the liquidation proceeds, the declaration of insolvency does not provide the necessary conditions for the credit right of the partner (shareholder) to emerge. However, the right of the partner (shareholder) who exercised the separation right prior to the declaration of insolvency must be classified as a subordinate credit, and this is without prejudice to any contingency arising from a possible conflict regarding the valuation of the partner’s (shareholder) stake.

 

 

Eduardo Vilá

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

12th February 2021