Luis Prados Ramos



Shortly after beginning my professional career as a notary, I authorized a capital reduction deed, which was returned to me by the Mercantile Registry, with a brief note that said something like this:  "There is no statement from the grantor that the corresponding refunds have been made."

This classification of the document was in accordance with the provisions of article 201 RRM, which when dealing with the deed of reduction of share capital, when the reduction has the purpose of restitution of contributions, requires that the following be recorded:

1. The sum of money or the description of the goods to be delivered to the partners, as well as the declaration of the grantors that the corresponding reimbursements have been made.

I am not going to deny that this qualification stuck with me, and that since then, it has not occurred to me again that of not consigning the statement that the corresponding refunds have been made, whether or not it is necessary.

But the truth is that that qualification left me with a doubt, specifically, if it was possible in the capital reduction agreement, that the amount to be received by the partners, whose shares or participations are amortized, be deferred.

The reason is that in such cases, it may seem that the manifestation of article 201 RRM cannot be stated, which, as we have said, obliges to state that the corresponding refunds have been made, since such refunds have not been made at least In its whole.

When the question has been raised, and I have to say that on many occasions, I have always referred to the possible negative qualification of the registrar via 201 RRM, despite being aware that the capital reduction deeds with restitution of contributions postponed usually registered in more than one commercial register, without major difficulties.

To those doubts, of my early dalliances for company law, the resolution of September 9, 2019 of the General Directorate of Registries and Notaries has been kind enough to express, in the appeal filed by the authorizing Notary, against the refusal of the Commercial Registrar VIII of Madrid to register the deed of reduction of the capital of a company, in which a universal general meeting of a company unanimously adopts the agreement to reduce the capital stock by restitution of their contributions to only one of the partners, with the particularity that the sum that is returned to the partner is with the adjudication of a real property of the company, the payment of another part in cash and the rest being deferred to be paid on a certain date.

The arguments of the registrar to deny the registration of the deed, as the reader can imagine, were concise, and in accordance with what was previously stated:

"A reduction in capital cannot be registered, the execution of which is postponed, in part, in terms of the restitution of the amounts to the partners, ... given that art. 201 of the RRM requires that the deed include the sum of money or the description of the goods to be delivered to the partners, as well as the declaration of the grantors that the corresponding reimbursements have been made.

For his part, the arguments of the appellant notary, were specified in article 1,255 of the Civil Code, which recognizes the principle of autonomy of the will in patrimonial matters, and

“… that in "the legal regulation of the reduction of capital in the limited liability capital company, there is no rule prohibiting the deferral of the payment of the sums or quantities that have to be delivered to the partners", and that the deferral of the payment is an agreement between the company and the affected partner(s) that produces effects only between them (art. 1257 Civil C.), so it cannot affect or harm the corporate creditors.

I anticipate that the General Directorate of Registries and Notaries upholds the appeal considering, with good judgment that,  "It is not that the execution of the reduction agreement has been postponed, as the registrar affirms in its qualification, but that said agreement has already been executed by means of the recognition of a monetary credit in favor of the partner whose social shares are amortized".

Before going into more detail and as a merely introductory element, I will make a very brief accounting note, in accordance with what the resolution that motivates these lines says, because as I have repeated on many occasions in my blog, company law must be analyzed and understood Also, from an accounting perspective.

Let us imagine that a company, in which six partners contribute 30,000 euros each to its share capital, which they allocate to the purchase of premises for rent, and that the profits obtained from 30,000 euros have been allocated to reserves.

In this case, the balance, in a very abbreviated way, would be as follows:

immobilized 180.000,00 € capital 180.000,00 €
treasury 30.000,00 € booking 30.000,00 €
TOTAL 210.000,00 € 210.000,00 €

Regarding this patrimonial situation, a partner wants to leave the company, and for this the company agrees to reduce the capital to restore it in its contributions.

The reduction (cash) of the share capital contributed by the partner of 30,000 euros would leave the balance as follows:

immobilized 180.000,00 € capital 150.000,00 €
treasury                 0 € booking 30.000,00 €
TOTAL 180.00,00 € TOTAL 180.000,00 €

The balances that we have indicated are very simple, and any seasoned reader will be able to think What about reservations?, Well, if these are non-distributed benefits, the outgoing partner must also have the right to recover the part thereof that corresponds to him.

More strictly, you have the right to recover the fair value of your share in the share capital, which may be higher or lower than nominal.

Following the example of the company we are dealing with, if the partner's participation is worth 50,000, due to the reduction in share capital of 30,000 euros they are entitled to receive those 50,000 euros, with which the company does not have liquidity for its cash payment of its whole.

And I say:

1.- What problem exists for the postponement of all or part of what the partners should receive to be agreed? 

2.- Can a regulatory norm foresee such a perverse result? 

From an economic point of view, the outgoing partner may be interested in deferring the payment of the value of their amortized shares, for whatever reason they consider (with or without guarantees); On the other hand, the company, once the capital reduction has been carried out, in addition to obtaining a deferral of payment, avoids the problems of a partner who may not be in tune with the rest, developing a work of mere opposition.

From a purely civil point of view, As the DGRN points out, there is no mandatory rule that imposes the cash payment of the value of the contribution that is returned to the partner through the reduction of the social capital.
The obligation to pay the reimbursement credit derived from the reduction agreement is a monetary obligation (article 1170 of the Civil Code), which admits deferral by agreement of the parties.

And in my opinion, not even the Mercantile Registry Regulations, literally interpreted, require cash payment, since it only indicates that the description of the assets to be delivered to the partners must be recorded.

So that if a credit right is delivered, it will suffice to identify it, at least,  by amount and term,  and with the other identifying elements that are considered appropriate, such as place of payment, bank account... And once the credit is recognized and accepted by the creditor, the corresponding reimbursements will have been made, then, and it is not bad to remember it, in terms of rights credit, does not govern the title and mode.

Continuing with the balance sheets, (I anticipate that if the value of the partner's participation is worth 50,000 euros, this is indicative of a higher value of the company, which should have its accounting reflection, either due to a value update reserve or for the reason whatever….) In such a case, the reduction through the deferral of 20,000 euros, would leave the balance like this

immobilized 180.000,00 € capital 150.000,00 €
treasury           0,00 € Bookings 30.000,00 €
another reservation 20.000,00 €
debt -20.000,00 €
TOTAL 180.000,00 € TOTAL 180.000,00 €

And once the debt is paid, either by the benefits obtained or by the contributions of the partners, the liability would be cancelled.

In essence, the reduction of capital with restitution in installments, in no case influences the interests that are object of protection in the reductions of capital, such as the protection of partners and company creditors.

Although we have already referred to this topic in other entries in this blog, which you can consult here and here, it does not hurt to make some kind of reminder.

In the event that the capital reduction is verified through the restitution of the contributions to the partners, their protection is specified, In addition, the capital reduction agreement must be adopted with respect, to the legal and statutory provisions, by a double path established by articles 329 and 330 LSC, which impose:

a) on the one hand, when the reduction agreement with return of the value of the contributions does not equally affect all the shares or all the shares of the company, it will be necessary, in limited liability companies, the individual consent of the holders of these participations and, in corporations, the separate agreement of the majority of the interested shareholders, adopted in the manner provided for in article 293;

In the event that the postponement of the restitution of what has to be returned to a shareholder in a share capital reduction agreement is agreed, it will be necessary, in addition to the agreement of the Meeting, the consent of the interested shareholder, as happens when it is intended to award to a partner his liquidation quota or in payment of his amortized shares in a capital reduction, in assets other than money.

From a purely registry point of view, it can be considered (as is happening in capital increases due to credit compensation) if that consent must be recorded by means of their appearance in writing, or will it suffice with the manifestation in that sense of the person who, empowered to do so, make the corporate resolutions public. The second position seems more reasonable.

b) and on the other hand that the return of the value of the contributions to the partners will have to be made in proportion to the value disbursed of the respective social participations or shares, unless, unanimously, another system is agreed.

Regarding the protection of creditors,  We can consider two scenarios:

1.- That the real or fair value of the shares is equal to or greater than their face value. In this case, ex article 331 LSC, the partners to whom all or part of the value of their contributions had been restored jointly and severally among themselves and with the company for the payment of the corporate debts contracted prior to the date on which the reduction was opposable to third parties (publication in the BORME), up to the limit of what is received as restitution of the social contribution.

Without prejudice to the fact that liability may be avoided when, upon agreeing to the reduction, a reserve is charged to profits or free reserves for an amount equal to that received by the partners as restitution of the social contribution, or when provided for in the bylaws creditors are notified, so that they can oppose the reduction, until the amount of their credits is paid or guaranteed.

Therefore, the recognition of a liability for the amount of the deferred amount, in no case modifies the position of the creditors with respect to their situation prior to the capital reduction. 

2.- That the real or fair value of the company shares is less than their nominal value, which is an indication that the company has losses, which could lead to the impossibility of returning contributions.

This would be the case raised in the resolution of the DGRN of April 26, 2013, which states that the reduction can be verified through one of these three ways: either by adjusting to the capital reduction requirements for losses; either by constitution or increase of voluntary reserve; or by establishing or increasing the amortized capital reserve.

For this reason, in such cases, the restitution of the contributions would require a prior reorganization of the company.

Leganés as of January 1, 2020.

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