Statutory Modifications

Inscription of Statutory Modifications

• Involves the increase and reduction of capital.
• Includes "Accordion Operation".
• Considers the dissolution and liquidation of companies.

Statutory Modifications: General Provisions

• Modifying a company's statutes is significant and receives special attention in the LSC (Law on Capital Companies).
• Title VIII of the LSC, spanning articles 285 to 345, is dedicated to statutory modifications.
• In general, the power to modify statutes lies with the general meeting.
• An exception exists where the administrative body can change the company's address within national territory, unless the statutes state otherwise.
• A contrary provision is only considered if the statutes explicitly state the administrative body lacks this power.
• The administrators or proposing partners must draft the full modification text.
• In the case of a public limited company, a written report justifying the modification is also required.
• Call for a meeting must clearly state the items to be modified and the shareholders' right to examine documents at the company's registered office.
• A complete version of the proposed modification text and any reports for public limited companies must be provided.
• Shareholders are entitled to request free delivery or sending of these documents (art. 287).

Modification Agreement

• In Limited Liability Companies (SRL), the modification agreement requires a favorable vote from over half of the votes corresponding to the shares into which the capital is divided.
• In Public Limited Companies (SA) and limited partnerships, the agreement must be adopted in the first call.
• Agreement must be adopted with a quorum of over 50% of the share capital.
• Agreement must be adopted by absolute majority.
• Unless on the second call, the agreement requires a quorum of 25% of the share capital and 2/3 of the votes present or represented.
• All agreements must be recorded in a public deed to be registered at the Mercantile Registry.
• The Mercantile Registrar will then send information of the agreement to the BORME (Official Bulletin of the Mercantile Registry).
• Any change of company name in the Mercantile Registry must be recorded in other relevant registries via marginal notes.

Specific Regulations

• Specific regulations exist for when statutory modifications individually affect shareholders.
• Modifications imposing new obligations on shareholders require consent from those affected (art 291 LSC).
• In SRLs modifications affecting individual rights of any partner requires the consent of those affected (art 292 LSC).
• In SAs a statutory modification directly or indirectly affecting rights of a class of shares requires agreement by the general meeting.
• The agreement requires a majority of shares belonging to the affected class.
• If multiple classes are affected, a separate agreement from each is necessary (art. 293).
• The legal relationship from a company contract can be rescinded for a specific partner when certain events occur affecting them, without affecting the contract's survival.
• Right of separation allows a partner to withdraw when certain conditions occur.

Legal Reasons for Separation

• Partners who did not vote in favor of a resolution, including non-voting partners, have the right to leave a capital company in the following:
• Substancial change or modification of the company's prurpose
• Extension of the company's duration.
• Reactivation of the company.
• Creation, modification, or advance termination of performance obligations, unless the statutes state otherwise (art 346 LSC).
• In limited liability companies, partners not in favor of modifying the transfer of shares also have a right to leave.
• In structural modifications, partners can sell or separate under the terms of Real Decree-law 5/2023.
• Company statutes may establish other reasons for separation
• These reasons must define how the cause is proven, the process for exercising this right and the deadline.
• Adding or removing reasons for separation requires consent from all partners (art 347 LSC).
• Article 348 bis LSC regulates the right to separation if dividends aren't distributed.
• The right to separation must be exercised in writing within 1 month after the publication of the agreement or receipt of the communication (art 348 LSC).
• To register the deed in the Mercantile Registry, the deed itself or another document must include a statement that no partner has exercised the right to separation within the timeframe.
• The document can state that the company, with approval from the general meeting, has acquired separated shares.

Legal Grounds for Exclusion

• SRLs can exclude partners who fail to fulfil obligations voluntarily.
• It can exclude administrators who violate competition restrictions or have been convicted of an infringement.
• If the infringement has caused damage through actions against the law or statutes, or without due diligence (art. 350).
• With consent from all partners, capital companies can incorporate fixed reasons for exclusive or modify or delete existing ones (art. 351).
• Articles 353 onward, lays out common regulations for separation and exclusion of partners in the valuation of shares, the expert's report, payment of expert and protection for company creditors.

Increasing Capital

• Increasing capital is a legal procedure for raising the amount of capital stated in the statutes.
• Article 295 LSC states that it is a statutory modification.Social Capital increase can take place by:
• Creating new shares or raising existing shares.
• Capital can be raised through new cash or non-cash contributions to the company assets.
• Social capital can be raised including contributions of credit against the company with a charge to profits or reserves already shown on the latest balance sheet (art. 295 LSC).

Guidelines

• Agreement from the General Board must be valid.
• In SRLs, agreement has to be with the favorable vote with more than half of participating shares where Social Capital is divided
• In SAs agreement must be adopted that:
• On the first call for votes a quorum of Social Capital is needed by absolute majority.
• On the second call for votes one quarter of Social Capital is needed by two thirds votes from those present or represented.
• The Social Capital increase corresponds to the general board, with the the authorized capital which is planned in the 297 LSC.
• Certain LSC limits must be maintained. These must be related to the contribution amounts (from art. 298).
• Increasing premium is acceptable when creating participating shares but the premium must be payed at subscribing shares.
• Cash injections are acceptable unless the entities insure for coverage.

Non Monetary Contributions

• Necessary that at the time of a call for the board, to give partners a report that describes the planned contributions to the administrators.
• The valuation, people who have to do them, number and nominal value of the amounts to be created/issued.
• Must show the amount of the increase and guarantees approved for its effectiveness.
• Each partner has the right to examine the report at the registered office and must be on the announcement of the call for the Board.
• Has the right to ask for the delivery or submission of information (Right to information).Credit compensation: In SRLs, the credit needs to the compensate should be totally liquid and required.
• In a SA, 25% the credits needs should be liquid.
• Must be expired and required and the expiration of the rest can´t be higher to five years.
• Should make available to the partners a report to the administrators and a certificate to the auditor of amounts ( the amounts in case of society amounts)

Conversion

Conversion will be to establish to the emission agreement. Reserves can be used with available reserves for premium allocation of participating shares or subscribing shares and the legal reserve in total.

• Art 304 LSC regulates preemptive acquisition rights for shareholders.

Decreasing Capital

• Decreasing capital is a operation that allows the amount of social capital shown in status.
• Presents a opposite operation that increasing.
• May vary : Fixed to a high to affect yield of society,
• Some members has is separated from the society,
• Society acquires own shares or participations, the initial assessments assigned to contributions.
• Has to be regulated in the Arts 317 to 345 TRLSC.Has to be regulated in the Arts

Modalities

• In line with the art. 317: “1. The capital reduction can have for the reason.
• Rebalancing the between social capital equilibrium and society net asset reduced by of consequent losses.
• Amount to creation increment of legal reserve one to voluntary reserves.
• Value devolution of amounts.
• Art 416 TRLSC. Owners of the shares has to have emission, obligate to turn over the amount.
• Administrators needs one, do the agreement from social capital, give a new write to the social society, recoup other capital social, agreement to increase.

Acordeon Operation

• Is know too simultaneity operation is regulated to the Arts 343 TRLSC and sub articles
• It agrees "The agreement to to lower to zero or for less that is allow for less that the one it has, can can agree at social capital on a like as it will rise "
• Simultaneous agreement of reduction, effectiveness of social capital if it has conditioned, in its case the agreement the Social capital
• Registration is not to be allowed unless it is simultaneous
• From RDGRN january 16, 1995 thought one reduction, increase, at once are operations that are free should see

Society Solution and Liquidation

• Extinction of a society can understand as the entire process
• Dissolution the opening process any of the reasons allowed by law.
• The end of a society can understand as the entire process
• From Society´s Causes , they all agree with with society.
• Arts. 221, from Comerce laws, they all agree any company need be to be for the following reasons.
• The entire amount of capital lost, start of Liquidation declared on board.
• Causes on specifics for the society and legal or from their own rules to declare
• One of the reason is that society needs to disolved cause they has not worked with their activities it has had less is has had inactived of one year.

Society´s Causes

• Has has been imposible go for goal
• Has paralyisis their are not working it has been posible not going for functions.
• Has loses it has been lower for amount from half to Capital Society
• They has lower capital social amount under low with the minimun agree
• The has amount value of the shares more that low or non existent.
• With the 360 artcle

Effects or dissolution

• Dissolution to open the Liquidation part
• Society disuelte stay keep being legal is the Liquidation is made in this part the name will be"In Liquidation"

Termination

• Joint operations is that has the propose is it will be from the start divide between each of the members
• The liquidation they will ask for to cooperate with the liquidation
• At the end is the extinction society the Liquidation will be from concourse to the law from concourse
• According 395 articulation Society they will give you out put extinction contendra the siguiente
• Que ha transferido el plazo del acuerdo aprobación balance final se hayan formulado
• Ha resultado