The Capital Companies Act recognizes the rights of specific company shareholders as well as minority shareholders. These rights are designed to protect them against the majority, who often hold positions in the company administration, giving, in certain cases, minimal information to minority shareholders about the management and financial results of company operations.
On certain occasions, these minority partners are unaware of some of their fundamental rights conferred on them by the Law.
One of these rights is to request the preparation of an audit report, provided that the company is not already audited and provided that the shareholder has a percentage equal to or greater than 5% of the capital.
This application procedure is relatively simple, fast and inexpensive.
This contrasts with other measures to defend the rights of shareholders and minority shareholders, which in many cases require the assistance of the Courts, with the corresponding high cost in terms of money and time.
The minority partner who has doubts about the Accounts of the company or simply wants to have them checked by an independent professional must submit an application to the Mercantile Registry before a period of 3 months from the close of the fiscal year in question. This deadline is short and, therefore, the dates must be clearly borne in mind: if the company closes the year on 31 December, the application must be submitted before 31 March of the following year.
It is important to note that the cost of the audit report must be borne by the company itself, so that it does not involve any expense for the minority shareholder when he makes an application.
In the event that the minority shareholder has doubts or suspicions about any specific financial or accounting matters of the company, the shareholder may always contact the auditor appointed by the Mercantile Register to warn him of such facts and request special attention and due diligence from the auditor.
In a nutshell, the requirements of this procedure of defence of the minority shareholder are very simple:
- Have at least 5% of the capital.
- That the company is not already audited or has an appointed auditor.
- Presentation of the application to the Mercantile Registry before three months from the close of the fiscal year.
