Transfer of hares in SL
One of the most common forms of business operation or establishment in Spain, apart from the self-employed , is the Limited Liability Company (SL), which is characterised by the fact that its ownership is divided into shares. The owner of the shares (i.e. the shareholders) is said to be the owner of the company, as only the shareholders have the right to share in the company’s profits.
Two ways for a shareholder to leave a company
There are two ways a shareholder can leave a company if they want to break away or leave a company.
The first is to sell their shares, which means that the shareholder is no longer associated with the company.
The second is investment withdrawal, which means that the shareholder gets back the money invested in the company, and if the company makes a profit or loss, he or she gets a percentage of the shares and a relative share of the company’s assets.
The transfer of shares requires the consent of the other shareholders
The Spanish Companies Act provides that the transfer of shares in a company limited by shares requires the approval of the general meeting of shareholders of the company. Only with the approval of the general meeting can the shareholders transfer their shares.
If the shareholders do not give their approval, it can be on the grounds that there are other shareholders or that the company itself wants to buy the shares.
The law provides for this because the shareholders and the company itself have the right of first refusal (Pre-emption right). In other words, the shares can only be transferred to a third party if the shareholder or the company itself renounces the purchase.
Note: In the case of a transfer of shares to a spouse, child or parent, the consent of the general meeting of shareholders is not required.
Procedures for transferring shares
The transfer of shares is relatively straightforward and requires only a contract for the sale of the shares between the seller and the buyer. The law requires the contract to be signed by a notary public and not in private document.
In addition, the contract must be accompanied by the minutes of the general meeting of shareholders.
Note: Apart from the signing of the sale and purchase contract, no additional formalities are required for the transfer of shares to become effective, nor do they need to be registered in the commercial register.
Shareholders cannot withdraw investment without reason.
It is also important to note that, according to Spanish law, a shareholder cannot withdraw his or her capital at will. This means that if a shareholder wants to “quit” unilaterally, this is not possible. If a shareholder wishes to leave the company, he or she must give the reasons provided for by law, otherwise, they cannot leave unless all the other shareholders agree.
The Companies Act provides that a shareholder may withdraw in certain circumstances, such as if the company changes industry, if the company does not pay dividends for five consecutive years, if the company moves its legal address abroad, etc. Apart from these circumstances, shareholders are not allowed to withdraw unilaterally.
In summary, a shareholder who wishes to leave a company successfully needs the cooperation of the other shareholders, otherwise the money invested will have to remain with the company.
Related articles: Acquisition of companies in Spain
