It is common that throughout the life of a company there is one of the shareholders who wishes to end their participation in the company. In this situation, the shareholder can sell his part to another shareholder, a third party, or even to the company itself. There is also the option of agreeing to a capital reduction with a return of contributions or organizing any other agreement that is satisfactory to the parties or that has been established for this purpose in the By-laws or in the private agreements between shareholders.
But what happens when there are no express clauses or agreements and one of the shareholders wants to leave and cannot?
In this case, it will be necessary to resort to the Company Law on which establishes an exit mechanism called the “separation of the shareholder”.
How is this procedure regulated? To begin with, the right to separate will be held by those shareholders who are in any of these situations:
(a) They had not voted in favor of the supersession or amendment of the corporate purpose, of the extension of company term or reactivation of the company and finally of the creation, amendment or early cancellation of the obligation to perform ancillary commitments.
(b) Meet other requirements established in the By-laws.
(c) They have voted in favor of the distribution of dividends and the Shareholders’ Meeting has not approved the distribution of at least one third of the operating profits obtained during the previous year.
In any case, the terms for the exercise of the right of separation are short, approximately one month, so the interested shareholder must act quickly so as not to prejudice his rights.
How will the shareholder exit be implemented in these cases?
It will be essential to carry out a valuation of the shares. This can be done between the company and the shareholder if they agree, or if they do not agree on the value they can appoint an independent expert.
In any case, if they do not agree on the appointment of the expert either, the partner who wants to leave the company or the company itself may request the Commercial Registry to appoint said independent expert. The expert must issue his report within a period of two months and his remuneration will be borne by the company.
In the event that the shares subject to valuation are listed on an official secondary stock market, this expert procedure will not be necessary, since the redemption value will always be the average listing price of the last quarter.
Finally, once the valuation is fixed, how will the exit be implemented in practice? The outgoing shareholder will have the right to have the company acquire his or her shares or to be reimbursed for the amortization of the shares via a capital reduction.As can be seen from the description of the legal mechanism, it is clear that it will always be more practical for the shareholders to reach an agreement to resolve situations in which a shareholder wants to leave a company. However, it is positive that the law establishes ways – although limited and assessed, as we have seen – to organize these exits when there are no agreements or there are direct conflicts between shareholders.
At Martí & Associats we have extensive experience in resolving conflicts between shareholders, so we are at your disposal to clarify any doubts and design and implement an exit for a shareholder who wants to do so and encounters difficulties within the company.
