Right To Separate The Partner Due To Lack Of Dividend Distribution

Right to separate the partner due to lack of dividend distribution

Introduction

Within this exhibition we will talk about the right of separation due to lack of dividend distribution that is included in article 348 bis of the Capital Societies Law. To understand this right we will previously talk about: First, the right of separation as a right included within the Capital Societies Law. This right includes the ability of the partners to express their willingness to separate it.

Second, we will talk about the right of the different partners to receive dividends by the company, this is an economic, basic right in all companies. Subsequently, I will deal specifically of the right of separation due to the lack of dividend distribution that is the theme of this exhibition, this right was introduced into the Capital Societies Law after the 2011 partial reform, the 2007/36/CE Directive of the European Parliamentand of the Council in the Spanish legal system.

Through this modification, article 348 bis is incorporated into the Capital Societies Law, which is within Chapter I of Title IX, and therefore this article will mean the recognition of the right of the partner to separate from society as a result of thisLack of distribution of dividends that as a partner will correspond to it. This right may be exercised by it when a series of requirements are met. The main objective of the implementation of this article will be the protection of the minority partners of the abuses that may suffer from the most power partners of the same.

Finally, we will carry out a jurisprudential analysis of those most relevant sentences related to said article.

Developing

Concept of separation right

The concept of separation is linked to the voluntary abandonment of the company by the partner in the exercise of a right that the law or the statutes grant it, and prior to the reimbursement of its shares or participations, according to cases. In societies of marked capitalist character, such as anonymous, the right to separate the partner is only admitted in very counted isolated cases, because the normal mobility of action supplies the absence of a general right to separation. 

Within the societies of anonymous it admits it only in three cases: in the replacement of the corporate purpose, transfer of the registered office outside the national territory and transformation of the corporation into a collective or limp. In our personalist and closed societies (collective and limited) that right is collected (in the art game.224 and 225 of the Commercial Code) in the case of companies constituted by time indefinite.

With regard to limited liability companies, the 1953 law did not offer any separation assumption of the partner, LagunLegal causes of separation, and on the other, it allows the statutes to offer, next to those legal causes, other different volunteer who have obtained the consent of all partners. The Commercial Registry Regulation also establishes three broad items dedicated to the registration of the statutory causes of separation, to the exercise of the law and to the registration of the agreements that give the right to separate from the company.

This broad and novel separation system confirms the entity of an integral right of the condition of partner, which finds the reason for its breadth in that purpose of flexibility that, as we have already seen, repeatedly collects the exposition of reasons of the law and nailIts root in public order demands in defense of the minority partner.

The right of separation will involve a mechanism for the defense of the rights of the partners, which, with disagreement with the evolution of the company and given the impossibility of selling their participation, they may disconnect from the company within the established cases being in this way thecompany forced to satisfy the partner’s exit premium. However, sometimes this right can be used as a pressure mechanism since in the cases of the majority shareholders in certain situations, they may threaten the abandonment of society and therefore the latter may be seen in difficulties of being able to satisfy this cousinout of exit or carrying out the reduction of capital that this right is associated.

Legal Causes of Separation

These causes are the six that are collected within the law, which says:

Partners who had not voted in favor of the corresponding agreement will have the right to separate from society in the following cases:

1. Substitution of the corporate purpose.
2. Transfer the registered office abroad, when there is an international agreement in force in Spain that allows it with maintenance of the same legal personality of the company.
3. Modification of the Transmission Regime of Social Participations.
4. Extension or reactivation of society.
5. Transformation into a corporation, civil society, cooperative, collective or limited, simple or by shares, as well as in the group of economic interest.
6. Creation, modification or anticipated extinction of the obligation to carry out accessory benefits, unless contrary disposition of the statutes.

Naturally, the isolated partner can give up the exercise of his right of separation, as can give up any other right. But it does not seem that the right of separation can be renounced in generating by all partners by introducing a statutory clause into the founding writing that restricts or delete.

Let us now see the different legal causes included in the law in practically equivalent terms. The cause related to the modification of the regime of transmission of social participations may have been suppressed, or better. Have limited it to those modifications that seriously restrict the transmission of the participations.

Another of the established causes will consist of the extension or reactivation of society, it is not preceded in our previous legislation, but it does not seem to be badly received by the doctrine. Finally, the cause related to the relative to the creation, modification or extinction of accessory benefits, such as the previous one, is not legal precedent and does not seem appropriate to form trial without knowing the result of its application. But in any case, it is interesting to emphasize that this is the only legal cause of separation of the partner that has no inderogable character and can be restricted or suppressed by the opposite disposition to the contrary.

Exercise of the right of separation

The law specifically deals with establishing the requirements without whose compliance it will not be possible to exercise the right of separation of the partner.

We must point out that the law explicit when, but not so much how, without prejudice to establishing what must inexcusably do the management body of the company so that the partners can exercise the right of separation. The first thing to do the administrators of the company, once the Minutes of the General Meeting that takes place that gives rise to the right of separation is approved, is to publish that agreement in the Official Gazette of the Mercantile Registry.

This without prejudice that the administration body may replace said publication with written communication to each of the partners who have not voted in favor of the agreement. Once this requirement is fulfilled, the time in which the right can be exercised can be exercised, since as established by the law, the right of separation may be exercised as long as it does not take a month counted from the publication of the agreement or from the reception of the communication.

We know, then, that the partner has a month for the exercise of law. But what does the law understand the exercise of the right? Although the law says nothing about the positive exercise of that right, and although the company can know which partners have voted against the agreement and which have refrained from voting, it seems appropriate and convenient that the partner not voting for the agreement he wishes to separateof society directs its case, of the exercise of law in a timely manner. Exercised the right of separation by express declaration addressed to society, the acceptance of this will not be necessary. The separation aimed at society will not be necessary to accept this. Separation is a unilateral act, and if not voluntarily recognized by society, it may be imposed by the courts.

But the declaration of separation of the partner does not involve its immediate separation, its effects do not supply immediately. It is necessary to register in the commercial registry the public deed that document the agreements and it will be necessary that in the same deed or in another subsequent the reduction of capital is contained in the terms of article 103 or the declaration of the administrators that no partner has exercisedthe right of separation within the period previously established.

Statuar Causes of Separation

It tells us about these causes established within the law that institutes with this first statement: the statutes may establish different causes of separation to those provided for in this law. This means that the statutes can add to the legal causes other different causes, not contrary, of voluntary and non -legal origin. The game of statutory causes will not be subject to the regime for the exercise of the right of separation that we have already seen established the art.97. For the exercise of the right of separation supported by these statutory causes, the statute.

These words of the law highlight that some and the other causes go on different paths. But they also highlight the broad freedom of the statutes, and perhaps there are no difficulties to resign that they can establish causes related to different social acts or acts of the agreements of the General Board.

Conclusions

Finally, and to end this issue of statutory causes, it is convenient to set attention in the sense that against the final paragraph when it is said: for the incorporation into the bylaws, the modification or suppression of these causes of separation will be necessaryThe consent of all partners. Putting thought in social minorities those words bring a certain tranquility. The art.207.2 of r.R.M also states that it will be necessary to record the consent of all partners in public deed or expressly result in said consent of the act of the relevant social agreement.

The distribution of dividends is enshrined as an economic law par excellence of the partner within the company within the art. 93 a) LSC where this right to participate in the distribution of social profits is established. Within the Spanish regulation, societies must allocate 10 % of the benefits of each fiscal year to the constitution of what we know as a legal reserve that must be equivalent at least 20 % of social capital that is writing.

Subsequently to the constitution of this legal reserve, as well as in its case the other reserves that would have been established in the Social Statutes, the Board of Partners may freely decide on the distribution of dividends unless there are prior contractual impediments, that is,, that within the Statute is established the way in which this distribution of dividends or accounting impediments must be carried out as established by the ART.273.2 LSC since if there are losses in the previous exercises that produce that the share capital is less than the benefits, these dividends must be used first to the compensation of these losses.

The doctrine has granted this right an abstract character, it is true that any agreement will be considered as invalid to exclude a partner from the distribution of the dividends of the company or establish within the bylaws the impossibility of distribution of dividends in formgeneralized. On the other hand, it is also true that this right will not prevent the Board of Members can decide freely on the distribution of dividends taking into account the financial, legal and economic circumstances.

The absence of a legal precept that imposes a minimum benefit previously established to distribute among the partners has produced various situations of abuse of the majority partners towards minority partners as we have previously commented. Given this concrete situation, repeated sentences of the Spanish courts, specifically in the Supreme Court Judgment of May 26, 2005, it established that depriving the minority partner without any accredited cause of their rights to receive the social benefits obtained and proceed to their systematic retention,It is presented to all lights as an abusive action, which cannot obtain the protection of the courts, since it is an affected attitude of notorious illegality, which justifies the challenge promoted and estimated of the agreement to apply the result, since all thisIt would mean consecrating a despotic empire of the majority.

On the other hand, the High Court in its judgment of October 5, 2011 would also pronounce in this regard against an assumption of violation of information law in relation to the accounts of the year in question, stating that through agreements adopted by the groupMostly shareholders’ relative, the right of information of the demanding shareholders appealed to alleged social debts of exercise in exercise is systematically violating, the benefits formally reflected in the accounts of the company are probably much lower than the reais, thus impacting on the application agreement on the application agreementof result and, consequently and negatively, in the right of the plaintiffs appealed to participate in the social profits or right to dividend. Both sentences mentioned above are intimately related since both claim that the minority partner cannotabusive and, therefore, cannot obtain the protection of the courts.