Shareholders' rights in private and public companies in Spain: overview

A Q&A guide to shareholders' rights in private and public companies law in Spain.

The Q&A gives an overview of types of limited companies and shares, general shareholders' rights, general meeting of shareholders (calling a general meeting; voting; shareholders' rights relating to general meetings), shareholders' rights against directors, shareholders' rights against the company's auditors, disclosure of information to shareholders, shareholders' agreements, dividends, financing and share interests, share transfers and exit, material transactions, insolvency and corporate groups.

Fernando de las Cuevas, Gómez-Acebo & Pombo

Types of limited companies and shares

1. What are the main types of companies with limited liability and shareholders? Which is the most common? Which type do foreign investors most commonly use?

The main companies with limited liability and shareholders are public companies (sociedad anónima) and limited companies (sociedad limitada).

There are also joint stock companies (sociedad comanditaria por acciones), in which only the non-managing partners have limited liability.

The type of company most frequently used by both Spanish and foreign investors is the limited company.

2. What are the minimum share capital requirements for companies?

The Capital Companies Act (passed by Legislative Decree 1/2010, dated 2 July 2010) provides that:

  • The share capital of a public company must be at least EUR60,000.

  • A limited company must have a minimum share capital of EUR3,000.

Limited companies can be formed with a share capital below the minimum requirement by complying with certain rules, such as allocating at least 20% of its benefits to statutory reserves.

The Capital Companies Act provides for thin capitalisation rules that require a company to be wound up when, due to losses, the value of the share capital falls to less than half of its value, unless measures are taken to increase or reduce the capital.

3. Briefly set out the main types of shares typically issued by a company and the main rights they provide. Set out the other main financial instruments (for example, bonds) and participation instruments that can be issued by a company.

Capital companies can issue ordinary or privileged shares or stock.

Ordinary shares or stock provide general shareholder rights and obligations. Privileged shares or stock create certain additional rights, and include non-voting shares or stock and redeemable shares (see Question 5). Privileges cannot be created in relation to voting rights and pre-emption rights. Issuing shares that give a right to receive interest is prohibited.

The Capital Companies Act allows a company to issue convertible bonds. They grant the bondholder the option to convert their bonds into shares within stated time periods, according to the conversion ratio established by the issuing company.

4. What is the minimum number of shareholders in a company?

The minimum number of shareholders in a company is one (Capital Companies Act).

If a company becomes a single member company in fortuitous circumstances, the sole shareholder will assume personal, unlimited and several liability for any company debt incurred during the sole proprietorship, if these circumstances are not recorded in the Commercial Registry within six months from becoming a single member company. Once single membership has been recorded, the sole shareholder is not liable for subsequent debt incurred by the company.


General shareholders' rights

5. What are the general rights of all shareholders? How can shareholders' rights be varied (for example, additional rights attaching to a class of shares, or limitations on shareholders' rights)? Are such variations generally provided in the company's bye-laws and shareholders' agreements?

Spanish commercial law clearly states that shareholders have at least the following rights:

  • To share in the company profit.

  • To share in capital resulting from the process of liquidation.

  • Pre-emption rights over the issue of new shares and convertible bonds, or preferential acquisition rights over new shares in capital increases (excluding increases for the issue of free shares).

  • Voting rights.

  • Information rights.

  • To attend general meetings.

  • To challenge corporate resolutions.

The owners of non-voting shares or stock have additional economic rights instead of voting rights. Non-voting shares or stock can only be issued for no more than one half of the nominal amount of the share capital, for limited companies (or the paid-in share capital, for public companies).

Owners of non-voting shares or stock typically have the following rights:

  • To receive a fixed or variable minimum annual dividend, as established in the bye-laws and approved by the general meeting, provided there is profit to be distributed.

  • Priority in receiving repayment of the amount paid up on their shares, before any amount paid out on ordinary shares, if the company goes into liquidation.

  • Not being affected by capital reductions due to losses, provided the reduction does not exceed the nominal value of the remaining shares.

Redeemable shares can only be issued by listed companies, to be redeemed by the company in pre-determined conditions stipulated in the bye-laws. Redeemable shares can only be issued for no more than one-quarter of the amount of the share capital (Capital Companies Act).

If it is in the company's interest a general meeting, when deciding on a capital increase, can agree on the full or partial suppression of pre-emption rights (Capital Companies Act). Similarly, in public companies the pre-emption rights of holders of non-voting shares can be excluded or limited.

In general, a shareholder cannot be deprived of voting rights unless they hold non-voting shares or stock. Shareholders can only be deprived of their voting right in limited circumstances, such as when payment of their called-up share capital in a public company is overdue.

In limited companies, no limitations or conditions can be placed on the right to attend general meetings. In public companies, this right can only be limited in the bye-laws by requiring a minimum number of shares or prior identification of the shareholder (Capital Companies Act).

The shareholders' right to information cannot be limited or excluded, both in public companies and limited companies.

6. Briefly set out the rights of minority shareholders and the shareholding required to exercise such rights.

Minority shareholders representing 1% of the share capital in public companies and 5% in limited companies can request the directors to appoint a notary to attend a general meeting.

Shareholders representing 1% of the share capital are entitled to:

  • Request a judge to suspend corporate resolutions that have been challenged.

  • Challenge resolutions adopted by the board of directors or those adopted by any other corporate administration body which are contrary to law, the bye-laws, or the company's interests.

Shareholders representing 5% of the share capital are entitled to:

  • Require the directors or a judge to convene an extraordinary general shareholders' meeting.

  • Require the appointment of an auditor in companies that are subject to external control.

  • Object to the waiving and/or reaching of a settlement in a liability action against the directors.

Shareholders representing 20% of the share capital of a public company are entitled to ask for government intervention to ensure the continuity of a company in dissolution.

Shareholders representing 25% of the share capital can overrule the chairman's refusal to provide information required for the general meeting or a limited company.

7. How influential are institutional investors and other shareholder groups in monitoring the company's actions (for example, corporate governance compliance)? List any such groups with significant influence in this area.

Most good governance regulations are voluntary in Spain, under the "comply or explain" principle (see Question 27). There are shareholder activists who put pressure on companies to comply. There is increasing activity in this respect at shareholders' meetings.


General meeting of shareholders

Calling a general meeting

8. Does a company have to hold an annual shareholders' meeting? If so, when? What issues must be discussed and approved? Which decisions must be approved by the shareholders in a general meeting?

The company must hold an annual shareholders' meeting previously convened for this purpose, within the first six months of each financial year. In the meeting the following must be discussed and approved by the shareholders, if appropriate:

  • The management of the company.

  • The annual accounts of the previous financial year.

  • The allocation of the profit and loss.

The general meeting of shareholders:

  • Is the competent body to adopt resolutions that enable the company to acquire certain goods, own shares or shares in the controlling company.

  • Is entitled to review the management of the company, to approve the annual accounts and pass resolutions on the allocation of profit and loss.

  • Can approve the company's liquidation balance sheet, appointments and dismissals of board members, and bring a corporate liability action against the directors, liquidators, or auditors of the company.

  • Is responsible for adopting resolutions to amend the bye-laws or change the corporate structure.

  • Has competence to pass a resolution to wind up the company, under the Capital Companies Act.

9. Can a general meeting be held by telecommunication means or written/electronic approval?

Legislation does not contemplate general meetings being held by telecommunication means. However, most case law allows a general meeting to be held in different rooms linked by videoconference located in the company's registered office (some scholars argue that general meetings can be held in rooms situated in different locations), provided that:

  • Audio-visual media is installed that enables shareholders to participate and vote in real time on the items on the agenda.

  • There is no unfair discrimination when assigning the shareholders to different rooms.

Spanish law does not allow virtual general meetings where each shareholder is in a different geographical area linked by videoconference or other media allowing control over shareholders' ability to attend (for example, through simultaneous communication and instantaneous sending of documents).

However, some scholars consider virtual universal general meetings (that is, where all the shareholders are present) admissible, since this type of meeting is valid irrespective of where it is held if all the shareholders are in agreement.

For example, if the bye-laws of a public company provide the possibility to attend the meeting by telecommunications means which adequately ensure the identity of the person attending, to be held correctly the call must establish the deadlines, forms and ways of exercising the shareholders' rights foreseen by the directors.

10. What are the notice, information, and quorum requirements for holding general meetings and passing resolutions?

The notice of the general meeting must include the:

  • Name of the company.

  • Date and time of the meeting.

  • Agenda containing the matters to be discussed.

  • Position held by the person calling the meeting.

The shareholders of limited companies can request in writing, prior to the general meeting or verbally during the meeting, any reports or clarifications they deem necessary regarding the items on the agenda.

The shareholders of public companies can request from the directors any information or clarification they deem necessary regarding the items on the agenda, or ask written questions that they consider relevant, until the seventh day prior to the date of the meeting. Further, during the general meeting, the shareholders can verbally request any information or clarification.

The bye-laws of public companies can make the right to attend general meetings conditional on prior evidencing by the shareholder of their shareholder status (Capital Companies Act). However, they cannot prevent the exercise of this right by holders of:

  • Registered shares and shares represented by book entries, whose shares are entered in the relevant registers at least five days before the date of the meeting.

  • Bearer shares who, at least five days before the date of the meeting, have deposited their shares in the manner established in the bye-laws or according to law.

In listed companies, the bye-laws can require a minimum number of shares to be held to attend general meetings, provided the required number does not exceed one-thousandth of the share capital.

In public companies, the general meeting is validly constituted on the first call when the shareholders present or represented hold at least 25% of the share capital with voting rights, although the bye-laws can set a higher quorum. The general meeting will be validly constituted on a second call regardless of the capital attending it, unless the bye-laws specify a quorum lower than that in the bye-laws or required by law for the first call.

In a general meeting of a public company, at the first call the shareholders present or represented must hold at least 50% of the share capital with voting rights, to approve resolutions related to:

  • Share capital increases or reductions and any other modifications of the bye-laws.

  • Issue of debentures.

  • A removal or restriction of the right of first refusal for new shares.

  • A transformation, merger, spin-off, or global assignment of assets and liabilities.

  • A transfer of the company's residence abroad.

On a second call, 25% of the share capital with voting rights is sufficient to pass these resolutions. The bye-laws can increase the quorum for these resolutions.



11. What are the voting requirements for passing resolutions at general meetings?

In public companies, the Capital Companies Act requires voting rights to be proportionate to the shares or stock held by each shareholder, since cumulative voting is prohibited. However, the Capital Companies Act also provides that the bye-laws of public companies can establish the number of votes that a shareholder or companies belonging to a group are entitled to cast.

In limited companies, the Capital Companies Act makes clear that in principle each share confers on its holder the right to cast one vote. However, the bye-laws can provide for the issue of cumulative voting shares or stock.

A shareholder with a right to attend can be represented at the general meeting by another person, who does not have to be a shareholder. This representation can be limited in the bye-laws. In public companies, public invitation to appoint as proxy is possible, by which the directors, custodian institutions for share certificates, or institutions responsible for book entry register appointment by invitation of themselves or a third party as proxy (Capital Companies Act).

The Capital Companies Act provides that a shareholder can voluntarily limit its freedom to vote and be contractually bound, with other shareholders, to vote at general meetings in a specific way. These are called shareholders' syndicates or shareholders' agreements, which bind those who are party to them but not the company. In listed companies, these agreements must be notified to both the company and the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores (CNMV)) and published as a material fact affecting the company.

12. Are specific shareholder approvals/resolutions required by statute for certain corporate actions? What voting requirements and majorities apply?

The approval of the general meeting (the shareholders) is required for the following (Capital Companies Act):

  • The approval of the annual accounts, the allocation of profits and approval of the management of the company.

  • The appointment and removal of directors, liquidators and, where applicable, the auditors, and bringing a corporate liability action against any of them.

  • A modification of the bye-laws.

  • A share capital increase or reduction.

  • A removal or limitation of pre-emption rights and preferential assumption rights.

  • An acquisition, disposal or contribution to another company of core assets.

  • A transformation, merger, spin-off or global assignment of assets and liabilities and the transfer of the registered office abroad.

  • The dissolution of the company.

  • The approval of the final liquidation balance sheet.

  • Any other matters determined by law or the bye-laws.

Limited companies

In limited companies resolutions can be adopted by the majority of valid votes, provided they represent at least one third of the votes of the shares in which the share capital is divided.

An increase or reduction of the share capital and any other amendment to the bye-laws requires the approval of more than half of the votes of the shares in which the share capital is divided.

The following requires the approval of at least two thirds of the votes of the shares in which the share capital is divided:

  • An authorisation for the directors to engage, personally or on behalf of another party, in the same, similar or complementary activity as the company's corporate purpose.

  • A removal or limitation of pre-emption rights in capital increases.

  • A transformation, merger, spin-off, or global transfer of the company's assets and liabilities.

  • A transfer of the company's residence abroad.

  • The exclusion of shareholders.

For some issues, the bye-laws can require the approval of a number of votes higher than that required by law, without reaching unanimity.

In addition to the number of legally or statutorily required votes, the bye-laws can require the vote of a specific number of shareholders.

Public companies

In public companies, corporate resolutions are adopted by a simple majority of the votes of the shareholders present or represented at the meeting (that is, an agreement is adopted when there are more votes in favour than against of the capital present or represented).

To approve the resolutions referred to in the last paragraph of Question 10, if the capital present or represented exceeds 50% the resolution can be approved by a simple majority. If the shareholders attending the meeting at second call represent at least 25% but no more than 50% of the share capital with voting rights, the approval of two-thirds of the capital present or represented is required.


Shareholder rights relating to general meetings

13. Can a shareholder require a general meeting to be called? What level of shareholding is required to do this? Can a shareholder ask a court or government body to call or intervene in a general meeting?

Shareholders representing at least 5% of the share capital can require the directors to convene a general meeting of shareholders.

If the annual general meeting or general meetings provided for in the bye-laws are not called within the applicable statutory period, any shareholder can request the commercial judge with jurisdiction over the registered office of the company to call a general meeting, after the directors' have appeared before the judge.

14. Can a shareholder require an issue to be included and voted on at a general meeting? What level of shareholding is required to do this? Can a shareholder require information from the board about the meeting's agenda?

In principle, only shareholders of a public company owning at least more than 5% (3% for listed companies) of the share capital can include one or more items on the agenda of the general meeting. Otherwise, a shareholder cannot bring up an issue that is not included on the agenda. However, when a general meeting is a universal meeting, a shareholder can bring up any issues he chooses.

The shareholders' right to information (see Question 10) can be exercised in writing before the general meeting (up to seven days in advance, for public companies and five days in advance for a listed company) or verbally during the meeting. It merely allows the right to question, since initially only clarifications can be sought, or to information related to items on the agenda. In listed companies this right to information is broader, and includes items on the agenda and any issue in the information provided by the company to the Spanish Securities and Exchange Commission (CNMV) since the date of the last shareholders' meeting.

15. Do shareholders have a right to resolve in a general meeting on matters which are not on the agenda?

The removal of directors can be brought up at any time, even when not included on the agenda. When a general meeting is a universal meeting a shareholder can bring up any issue.

16. Can a shareholder challenge a resolution adopted by a general meeting? Is a certain shareholding level required to do this? What is the time limit and procedure to challenge a general meeting resolution?

Resolutions adopted by the general meeting can be challenged when they are either (Capital Companies Act):

  • Contrary to law, the bye-laws, or the regulations of the general meeting.

  • Detrimental to the company's interests, for the benefit of one or several shareholders or third parties.

Resolutions contrary to public order can be challenged by any shareholder. The other resolutions listed above can be challenged by any shareholder with at least 1% of the share capital, a director, and any third party who proves a legitimate interest.

A resolution must be challenged within one year after the date on which it is adopted, or from the date a copy of the minutes is received if it is adopted in writing. If the resolution is registered, this one year limitation period starts from the date of enforceability of the registration. Resolutions contrary to public order can be challenged at any time.

The Capital Companies Act provides that the challenging of company resolutions is done according to ordinary court proceedings in the Civil Procedure Act.


Shareholders' rights against directors

17. What is the procedure to appoint and remove a director?

The first directors are appointed when the company is incorporated and are recorded in the deed of incorporation. Subsequent appointments are generally decided by the general meeting.

The Capital Companies Act provides two exceptions for public companies when appointing directors:

  • An optional system for the proportional representation of minorities on the board. Minority shareholders can appoint a number of directors according to the amount of share capital they hold in proportion to the share capital as a whole, provided that the amount of share capital they hold is at least that resulting from dividing the total share capital by the number of board members.

  • The co-optation method to cover early vacancies on the board, granting the board power to appoint, from among the shareholders, persons to provisionally fill the vacancies until the next general meeting.

The appointment of a director will be effective upon his acceptance.

Removals are generally decided by the general meeting and can be agreed even if not included on the agenda. The bye-laws of limited companies may require a qualified majority, which cannot exceed two-thirds of the share capital, for the removal of a director.

18. Can shareholders challenge a resolution of the board of directors? Is there a minimum shareholding required to do this?

Directors and shareholders who represent 1% of the share capital are entitled to challenge resolutions of the board of directors, irrespective of the reason.

19. Briefly set out the main directors' duties to the company and its shareholders. What is the potential liability of directors to the shareholders? Can their liability be limited or excluded? On what grounds can shareholders bring legal action against the directors?

The directors' main duties are the following:

  • Duty of care: to carry out their duties and comply with the obligations imposed by law and the bye-laws with the diligence of an organised businessman.

  • Business judgement rule: to act in good faith, without any personal interest in the resolution, with the necessary information and in accordance with an appropriate procedure in relation to the resolution.

  • Duty of loyalty: which includes:

    • not to exercise their powers for purposes other than those for which the powers have been granted;

    • duty of confidentiality;

    • to abstain from voting in cases of conflict of interest;

    • to perform their duties according to the principle of personal responsibility with freedom of judgement.

  • Duty to take the necessary measures to avoid incurring conflicts of interest.

The directors are subject to a civil liability regime that seeks to compensate any pecuniary damages caused by their negligence. Their liability is linked to damage caused due to conduct contrary to law and the bye-laws, and due to actions carried out without the diligence required in carrying out their obligation, provided that there is negligence or fault (dolo o culpa). Therefore, failure to comply with the legally required level of diligence will give rise to a subsequent obligation to compensate for damage.

The law provides that all members of the administration body are jointly and severally liable for damages caused due to a detrimental action or resolution adopted. Even if the prejudicial act or resolution is adopted, authorised or ratified by the general meeting, this does not exclude this liability. If members prove grounds for their exoneration they will be exempt from liability. Liability extends to any party who acts as a de facto director of the company.

Under Spanish law there is an action for corporate liability and an action for individual liability. The aim of a corporate liability action is to seek compensation for damages suffered by the company due to the directors' negligent conduct. The company itself is initially responsible for bringing this action and then the shareholders, as parties with an indirect interest in protecting the company's assets. The Capital Companies Act requires that shareholders bringing the action must represent at least 5% of the share capital.

An individual liability action seeks to compensate damage caused directly to the assets/patrimony of shareholders or third parties due to the directors' negligent conduct. Shareholders and third parties who suffer damage due to the directors' negligent conduct are entitled to bring this action.

20. Are directors subject to specific rules when they have a conflict of interest relating to the company? Are there restrictions on particular transactions between a company and its directors? Do shareholders have specific rights to bring an action against directors if they breach these rules?

The directors must refrain from the following when they have a direct or indirect conflict with the company's interest or with their duties to the company:

  • Carrying out transactions with the company, except for ordinary operations.

  • Using the corporate name or their position as directors to improperly influence the outcome of private operations.

  • Using corporate assets, including confidential information for private purposes.

  • Taking advantage of business opportunities of the company.

  • Obtaining benefits or remuneration from parties other than the company.

  • Carrying out activities, as an employee or as self-employed, which could lead to actual or potential effective competition with the company.

The above provisions also apply if the beneficiary of the prohibited acts or activities is a person related to the director.

Directors must notify the board of directors of any direct or indirect conflict they or a related person may have with the company's interests. Information on all conflict of interest situations in which the company directors are involved must be included in the annual report.

Shareholders can bring an action against the directors (see Question 19).

21. Does the board have to include a certain number of non-executive, supervisory or independent directors?

The CNMV recommends listed companies to have a balanced composition in their board of directors, with a large majority of non-executive directors and an adequate proportion of proprietary and independent directors. Independent directors should represent at least half of the total number of directors.

22. Do directors' remuneration and service contracts have to be disclosed? Is shareholder approval of directors' remuneration required?

Listed companies must disclose the director's remuneration to the CNMV as part of an annual corporate governance report, which must be published.

The shareholders' meeting must approve the maximum gross amount of the annual remuneration to be paid to the directors as a whole.

The Capital Companies Act provides that any directors with executive functions, as a chief executive officer or with another title such as executive director, must sign a director's service agreement with the relevant company.


Shareholders' rights against the company's auditors

23. What is the procedure to appoint and remove the company's auditors? What restrictions and requirements apply to who can be the company's auditors?

The company's auditors are generally appointed by the general meeting before the end of the year to be audited, for an initial period of time which must be at least three years and no more than nine years.

The company auditor cannot be removed by the general meeting before the end of the initial period for which the auditor was appointed, unless there is a just cause.

The auditors must be registered with the Official Register of Auditors (ROAC) and the Institute of Accounting and Auditing (ICAC).

The audit legislation establishes situations of incompatibility where a person cannot be the company's auditor, for example:

  • Having a management position in the audited company.

  • Having a direct or indirect financial interest in the audited company.

  • Preparing the financial statements or other accounting documents of the audited company.

24. What is the potential liability of auditors to the company and its shareholders if the audited accounts are inaccurate? Can their liability be limited or excluded?

The auditors are liable proportionally for direct damage caused to the company or a third party resulting from a breach of their obligations. Liability is determined by failing to comply with their obligations, rather than by not detecting errors or irregularities.

In cases resulting in damage and involving willful misconduct there is also criminal liability.

The law does not allow the auditors to limit by contract their liability for the work performed.


Disclosure of information to shareholders

25. What information about the company do the directors have to provide and disclose to its shareholders? What information and documents are shareholders entitled to receive?

Shareholders can request reports or clarifications concerning any of the items on the agenda of a general meeting. In listed companies, shareholders can also request reports or clarifications about the information produced by the company since the last general meeting (see Question 14). Although the information would in practice be requested and provided in print, the Securities Market Act (Ley del Mercado de Valores) requires listed companies to allow the exercise of the information right through technical, IT and telecommunications media. Therefore listed companies must have a website to allow shareholders to obtain this information.

The Capital Companies Act provides that shareholders have the right to freely obtain a copy of the relevant documents relating to the annual accounts, and the right in more significant business transactions to examine the preliminary documents or to ask for the documents to be sent to them.

The Commercial Code establishes that shareholders and persons who have attended the general meeting representing other shareholders have a right to obtain a certificate of the resolutions and minutes of the general meeting at any time.

26. What information about the company do the directors have to disclose under securities laws (where applicable)?

Listed companies must publish a report on corporate governance annually. This report must provide a detailed explanation of the company's governance structure and the way it works in practice. At minimum, the corporate governance report must include:

  • The ownership structure of the company.

  • Any restriction on the transferability of securities and on voting rights.

  • The governing body structure.

  • Related party transactions between the company and its shareholders, directors and executive managers, and intra-group transactions.

  • Risk control system.

  • Operation of the general meeting.

  • Degree of compliance with corporate governance recommendations (see Question 27).

  • A description of the main features of internal control and risk management, in relation to issuing financial information.

27. Is there a corporate governance code in your jurisdiction? Do directors have to explain to shareholders in the company's annual report if they have not complied with it (comply or explain approach)?

There is a corporate governance code for listed companies, and compliance with its recommendations is voluntary.

The directors must explain the degree of compliance with corporate governance recommendations or, where applicable, include an explanation for the failure to follow these recommendations (comply or explain approach).

28. What information can shareholders request from the board about the company? On what grounds can disclosure of company information be refused? Are shareholders entitled to inspect the company's books and similar company documents?

See Question 25. After the general meeting at which the annual accounts are to be approved has been convened, any shareholder can immediately obtain from the company, free of charge:

  • The management report.

  • The audit report.

  • The documents to be submitted for approval by the general meeting.

In limited companies the board can refuse to provide information when, in its view, this may damage the company's interests. Information must be disclosed in any event when shareholders requesting the information represent 25% of the share capital.

In public companies the board can refuse to provide information when, in its view, such information is unnecessary to protect the shareholders' rights, or there are objective reasons to believe it could be used for other purposes or that making it public may damage the company or its affiliates. However, the information must be disclosed in any event when shareholders requesting the information represent 25% of the share capital.


Shareholders' agreements

29. Briefly set out the main provisions of a typical shareholders' agreement.

Typical shareholders' agreements can be grouped, among others, into categories relating to:

  • Shareholder relations, for example allocation of profits, rights of stock acquisition as preferential purchase agreements, the obligation to assign or acquire shares under certain circumstances, or restrictions on transfer of shares.

  • The shareholders providing advantages to the company. For example, the obligation to finance the company under certain circumstances, a commitment to contract with the company, or non-competition agreements.

  • The general meeting and the governing body. This includes the composition of the board of directors and the distribution of positions among the directors, and how to vote on certain proposals and quorum requirements in the general meeting.

Generally, the regulations acknowledge the validity and legality of shareholders' agreements, provided they do not contravene the essential rules or principles of law or commercial law.

The shareholders can decide the duration of the shareholders' agreement. If they fail to do so it will be indefinite, and termination of the agreement is governed by the rules applicable to contracts.

30. Are there circumstances where shareholders' agreements can be enforceable against third parties?

The Capital Companies Act establishes that if shareholders' agreements are not included in the bye-laws or in the deed of incorporation they are not enforceable against the company. If so, they are only enforceable between the parties, and a breach of them leads to typical liability for a breach of contract.

Even though the law makes no provision with respect to third parties, most scholars believe that these agreements cannot be enforced against third parties. In listed companies, the legislation establishes that a shareholders' agreement is not validly enforceable until it has been duly communicated, filed and published.

31. Do shareholders' agreements have to be publicly disclosed or registered?

There is no obligation to publish or register shareholders' agreements except in the case of listed companies. The Securities Market Act establishes an obligation to immediately inform the CNMV and the company itself of the entering into, extension or amendment of a shareholders' agreement that affects any of the following:

  • Exercise of voting rights in the general meeting.

  • Limitations or conditions on the free transfer of shares or convertible bonds issued by the company.

A copy of the terms of the document in which the shareholders' agreement is recorded must be attached to the communication to the CNMV.

When the listed company is an insurance company, a pension fund management company or a credit institution, the communication must also be sent to the relevant regulatory authorities. The document recording the shareholders' agreement must then be filed at the Commercial Registry corresponding to the company's registered office. The shareholders' agreement must also be published as a material fact affecting the listed company.

At the request of any interested party, the CNMV may agree not to publish a shareholders' agreement or part of it and dispense with communicating it to the company. The CNMV's decision must be reasoned and must establish how long the agreement can be kept secret among the interested parties.



32. How can dividends be paid to shareholders and what procedures and restrictions apply? Is it possible to exclude or limit the right of certain shareholders to dividends? Is the payment of interim dividends allowed?

Once the conditions provided by law and the bye-laws have been met, dividends can only be distributed out of profit generated in that financial year or freely distributable reserves, provided that the value of the company's net assets does not fall or due to the dividend distribution it is not reduced to less than the share capital.

The profit attributed directly to shareholders' equity cannot be directly or indirectly distributed. The legislation also obliges companies to create a legal reserve with an amount equal to at least 10% of that year's profit, up to 20% of the share capital.

In addition, the company can also create statutory and voluntary reserves. Statutory reserves are constituted and governed by the bye-laws. Voluntary reserves are constituted by a resolution adopted at a general meeting and consequently the company can freely dispose of them.

One or more shareholders can waive their right to receive dividends due to them.

The payment of an interim dividend is allowed but certain requirements need to be complied with. These include that the directors must draft a report stating that there is sufficient liquidity for the distribution, for which they must draw up an accounting statement.


Financing and share interests

33. Can shareholders grant security interests over their shares?

Shares in the form of securities can be pledged. The legal requirements for a pledge must be met as follows:

  • It is created to guarantee the fulfilment of a relevant obligation.

  • The pledged goods/property belong to the pledgor.

  • The pledgor is entitled to freely dispose of securities and failing this, must be legally empowered to do so.

  • The pledged property is placed in possession of the creditor or a third party, by mutual agreement.

  • The date of the pledge is recorded in a public document.

34. Are there restrictions on financial assistance for the purchase of a company's shares?

Without exception, a company cannot advance funds, grant loans, extend guarantees or provide any kind of financial assistance for the acquisition of its own shares or shares in its controlling company by third parties.


Share transfers and exit

35. Are there any restrictions on the transfer of shares by law? Can the transfer of shares be restricted? What are the rights of shareholders in the case of an issue of new shares (pre-emption rights)?

Given that shares or stock interests in public companies are movable securities, they are essentially transferable. The transfer of shares is not restricted in principle, but restrictions can be set provided they apply to nominative shares and are imposed in accordance with the bye-laws (Capital Companies Act).

Statutory restrictions that render shares practically non-transferable will be considered null and void. Conditions can only be placed on share transferability when reference is made in the bye-laws to grounds for denying their transfer.

Shares can be freely transferred in limited companies (unless otherwise stipulated in the bye-laws) when carried out inter vivos between shareholders and in favour of a shareholder's spouse, ascendant or descendent, or in favour of companies in the same group as the transferor. For other transfers inter vivos there is some restriction on free transferability, since the law establishes pre-emption rights in favour of the other shareholders. The law also establishes that statutory clauses whereby the transfer of shares inter vivos is made practically free are null and void. Clauses where a shareholder who offers all or part of his shares is obliged to transfer a different number of shares than those offered are also null and void.

Limited companies are allowed to voluntarily make their shares non-transferable, provided the bye-laws acknowledge a right of withdrawal. Shares and stock interests cannot be transferred until the company or the capital increase resolution has been recorded at the Commercial Registry.

When there is a capital increase involving the issue of new shares or stock, the shareholders have a pre-emption right to acquire the new shares. This right applies to any capital increase by issuing new shares involving monetary contributions. The value of the new shares or stock attributable to each shareholder must be proportionate to the nominal value of the shares they already own.

36. Can minority shareholders alter or restrict changes to the company's share capital structure?

In principle, statutory changes related to capital increases and decreases are adopted by the general meeting with a majority vote. Consequently, minority shareholders cannot limit or prevent such changes from being carried out. However, when the increase is to be carried out by raising the nominal value the unanimous consent of the shareholders is required, except if all the increase is made out of company reserves or profit. Therefore in this case the minority shareholders can limit or prevent the increase.

37. When are shareholders required to notify changes to their shareholding to a regulatory authority?

Apart from listed companies, shareholders are not obliged to obtain an authorisation from, or provide information to, a public authority about events that impact on their stock interest in the company.

However, a type of control and review process exists to gather administrative, statistical and economic information concerning foreign transactions, and to take measures where appropriate to safeguard public order and security. This can be a mere notification (before or after the transaction) or a review and approval procedure prior to entering into the transaction. The process applies to public and private foreign investors, including state-owned companies.

As a general rule, Spanish legislation requires foreign investments to be notified after the transaction is closed. The relevant form must be filed with the Foreign Investments Registry, at the Ministry of Economic Affairs and Competitiveness, within one month from the date the investment was made or paid, as applicable. There are two exceptions to this rule, when the total value of the investment does not exceed EUR3,005,060.52:

  • Investments in real estate assets located in Spain.

  • Creation or participation in shared accounts, foundations, groupings of economic interest, or co-operatives.

In both cases no notification is required, unless the relevant investment is made through a tax haven. Investments made through a tax haven must be notified beforehand, regardless of the amount, if the investment either:

  • Results in a stake of more than 50% in the Spanish company.

  • Is not made in Spanish-listed securities or interests in mutual funds registered with any special registry at the Spanish Securities and Exchange Commission (CNMV).

Once a before-the-event notification is made, the foreign investor can proceed with the transaction without further authorisations, except for the above mentioned after-the-event notification.

Exceptionally, with respect to foreign investments involving the exercise of public authority or activities that may affect public order, national security or public health, the Spanish government can restrict or even prohibit such investments. Foreign investors must then request prior administrative approval to carry out investments.

There are further restrictions (mostly industry-specific) on foreign investments although they are limited and, in general, are similar to those in other EU member states. In some cases, restrictions apply to the shareholdings non-EU investors can hold in companies in certain sensitive sectors, such as air transport, railways, telecoms, and private security. Restrictions can apply to EU investors (for example, in relation to mining rights and national defence).

Certain activities in Spain are regulated and involve specific compliance obligations applicable to all investors, whether Spanish or foreign. For example, an approval may be required to obtain a significant stake in a credit entity, an insurance company or a university.

38. Can companies buy back their shares? Which limitations apply?

The Capital Companies Act provides that a public company can acquire its own shares and those issued by its parent company, provided the following requirements are met.

The share acquisition must be authorised by the company in a general meeting, by a resolution establishing the:

  • Manner of acquisition.

  • Maximum number of shares to be acquired.

  • Minimum and maximum acquisition price.

  • Duration of the authorisation, which must not exceed five years.

When shares in the controlling company are acquired, this authorisation must also be granted by the controlling company in a general meeting. If the shares to be acquired will be given directly to employees or directors of the company, or due to option rights held by them, the general meeting resolution must indicate that the authorisation is granted for this purpose.

The acquisition, including shares previously acquired by the company or person acting in its name but on the company's behalf and held in portfolio, must not result in the reduction of its net assets (patrimonio neto) to below the amount of share capital plus the mandatory legal reserves.

The nominal value of the shares acquired directly or indirectly, added to the value of the shares already held by the acquiring company and its subsidiaries and, if applicable, the controlling company and its subsidiaries, must not exceed 20% or, in a listed company, 10% of the paid-in share capital.

The acquisition by the company of partially paid-in own shares is null and void, except when the acquisition is free of charge. The acquisition of shares involving an obligation to render ancillary services is also null and void.

In limited companies, a derivative acquisition of own shares is permitted where:

  • It forms part of the transfer of all outstanding shares.

  • It is a gift.

  • It is done due to judicial execution to satisfy a judgment in favour of the company against the owner of the shares.

Derivative acquisition is also permitted when own shares are acquired to execute a resolution to reduce the share capital, adopted by the general meeting. It is also permitted when company shares or stock interests are acquired as provided in Article 109.3 of the Capital Companies Act.

The Capital Companies Act permits limited companies to acquire own stock when the acquisition has been authorised by the general meeting, when it is made out of company profit or freely available reserves and its object is to acquire one of the following:

  • Shares of a shareholder who has withdrawn from or who has been expelled from the company.

  • Shares due to a clause restricting their transfer.

  • Shares transferred in contemplation of death (mortis causa).

The acquired shares must be redeemed within a period of three years.

39. What are the main ways for a shareholder to exit from the company? Can shareholders require their shares to be repurchased by the company? Can shareholders be required to exit the company in certain circumstances? How are the shares valued in this case?

The Capital Companies Act regulates the right of shareholders to withdraw from the company when certain legal or statutory causes occur (in limited companies). Legal causes of withdrawal common to both public and limited companies are:

  • Change of the corporate purpose.

  • Extending or renewing the company.

  • The creation, modification or early cancellation of ancillary services, except as otherwise provided in the bye-laws.

  • The conversion of the company and the relocation of the registered office abroad.

In a limited company, changing the share transfer regime is also a legal cause for withdrawal.

In addition, the Capital Companies Act provides that the bye-laws can establish other causes for withdrawal.

Withdrawing shareholders are reimbursed for the value agreed between the shareholder and the company. If the shareholder fails to agree the value with the company, the Commercial Registry will appoint an auditor (who cannot be the company's auditor), to determine the reasonable value of the shares or stock.


Material transactions

40. What rights do shareholders have in the case of material transactions, such as a sale of all or substantially all of the company's assets, and a company reorganisation such as a merger or demerger?

In mergers and the total assignment of company assets and liabilities, the shareholders have a right to information.

With mergers, when a general meeting is convened the directors have to make a series of documents available to the shareholders for examination, including the joint merger project and merger reports from the directors of each company.

In both cases, the law requires the merger resolution or total assignment of the assets and liabilities to be communicated to the shareholders, by either:

  • Notifying each one of them individually.

  • Publishing the merger on the website of each company involved, and publishing the announcement in the Official Bulletin of the Mercantile Register (Boletín Oficial del Registro Mercantil) (BORME) and in a newspaper widely distributed in the province where the registered offices are located.

Therefore, in both cases the shareholders have a right to challenge the relevant resolution when the transaction has not been carried out in accordance with the applicable legal provisions.

In intra-EU cross-border mergers shareholders of the Spanish company involved, who vote against a resolution approving a merger where the resulting company will have its registered office in a different member state, can withdraw from the company under the Capital Companies Act.

41. What rights do shareholders have if the company is converted into another type of company (consider if applicable, a European Company (SE))?

In a conversion of the company into another type of company, in principle the shareholders have a right to information. When convening the general meeting at which the conversion resolution is to be debated, the directors must make a series of documents available to the shareholders, such as the balance sheet of the company to be converted and a report on the significant changes in the net assets (situación patrimonial) that may subsequently take place.

The adoption of the conversion resolution must also be communicated to the shareholders, by notifying each one of them individually or by publishing the announcement in the BORME and in a newspaper widely distributed in the province where the registered office is located.

The shareholders have a right to challenge the conversion once it has been registered. This right can be exercised within three months from the date on which the conversion was registered. Shareholders who did not vote in favour of the resolution can withdraw from the company being converted, under the Capital Companies Act.



42. What rights do shareholders have if the company is insolvent?

Shareholders of the company are entitled to request the insolvency of the company (that is, it cannot meet its obligations in a timely way).

In a company in liquidation, shareholders have the right to information which consists of the liquidators periodically updating them on the status of the liquidation process.

The final balance sheet must be approved by the general meeting. The balance sheet can be challenged by any shareholder who considers it detrimental to him.

Shareholders are also entitled to receive a share of the liquidation price based on their shares or stock interest in the share capital, unless otherwise provided in the bye-laws.

Shareholders can bring a liability action against liquidators who have caused detriment through fraudulent or seriously negligent conduct when carrying out their duties.

43. Can shareholders put the company into liquidation? What is the procedure to do this?

The shareholders of a company cannot carry out its liquidation since that responsibility is with the liquidators. However, shareholders can trigger the winding-up of a company by adopting a resolution at a general meeting.


Corporate groups

44. Is the concept of a corporate group recognised under specific legislation?

Article 42 of the Commercial Code contains a definition of a corporate group. The most immediate consequence is that a controlling company of a group of companies must draw up consolidated annual accounts and a management report, in accordance with the Commercial Code.

45. Does a controlling company have any duties and liability to the shareholders of the company it controls? What are the rights of company shareholders if the controlling company carries out actions that are prejudicial to the shareholders?

The relationship between dependent and controlling companies is governed by the duty of loyalty. The controlling company must exercise its influence observing the corporate interest or common purpose and the legitimate interests of the rest of the shareholders. Consequently, the influence of the controlling company is not acceptable (even when no detriment is caused to the dependant company) when it does not conform to the common corporate purpose established in the bye-laws.

Legislation does not provide how shareholders should proceed when the controlling company carries out actions or transactions that may be detrimental to them.

46. What are the limitations on owning reciprocal share interests in companies?

Reciprocal holdings exceeding 10% of the total capital of the companies involved cannot be established. Banned reciprocal stock interests include direct stock in both companies and those that can be established indirectly through subsidiaries.

Any company that itself, or through its subsidiaries, holds more than 10% of the capital of another company must immediately communicate this to the investee company. The legislation establishes an obligation to reduce such stock interests until they do not exceed the legal limits. The time period for reducing the stock interest is one year from the date of notification, except for stock interests acquired in exceptional circumstances such as the legitimate acquisition of own stock, in which case the time period is extended to three years.


Online resources

Spanish Ministry of Justice


Description. Official website maintained by the Ministry of Justice, indicating if the relevant laws are up-to-date (or potentially out-of-date). It includes the Corporate Enterprises Act, the Civil Code, the Code of Commerce, and the Act on Insolvency.

National Securities and Exchange Commission (Comisión Nacional del Mercado de Valores (CNMV))


Description. Official website maintained by the CNMV. It is up-to-date. It includes the Securities Market Law.

Contributor profile

Fernando de las Cuevas, Partner

Gómez-Acebo & Pombo Abogados, S.L.P.

T +34 91 5829132
F +34 91 5829294

Professional qualifications. Master of Law and Bachelor of Business Science (University of Deusto, 1981); Diploma in European Studies (University of Deusto, 1981); Diploma in Higher European Studies (College of Europe, Bruges, 1982); Research Scholarship from the EFTA, Geneva (1982 to 1983); P.I.L. Harvard Law School (1990).

Areas of practice. Banking law; securities market law; collective investment institutions; mergers and acquisitions; family and private equity businesses.

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