{"id":2059,"date":"2017-01-13T14:21:41","date_gmt":"2017-01-13T14:21:41","guid":{"rendered":"https:\/\/vila.es\/en\/?p=2059"},"modified":"2020-12-03T16:10:14","modified_gmt":"2020-12-03T16:10:14","slug":"open-season-regarding-exit-right-shareholder-due-lack-distribution-dividends","status":"publish","type":"post","link":"https:\/\/vila.es\/en\/corporate\/open-season-regarding-exit-right-shareholder-due-lack-distribution-dividends\/","title":{"rendered":"DISTRIBUTION OF DIVIDENDS AND EXIT RIGHTS FOR COMPANY PARTNERS (II)"},"content":{"rendered":"<p style=\"text-align: justify;\">The suspension of article 348bis of the Spanish Capital Companies Act (Ley de Sociedades de Capital \u2013 LSC)[1], which provides for the <strong>exit right of a shareholder due to a lack of distribution of dividends<\/strong> finalised on 31<sup>st<\/sup> December 2016.<\/p>\n<p style=\"text-align: justify;\">Thus, said grounds are added to the other legal grounds for the exit of a shareholder (article 346 of the LSC), as well as any grounds that may be established in the company by laws with the consent of all of the shareholders (article 347 LSC).<\/p>\n<p style=\"text-align: justify;\"><strong>Legal grounds for exit<\/strong><\/p>\n<ul style=\"text-align: justify;\">\n<li>Substantial substitution or modification of the corporate object.<\/li>\n<li>Extension of the duration of the company.<\/li>\n<li>Reactivation of the company.<\/li>\n<li>Creation, modification or early termination of the obligation to carry out accessory services, except where otherwise indicated in the by laws.<\/li>\n<li>Modification to the participations transfer system (in limited liability companies)<\/li>\n<li>Transformation of the company, which has the effect of the assumption of personal responsibility for company debt (article 15 of Act 3\/2009 of 3<sup>rd<\/sup> April, regarding structural modifications of companies).<\/li>\n<li>Transfer of the registered address of the company to another member State as a consequence of an intra EU cross-border merger or to another foreign country by resolution of the shareholders\u2019 meeting (articles 62 and 99 of Law 3\/2009, of 3<sup>rd<\/sup> April regarding structural modifications of companies).<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">Thus, as from <strong>1<sup>st<\/sup> January 2017<\/strong>, where <strong>non-listed companies<\/strong> are concerned, in the fifth fiscal year as from the moment of registration of the company with the Commercial Registry, <span style=\"text-decoration: underline;\">if the general meeting does not agree the distribution as dividend of at least a <strong>third of the operating profit <\/strong>obtained during the previous fiscal year, which are legally distributable, the shareholder (partner) who votes in favour of the distribution of company profits shall have the right to exit the company<\/span>, via a share capital reduction (article 358 of the LSC) or the acquisition of the shares or participations of the affected shareholder or partner by the company (article 359 of LSC).<\/p>\n<p style=\"text-align: justify;\">As it may be seen, in this case the legal grounds for the right to exit of the shareholder (partner) are no longer a matter of majority resolutions which essentially modify the company purpose (as is the case of the cause for exit of article 346 of the LSC), but the protection of the minority shareholder (partner) in the face of a general meeting resolution which withholds the shareholder\u2019s (partner\u2019s) participation in profit, understood to be non-fulfilment on the part of the majority of the company purpose and of the legitimate expectations of the minority shareholder (partner) for obtaining a profit.<\/p>\n<p style=\"text-align: justify;\">As from 1<sup>st<\/sup> January 2017, minority shareholders who find themselves in this situation shall have a term of one month as from the date of the ordinary general shareholders\u2019 (partners\u2019) meeting to exercise their exit right (article 348bis LSC).<\/p>\n<p style=\"text-align: justify;\">The evaluation of the participations or shares of the shareholder (partner) may be carried out:<\/p>\n<p style=\"text-align: justify; padding-left: 40px;\">1) By way of an <strong>agreement between the company and the shareholder (partner) on the <span style=\"text-decoration: underline;\">reasonable value<\/span><\/strong> of the participations or shares, or on the person or persons who must evaluate them and the procedure to be followed for their evaluation.<\/p>\n<p style=\"text-align: justify; padding-left: 40px;\">2)\u00a0<strong>In the absence of agreement<\/strong>, they shall be evaluated by an <strong>independent expert<\/strong>, designated by the commercial registrar corresponding to the company\u2019s registered address at the request of the company or any of the holders of the shares or participations object of the evaluation (article 353 of the LSC), the retribution of which must be assumed by the company (article 355 of the LSC).<\/p>\n<p style=\"text-align: justify;\">Nevertheless, the partners of limited liability companies to whom the value of redeemed participations may have been reimbursed (against a share capital reduction with funds returned to partners) should be aware that they are jointly and severally liable before third parties for company debts prior to the publication of their exit up to the limit of the amount that they may have received (article 357, in relation to articles 331 and 332 of the LSC).<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\">Carla Villavicencio<\/p>\n<p>Vil\u00e1 Abogados<\/p>\n<p>&nbsp;<\/p>\n<p>For more information, please contact:<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"mailto:va@vila.es\" target=\"_blank\" rel=\"noopener noreferrer\">va@vila.es<\/a><\/span><\/p>\n<p>&nbsp;<\/p>\n<p>13<sup>th\u00a0<\/sup>of January 2017<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\">[1]Note regarding enforcement: this article was introduced by Act 25\/2011, of 1<sup>st<\/sup> August, partially reforming the Spanish Capital Companies Act and incorporating Directive 2007\/36\/CE of the European Parliament and Council, of 11<sup>th<\/sup> July, on the exercise of determined rights of shareholders of listed companies, although the application thereof was suspended until 31<sup>st<\/sup> December 2016 pursuant to Act 9\/2015, of 25<sup>th<\/sup> May, regarding urgent insolvency measures and the Royal Decree law 11\/2014, of 5<sup>th<\/sup> September, regarding urgent insolvency measures (previously it had been suspended until 31<sup>st<\/sup> December 2014 by Act 1\/2012, of 22<sup>nd<\/sup> June, regarding the simplification of the obligations of information and documentation of mergers and split-offs of capital companies).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The suspension of article 348bis of the Spanish Capital Companies Act (Ley de Sociedades de Capital \u2013 LSC)[1], which provides for the exit right of a shareholder due to a lack of distribution of dividends finalised on 31st December 2016. Thus, said grounds are added to the other legal grounds for the exit of a  [&#8230;]<\/p>\n","protected":false},"author":4,"featured_media":4734,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[],"class_list":["post-2059","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>DISTRIBUTION OF DIVIDENDS AND EXIT RIGHTS FOR COMPANY PARTNERS (II)<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/vila.es\/en\/corporate\/open-season-regarding-exit-right-shareholder-due-lack-distribution-dividends\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DISTRIBUTION OF DIVIDENDS AND EXIT RIGHTS FOR COMPANY PARTNERS (II)\" \/>\n<meta property=\"og:description\" content=\"The suspension of article 348bis of the Spanish Capital Companies Act (Ley de Sociedades de Capital \u2013 LSC)[1], which provides for the exit right of a shareholder due to a lack of distribution of dividends finalised on 31st December 2016. 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