M&A

Article 348 bis of the Companies Act (Royal Legislative Decree 1/2010) protects minority shareholders against the systematic blocking of profit distributions. From the fifth financial year following registration, a shareholder who has recorded their objection in the minutes may withdraw from the company if the general meeting does not agree to distribute at least 25 per cent of the legally distributable profits from the previous financial year, provided that profits were made in the three preceding financial years. This right lapses if that percentage has been distributed in any of the last five years and expires one month after the general meeting.

With regard to general meetings and boards, the Companies Act distinguishes between different types of company. Notice of a general meeting must be given one month in advance for public limited companies and fifteen days for private limited companies; only a general meeting of all shareholders is exempt from this requirement. Public limited companies operate with a constitutive quorum; private limited companies decide by majority of the total votes cast, with one-third as the standard threshold, more than half required to amend the articles of association, and two-thirds for decisions of greater significance. Structural amendments are currently governed by Royal Decree-Law 5/2023.

These tools provide a literal interpretation of case-law, not a solution to your specific case. If the result suggests that separation is enforceable, that there was a defect in the notice of meeting, or that an agreement is contestable, the time limits are short and it is advisable to seek professional advice.

When can a partner withdraw from the partnership on the grounds of a lack of dividends?

The provisions of Article 348 bis are more stringent than they appear. The shareholder must record their objection in the minutes; the company must have been registered for five financial years and must have made a profit in the three preceding years; and the one-month period begins from the date of the general meeting. Excluded, amongst others, are listed companies and companies in insolvency proceedings, and the articles of association may remove or modify this right.

Case law adds nuances that the legislation does not address, ranging from the validity of a subsequent agreement that nullifies the separation to the calculation of distributable profits. The tool allows these to be checked against specific court rulings before making a decision that is difficult to reverse.

When a separation, the valuation of shareholdings or a corporate deadlock leads to a negotiated exit or the sale of the company, it is advisable to approach the matter methodically. See our M&A and company sales section.