Title II comprises the following chapters and sections:
TITLE II. Structural Modifications
CHAPTER I. Transformation by Change of Corporate Type, Articles 17 to 32
Section 1. General Provisions
Section 2. The Transformation Project and Report
Section 3. The Transformation Agreement and Protection of Shareholders
Section 4. Formalization and Registration of the Transformation
Section 5. Effects of the Transformation on the Liability of Shareholders
Title II, which begins with Article 17 and exclusively regulates internal structural modifications, could have defined its scope of application in its first article, establishing that its provisions would apply supplementarily to cross-border modifications in all matters not contradicting its specific regulations.
Revised Proposed Wording:
TITLE II
INTERNAL STRUCTURAL MODIFICATIONS
ARTICLE 17 - SCOPE OF APPLICATION
1. This Title regulates internal structural modifications, understood as those that They alter the legal structure of a company without modifying the legal system to which it is subject.
2. The following are considered internal structural modifications:
a) The transformation of a company into another legal form within the same legal system.
b) The merger of companies domiciled in Spain.
c) The division of a company with the creation of resulting companies in Spain.
d) The global transfer of assets and liabilities within the national territory.
3. The provisions of this Title shall apply supplementarily to cross-border structural modifications insofar as they do not contradict the specific regulations of the Titles corresponding to intra-Community and extra-Community modifications.
We will now proceed to analyze the articles that comprise this Title.
ARTICLE 17 TRANSFORMATION CONCEPT
Article 17 introduces the fundamental concept of corporate transformation, highlighting a key point:
The legal form of the company changes, but the company remains the same in terms of its legal personality.
What changes:
- The type of company.
- The regulations applicable to the company after the transformation.
What DOES NOT change:
- The identity of the company.
- Its legal continuity: the rights and obligations acquired before the transformation are maintained.
ARTICLE 18 CASES OF POSSIBLE TRANSFORMATION
Article 18 regulates the different cases in which a company can transform into another type of company, establishing which combinations are possible.
Transformation is permitted for all registered commercial companies.
Conversion between different types of companies is permitted, including civil companies, cooperatives, and economic interest groupings.
In some cases, the transformation can be at the European level (European Public Limited Company and European Cooperative Society).
1. Commercial company → any other commercial company
2. Commercial company or EEIG → Economic Interest Grouping (EIG)
- Commercial companies and European Economic Interest Groupings (EEIGs) can be transformed into an EEIG.
- An EEIG can also be transformed into a commercial company or an EEIG.
Key difference: an EEIG is non-profit and its function is to facilitate the economic activity of its members.
3. Civil partnership → Commercial company
A civil partnership (with or without legal personality) can be transformed into a commercial company.
4. Public limited company → European public limited company (SE)
An EEIG It can be transformed into a European Public Limited Company (SE) if it meets the requirements of Regulation (EC) 2157/2001.
An SE can be transformed into a national public limited company (S.A.).
Key difference: The SE allows operation in several EU countries with a single corporate structure.
5. Cooperative Society ↔ Commercial Company
A cooperative can be transformed into any commercial company (limited liability company, public limited company, etc.).
Conversely, a registered commercial company can be converted into a cooperative.
Key difference: In a cooperative, each member has one vote, regardless of their capital contribution.
6. Cooperative Society ↔ European Cooperative Society (ECS)
National cooperatives can be transformed into European cooperative societies (ECS).
An ECS can be transformed into a national cooperative.
Key difference: The ECS allows operation in different EU countries without the need to create separate subsidiaries.
The transformation of foundations or associations into commercial companies is not mentioned.
Article 18 establishes a flexible framework for the transformation of companies, allowing them to adapt to strategic or market changes without losing their legal personality.
ARTICLE 19 TRANSFORMATIONS BETWEEN PUBLIC LIMITED COMPANIES AND EUROPEAN PUBLIC LIMITED COMPANIES.
Article 19 establishes the applicable regulatory framework when a public limited company (SA) is transformed into a European public limited company Transformation into a European Public Limited Company (SE) and vice versa.
The regulation refers to three main sources of law:
1. Application of Regulation (EC) 2157/2001
This regulation is the main law governing European Public Limited Companies (SEs) in all EU Member States.
Main aspects regulated in the transformation:
Requirements for transformation: The public limited company transforming into an SE must meet specific conditions (for example, having a presence in at least two Member States).
Transformation process: This includes shareholder approval and compliance with registration formalities.
Possibility of relocating the registered office without dissolution: The SE can relocate within the EU without liquidation.
2. Application of national implementing regulations
In addition to the European Regulation, supplementary national regulations apply.
In Spain, this involves the application of provisions on commercial procedures, registration, taxation, and administrative control in aspects not regulated by the Regulation.
The Spanish Companies Act (LSC) will continue to apply to SEs domiciled in Spain in matters not expressly regulated by the Regulation.
3. Application of Law 31/2006 on employee involvement
This law adapts Spanish legislation to the European system of employee participation in the management of public limited companies and European cooperatives.
Key aspects:
It regulates the rights of employees to information, consultation, and participation in an SE.
It establishes procedures for negotiation with employee representatives before the transformation.
It prevents companies from using the transformation into an SE to reduce existing labor rights within their national structure.
ARTICLE 20 TRANSFORMATION PROJECT
Article 20 of Royal Decree-Law 5/2023 regulates the content and requirements of the transformation project of a commercial company.
This document is fundamental in corporate transformation processes, as it establishes the conditions under which a company changes its legal form within the legal framework.
To understand its scope, it is also necessary to refer to Article 4, which defines the structural modification project in general terms and whose application extends to transformations.
1. Relationship with Article 4
Article 4 establishes the general framework for structural modifications of commercial companies, regulating the requirements that these processes must meet, such as the minimum content of the project, the protection of shareholders and creditors, and the need for documentary transparency.
In this context, Article 20 specifically develops the transformation project, establishing particular requirements for this type of operation.
While Article 4 sets out the basis for any structural modification (merger, division, transformation, global transfer of assets and liabilities), Article 20 focuses exclusively on corporate transformation and adds further specifications to the general provisions of Article 4.
2. Content of the Transformation Plan
Paragraph 1 of Article 20 establishes that the transformation plan must include, in addition to the mandatory information in Article 4, the following elements:
A. Identification of the company in the Commercial Registry:
The company's registration in the Commercial Registry must be included, allowing for its identification and ensuring public access to the registry.
B. Draft articles of incorporation or bylaws of the resulting company:
The text of the public deed that will formalize the transformation must be included.
The bylaws of the transformed company, reflecting its new legal form, are attached.
Other relevant corporate agreements that must be formalized in a public deed may be included.
These requirements aim to ensure that all stakeholders (partners, creditors, employees, and third parties) have access to clear information about the transformation, providing legal certainty and transparency.
3. Exception for Internal Transformations
Section 2 introduces a relevant exception: in internal transformations, it will not be necessary to offer guarantees to creditors.
This means that:
If the transformation does not affect third parties (for example, a change from a public limited company to a private limited company within the same corporate group), offering guarantees to creditors is not required.
The aim is to expedite the procedure in these cases, avoiding unnecessary formalities.
This exception aligns with the trend toward administrative simplification in commercial law, reducing bureaucratic burdens.
Article 20.2 establishes that in internal transformations, it will not be necessary for the project to include an offer of guarantees to creditors.
In other words, in these cases, it is not automatically required that guarantees be included in the transformation project itself.
What does this regulate? What about Articles 13, 14, and 15?
These articles address the protection of creditors in structural modifications, establishing mechanisms to safeguard their rights.
They do not expressly distinguish between internal and external transformations, which raises the question of whether they also apply to internal ones.
Let's examine each article in more detail:
Article 13: Regulates the right of creditors to object when the structural modification may affect their collection rights.
Article 14: Regulates the possibility of requiring additional guarantees in favor of creditors in certain cases, establishing the criteria under which these guarantees may be required.
Article 15: Deals with the declaration of the company's financial situation, ensuring that shareholders and third parties have up-to-date information on the company's financial status before the structural modification.
Joint Application of Both Regulations
The apparent contradiction is resolved if we interpret Article 20.2 as follows:
Article 20.2 eliminates the obligation to include guarantees in the transformation plan for internal operations, but it does not prevent creditors from exercising their right to object or demand guarantees if the conditions of Articles 13, 14, and 15 are met.
In internal transformations, it is not automatically presumed that creditors need additional protection, because the company remains under the same legal framework and the same liability.
However, if a creditor demonstrates that the transformation causes them actual harm, they could invoke the mechanisms of Articles 13 to 15 to demand protection.
Application of the Guarantees in Articles 13-15
If the transformation is external (it involves a change in the legal framework or substantially affects creditors) → The guarantees in Articles 13-15 apply automatically.
If the transformation is internal → It is not mandatory to include guarantees in the project (Art. 20.2), but creditors may invoke Articles 13-15 if they demonstrate that their rights may be affected.
4. Mandatory Documentation in the Transformation Project
Section 3 lists the documents that must accompany the transformation project:
A. Updated balance sheet accompanied by a report on changes in equity:
It must be closed within the six months prior to the date of the meeting at which the transformation is approved.
A report on SIGNIFICANT CHANGES IN EQUITY AFTER THE BALANCE SHEET must be attached.
This report under Article 20 explains significant changes in equity after the balance sheet date.
It is prepared between the balance sheet closing and the meeting.
It is mandatory if there have been significant changes in assets or liabilities.
This report finalizes the information at the time the transformation project is presented.
This ensures that shareholders and creditors have access to current and reliable financial information.
B. Auditor's Report:
Mandatory when the transformed company is subject to an audit.
Its purpose is to ensure accounting transparency and prevent alterations in financial information.
C. Tax and Social Security Compliance Certificates:
The company must demonstrate that it is up to date with its tax and Social Security obligations.
Valid certificates issued by the competent authorities must be submitted.
This requirement prevents companies with outstanding debts from using the transformation to evade financial responsibilities.
Therefore, Article 20 harmonizes the transformation process with the general principles of Article 4, ensuring that any change in a company's legal form is carried out with sufficient guarantees for shareholders, creditors, and the tax authorities.
This regulatory framework seeks a balance between facilitating corporate transformations and protecting third parties and the commercial order.
ARTICLE 21 REPORT OF THE BOARD OF DIRECTORS
1. Content of the Report
The report of the board of directors must include the information established in the common provisions of Title I.
That is, it must contain the general information required by law for all structural modifications.
2. Obligation to Update Financial Information
The directors have the duty to inform the shareholders' meeting about any significant changes in assets or liabilities that have occurred between:
- The date of the report justifying the transformation. Art. 5
- The date of the balance sheet made available to the shareholders.
- The date of the shareholders' meeting.
This provision aims to ensure that the shareholders make their decision regarding the transformation with up-to-date and accurate financial information.
The report under Article 21 continues to update the information until the day of the meeting.
Article 21.2 of the Royal Decree-Law 5/2023 establishes the obligation of directors to inform the shareholders' meeting about significant changes in the company's assets or liabilities within a specific period.
However, the original wording may cause some confusion, as it mentions the explanatory report first and then the balance sheet, when in reality the balance sheet always precedes the explanatory report.
To improve the clarity of the text, a possible alternative wording could be the following:
Proposed corrected wording:
"The company's directors are obliged to inform the shareholders' meeting to which the approval of the transformation is submitted, about any significant changes in assets or liabilities that occur between the date of the balance sheet made available to the shareholders, the date of the explanatory report for the transformation pursuant to Article 5, and the date of the shareholders' meeting."
3. Exception: Universal Meeting and Unanimity
If the transformation is approved unanimously at a universal meeting, it will not be necessary to make available or send the report mentioned in section 1.
➡ Justification: It is understood that, given the unanimity, the shareholders already have sufficient knowledge of the report's content and do not need to receive it formally.
ARTICLE 22 INDEPENDENT EXPERT'S REPORT
This article regulates an additional report that is only required in certain cases of company transformations.
Below, we detail its content and practical application.
The independent expert's report is only required in two types of transformations:
1. When a company is transformed into a public limited company (S.A.).
2. When a company is transformed into a limited partnership by shares (S. Com. por A.).
This report is not general in nature, but rather has a single purpose:
To value non-monetary contributions
While the law does not expressly specify this point, a logical interpretation allows us to understand that:
If there is only a transformation → Previous non-monetary contributions are revalued to ensure that the share capital reflects its real value in the new company.
If there is a transformation plus a capital increase → Both previous and new contributions are valued, since the latter will form part of the new share capital.
This criterion is based on the need to ensure the correct valuation of share capital, especially in public limited companies and limited partnerships by shares, where regulations require greater protection for shareholders and creditors.
In this regard, although Article 22 does not state it with absolute clarity, its interpretation must align with the principle of legal certainty and transparency in the valuation of assets contributed to the company.
The report is prepared by an independent expert appointed by the Commercial Registry. Article 6, also Articles 67 of the Spanish Companies Act (LSC) and 338 of the Spanish Commercial Registry Regulations (RRM).
Its function is to ensure that the valuation of non-cash contributions is objective.
It is only required in Public Limited Companies (S.A.) and Limited Liability Companies (S.Com. por A.) because in these companies, share capital plays a key role in protecting creditors.
If non-cash contributions are overvalued, creditors may be harmed.
In short:
The independent expert's report is currently only required when the resulting company is an S.A. or a Limited Liability Company (S.Com. por A.) (Article 22).
Proposed improvement:
The independent expert's report should also be required when the resulting company, even if it is a Limited Liability Company (S.L.), civil partnership, Economic Interest Grouping (AIE), or cooperative, already has non-cash contributions equivalent to €60,000.
The €60,000 threshold is not arbitrary → It coincides with the minimum capital required for S.A.s. and S. Com. by A.
It prevents companies with high-value non-monetary assets from circumventing external control by transforming into S.L.s, AIEs, cooperatives, etc.
It strengthens legal certainty in transformations where share capital may be inflated without oversight.
WE ENTER SECTION 3 OF CHAPTER I OF TITLE II
ON THE TRANSFORMATION AGREEMENT AND PROTECTION OF SHAREHOLDERS
ARTICLE 23 REQUIREMENTS OF THE TRANSFORMATION AGREEMENT
This article regulates how the transformation agreement of a company must be adopted and what elements it must include. We break it down into two key points:
General rule (Art. 23.1):
The transformation agreement must comply with the rules of the company being transformed.
This means that the majorities, formalities, and procedures required in the original company apply.
The rules of the resulting company do not apply directly until the process is complete.
General rule (Art. 23.2):
The transformation balance sheet, with any necessary modifications, must be approved.
The agreement must include the information required for the formation of the new type of company.
1. A limited liability company (S.L.) is transformed into a public limited company (S.A.) → The agreement must reflect:
Approval of the transformation balance sheet.
The minimum share capital of the new S.A. (€60,000).
Issuance of shares instead of equity interests.
2. A S.A. is transformed into a S.L. → The agreement must include:
The substitution of shares with equity interests.
The adaptation to a more flexible regime for the transfer of equity interests.
If there are changes to the balance sheet before the transformation, the agreement must reflect them so that the shareholders vote on a real and up-to-date accounting situation.
Relationship between Article 20.3.1 and Article 23
Article 20.3.1 and Article 23 are closely related because both regulate fundamental accounting elements in the process of transforming a company.
1. Article 20.3.1
Requires that the balance sheet of the company to be transformed be closed within the six months prior to the date scheduled for the shareholders' meeting that will approve the transformation.
It also stipulates that a report on significant changes in equity that occurred after the balance sheet date must be included.
2. Article 23
It requires that the transformation agreement include the approval of the transformation balance sheet (mentioned in Article 20).
It allows for modifications to the balance sheet if they are necessary to reflect the company's true financial position at the time of the transformation.
Article 20.3.1 regulates the balance sheet that will serve as the accounting basis for the transformation.
Article 23 requires that this balance sheet be approved in the transformation agreement.
If there have been changes in equity after the balance sheet date, they must be incorporated before the agreement is approved.
If the balance sheet is not updated:
- The transformation would be approved based on outdated accounting.
- The shareholders would vote without knowing the company's true financial position.
Therefore,
Article 20.3.1 regulates the balance sheet that will be used for the transformation.
Article 23 requires that this balance sheet be approved as part of the transformation agreement.
If there are significant changes in equity after the balance sheet is prepared, these must be reflected before its approval.
ARTICLE 24 PROTECTION OF SHAREHOLDERS
Article 24 governs the rights of shareholders in the event of a company transformation, ensuring that those who do not agree with the transformation have exit options.
I. Shareholders' Right to Sell Their Shares or Equity Interests (Art. 24.1)
This Right is held by:
All shareholders and holders of non-voting shares or equity interests.
They may sell their shares or equity interests to the company, to other shareholders, or to a third party designated by the company.
In return, they must receive appropriate cash compensation.
How is this right regulated?
It is governed by the general provisions on shareholder protection (i.e., the general rules governing structural modifications of commercial companies).
• Cash compensation to shareholders in cases of structural modifications is regulated in Article 12 of Royal Decree-Law 5/2023.
• The procedure for assessing the appropriateness of this compensation, including the preparation of the independent expert's report, is detailed in Article 6 of the same Royal Decree-Law.
This right prevents a shareholder from being forced to remain in a company whose transformation they do not accept.
Article 24 protects both voting and non-voting shareholders, guaranteeing them the right to exit if they disagree with the transformation.
Both groups can sell their shares or stakes to the company, to other shareholders, or to designated third parties.
The key difference is that non-voting shareholders cannot influence the vote, so their protection depends entirely on the right of disposal.
II. Automatic Withdrawal of Partners in Case of Personal Liability (Art. 24.2)
The following may withdraw automatically:
Those who, due to the transformation, become personally liable for the company's debts.
Conditions for automatic withdrawal:
Not having voted in favor of the transformation.
Not having formally agreed to it within one month.
Time limits for deciding whether to agree or withdraw:
If they attended the meeting: 1 month from the date the resolution was adopted.
If they did not attend the meeting: 1 month from the date they are notified of the resolution.
Since the legislation does not establish a specific method of notification, it is recommended that companies:
Use reliable means of communication that allow proof of receipt by the non-attending partner, such as certified mail with return receipt requested or registered mail with acknowledgment of receipt.
Check whether their articles of association contain specific provisions regarding the method of notifying non-attending partners of resolutions and act accordingly.
III. Valuation of the Shares of Departing Partners
How are the shares or holdings of departing partners valued?
The provisions of the general regulations on modifications are followed Structural changes.
This guarantees fair compensation based on objective criteria.
This article protects dissenting shareholders, ensuring they are not forced to accept unwanted changes without a fair outcome.
Article 25 CONTINUED OBLIGATIONS OF SHAREHOLDERS
I. Transformation does not release shareholders from their prior obligations
The law makes it clear that a change in the company's legal structure does not exempt shareholders from their prior commitments to the company.
If, before the transformation, a shareholder had an outstanding contribution or any other obligation to the company, they remain obligated to fulfill it after the transformation.
II. When is full capital payment required before the transformation?
The law states that if the transformed company requires fully paid-up capital, this must be completed before the transformation.
The problem is that in most types of companies, this does not occur.
III. In which types of companies is 100% capital payment required?
In a Public Limited Company (S.A.), only an initial payment of 25% of the share capital is required, as per Article 79 of the Spanish Companies Act (LSC).
In a Limited Partnership by Shares (S. Com. por A.), 100% initial payment is also not required, as it follows the same regulations as a Public Limited Company (S.A.), as per Article 3.2 of the LSC.
In a Limited Liability Company (S.L.), full payment of capital from the outset is also not required, as per Article 40.ter.3.
IV. In what cases could this rule then be applied?
The only way this requirement makes sense is if the transformation is into a type of company that expressly requires fully paid-up capital, such as:
It may refer to special regulated companies (banking, insurance, etc.) where sector-specific regulations require full capital payment.
If the company's articles of association expressly state that the capital must be fully paid up before the transformation.
v. How is the capital payment verified?
If the capital must indeed be paid up before the transformation, the notary must verify and certify that the shareholders have made the payments.
The public deed of transformation must include the documents proving that the payment has been made in full.
The notary must verify that the assets have been effectively delivered and that the supporting documentation is attached to the deed.
In a Public Limited Company (S.A.), only an initial payment of 25% of the share capital is required, as per Article 79 of the Spanish Companies Act (LSC).
In a Limited Partnership by Shares (S. Com. por A.), 100% initial payment is also not required, as it follows the same rules as a Public Limited Company (S.A.), as per Article 3.2 of the LSC.
In a Limited Liability Company (S.L.), it is also not required that the capital be fully paid up from the outset, as per Article 40.ter.3.
Article 67 of the LSC → Establishes that non-monetary contributions in a Public Limited Company must be valued by an independent expert appointed by the Commercial Registry.
Article 81 of the Spanish Companies Act (LSC) → Regulates how outstanding payments can be made in a public limited company (Sociedad Anónima) and allows unpaid dividends to be settled through monetary or non-monetary contributions, provided the articles of association stipulate this or the company agrees to it.
Consequences for Article 25:
If, in a transformation, it is necessary to complete the share capital before the agreement, the shareholders can do so with cash or with assets or rights.
In the case of non-monetary contributions, the public deed of transformation must include the valuation report of the independent expert.
The notary must verify that the asset or right has indeed been contributed before authorizing the deed.
Conclusion: Article 25 does not limit payments to cash, so the shareholders can complete the capital with non-monetary contributions if the appropriate legal procedures are followed.
Article 25 is ambiguously worded and gives the impression that it only refers to cash payments, when in reality, payments can also be made with non-cash contributions.
The phrase "the actual disbursements made will be certified before the notary" seems to be intended only for cash contributions.
It does not explicitly mention non-cash contributions; however, we know that non-cash contributions are a legally valid option for paying outstanding dividends in a public limited company (Article 81 of the Spanish Companies Act).
If the payment is made with assets or rights instead of cash, the notary will not require proof of a bank deposit, but will instead have to verify other documents:
• The valuation report from an independent expert (Article 67 of the Spanish Companies Act).
• Documents transferring the contributed asset
Solution to clarify Article 25
The wording should specify that proof of disbursement can refer to both monetary contributions and in-kind contributions Non-monetary contributions.
For greater precision, we could rephrase the paragraph as follows:
"The actual disbursements made, whether monetary or non-monetary, must be certified before the notary public authorizing the public deed. In the case of monetary contributions, the corresponding bank statements must be included. If the disbursement is made through non-monetary contributions, the deed must contain the partner's express statement regarding the contribution of the asset or right, as well as a reference to the independent expert's valuation report when required, in accordance with the provisions of the Spanish Companies Act (LSC)."
ARTICLE 26. PARTNERS' PARTICIPATION IN THE TRANSFORMED COMPANY
This article regulates how partners' participation is maintained after a corporate transformation.
Its objective is to guarantee that partners' rights are not arbitrarily altered and that the transformation does not imply a loss of their position within the company without their consent.
I. General Rule: Shareholdings cannot be modified without consent (Art. 26.1)
The transformation of a company cannot alter the shareholdings of the partners without their consent.
Any modification to shareholdings requires unanimity among the remaining partners.
II. Special Case: Transformation of a company with industrial partners (Art. 26.2)
A. What is an industrial partner?
An industrial partner is one who contributes labor or services to the company, rather than assets or money.
They are found in partnerships, such as general partnerships, limited partnerships, and limited partnerships by shares.
In these cases, the industrial partner participates in the profits, but not in the share capital.
B. Problem that arises in the transformation
If a company with industrial partners becomes a corporation (for example, a limited liability company or a public limited company), the role of the industrial partner disappears, because in these companies only assets or money can be contributed.
C. Solution according to Article 26.2
• If the original company's articles of incorporation assigned a share to the industrial partner, that will be their share in the transformed company.
• If no share was assigned, the manner in which the industrial partner will participate in the new company must be negotiated among all the partners.
• In both cases, the capital partners' shares are adjusted proportionally to accommodate the industrial partner.
3. Personal obligations of the industrial partner after the transformation (Article 26.2, final paragraph)
3.1. General rule
The transformation cannot impose on the industrial partner the obligation to continue providing services without their consent.
If the industrial partner wishes to continue providing services, this must be regulated as an ancillary service in the company's bylaws.
3.2. Key difference: Being a partner does not imply working for the company
If the industrial partner receives a share in the capital, this does not mean they are obligated to continue providing services.
Being a partner in a Limited Liability Company (S.L.) or a Public Limited Company (S.A.) does not imply working for the company.
In short, if an industrial partner in the original company only contributed labor or services and not assets or money, in the transformed company (S.L. or S.A.) they must make a contribution of capital or assets to remain a partner.
In an S.L. or S.A., it is not possible to be a partner without having made a monetary or non-monetary contribution.
If the industrial partner wishes to remain a partner in the transformed company, they must contribute capital in proportion to their shareholding.
If they only wish to continue providing services, they would do so as an employee or under an external contract, but without being a partner.
Proposed clarification to the article
Since the regulation does not expressly mention this point, it would be advisable to add the following clarification:
"To acquire the status of partner in the new transformed company, the industrial partner must make a monetary or non-monetary contribution equivalent to their shareholding in the company's capital."
The following wording applies:
Article 26. Partners' Participation in the Transformed Company
1. The transformation agreement may not modify the partners' shareholdings without the consent of all remaining partners.
2. In the case of a company with one or more industrial partners that is transformed into a type of company in which no such partners exist, their shareholding in the capital of the new transformed company will correspond to the shareholding assigned to them in the company's articles of incorporation or, failing that, the shareholding agreed upon by all the partners.
"To acquire the status of partner in the new transformed company, the industrial partner must make a monetary or non-monetary contribution equivalent to their shareholding in the company's capital."
Reduced proportionally In both cases, the participation of the other partners is required.
The continued existence, if applicable, of the personal obligation of the industrial partner in the company after its transformation will always require the partner's consent and must be formalized as an ancillary contribution under the conditions established in the company bylaws.
ARTICLE 27. COMPANIES THAT HAVE ISSUED BONDS OR OTHER SECURITIES
This article regulates the restrictions on the transformation of companies that have issued bonds or other financial securities, establishing specific conditions to avoid conflicts with the holders of these instruments.
I. Restriction on transformation if the new company type does not allow the issuance of bonds, Articles 401 et seq. of the Spanish Companies Act (LSC).
If a company has issued bonds or other securities, it may only transform into another company type that also allows the issuance of these instruments.
If the new company type does not allow the issuance of bonds, the company may not transform without first redeeming the bonds already issued.
II. Restriction on Transformation if Bonds Convertible into Shares Exist
If a public limited company (S.A.) has issued bonds convertible into shares, it can only transform into another type of company if it has first converted or redeemed those bonds.
This protects the holders of convertible bonds, ensuring that they can exercise their conversion right before the company changes its legal form.
Practical Example:
An S.A. issued bonds convertible into shares, allowing investors to exchange them for shares in the company.
If the company decides to transform into a private limited company (S.L.), it must first allow bondholders to convert their bonds into shares or, failing that, redeem the bonds.
III. Which Companies Can Issue Bonds?
According to the Spanish Companies Act (LSC), the companies that can issue bonds are:
Public Limited Companies (S.A.) → Yes, without limit.
Limited Partnerships by Shares (S. Com. por A.) → Yes, because they are governed by the rules of Public Limited Companies (S.A.).
Limited Liability Companies (S.L.) → Yes, but with restrictions. They cannot issue convertible bonds.
Cooperative Societies → They can issue bonds, in accordance with Article 54.1 of the Cooperatives Act, with the necessary adaptations to the Capital Companies Act. They can also issue participating shares (Article 54.2).
Other entities (EIAs, Joint Ventures, associations, foundations, etc.) → It depends on their specific regulations.
IV. Purpose of Article 27
It prevents a company from modifying its structure and harming the rights of bondholders.
It guarantees that investors who purchased bonds under a specific regime do not lose their rights due to a corporate transformation.
It appears that associations and foundations cannot issue bonds, as their legal nature and non-profit purpose would prevent them from accessing this financing mechanism.
Bond issues are subject to the Securities Market Law when they are addressed to the public or admitted to trading on official secondary markets, in accordance with Articles 30 ter and 34 of said law. Conversely, private issues or those directed to specific investors are excluded from its scope and are governed exclusively by the Capital Companies Law.
ARTICLE 28. HOLDERS OF SPECIAL RIGHTS
Article 28 regulates the protection of holders of special rights in the event of a company transformation.
Its purpose is to guarantee that the rights acquired by certain individuals do not disappear without their consent.
I. Protection of Holders of Special Rights (Art. 28.1)
The transformation of a company may not be carried out if there are holders of special rights who object to it within one month of its publication in the Official Gazette of the Mercantile Registry (BORME) or from the date they receive individual notification.
This only applies if the special rights cannot be maintained in the new company resulting from the transformation.
Special Rights
These are rights distinct from ordinary shares, holdings, or quotas that grant specific advantages to certain shareholders or third parties.
Preferential Economic Rights:
Shares or holdings with preferential dividend distribution,
Public Limited Companies (S.A.) → Only non-voting shares are guaranteed a preferential dividend (Art. 99 of the Spanish Companies Act).
Limited Liability Companies (S.L.) → Dividend privileges may exist if so stated in the articles of association (Art. 275.1 of the Spanish Companies Act).
Preferential reimbursement in the event of liquidation. Article 391 of the Spanish Companies Act (LSC)
Differentiated political rights:
Right to appoint members of the board of directors. Article 243 for public limited companies (SA)
Veto powers in certain corporate decisions.
Greater number of votes in strategic agreements. Article 188 of the LSC
Other special rights derived from contracts or articles of association:
Right of usufruct over shares Social rights.
Profit sharing without being a shareholder.
Exclusivity or non-membership agreements.
III. Exception: Ineffective objection if the holder voted in favor of the transformation (Art. 28.2)
If the holder of special rights voted in favor of the transformation, they cannot subsequently object to halt the process.
The purpose of this rule is to prevent someone from accepting the transformation and then trying to block it for their own benefit.
IV. Purpose of Article 28
It protects holders of special rights, ensuring they do not lose their advantages due to a corporate transformation.
It prevents the transformation from being used as a mechanism to eliminate acquired rights without compensation.
It introduces a balancing mechanism: if the right can be maintained in the new company, the transformation can proceed; if not, the affected holder can object.
Conclusion
Article 28 is a guarantee of legal certainty in transformation processes.
If the special rights disappear and the holder has not voted in favor, they can block the transformation within one month.
However, if their right can be maintained in the new company, the transformation will proceed without issue.
ARTICLE 29. ADDITIONAL MODIFICATIONS TO THE TRANSFORMATION
Article 29 governs the ancillary statutory modifications that may be included in a corporate transformation agreement, that is, in those cases where a company adopts a legal form different from its initial one.
1. Incorporation of new shareholders
“The transformation of the company may be accompanied by the incorporation of new shareholders.”
This rule makes the transformation process more flexible, allowing the operation to be not limited to a mere change of legal form, but also to include the entry of new shareholders.
Therefore, a simultaneous modification of the corporate structure, expanding its membership base, is permitted without the need for separate processing as a capital increase involving the entry of third parties.
This is relevant, for example, in transformations into cooperatives or worker-owned companies, where a minimum number of members may be required, as per Article 8 of Law 27/1999, of July 16, on Cooperatives, and Article 1.2 of Law 44/2015, of October 14, on Worker-Owned and Participatory Companies.
The admission of new members must comply with the rules of the new corporate type, as well as the general principles regarding corporate consent and the rights of existing members.
In a cooperative, new members must acquire cooperative member status, subscribe to the minimum mandatory contribution, and meet the conditions of Article 16 of Law 27/1999.
In a worker-owned limited liability company (SL), the new worker-shareholders must have an indefinite-term employment contract, and the capital cannot be held by non-worker shareholders in more than 49% of the shares.
2. Modifications to the Purpose, Registered Office, Capital, or Other Elements
“When the transformation is accompanied by a modification of the purpose, registered office, share capital, or other aspects of the articles of incorporation or bylaws, the specific requirements for these operations must be observed in accordance with the provisions governing the new type of company.”
This section contains an express regulatory reference to the requirements of the new legal framework that will govern after the transformation.
Thus, if the transformation is accompanied by a modification of the corporate purpose, share capital, registered office, or any other essential element of the articles of incorporation or bylaws, the overall approval of the transformation agreement will not suffice:
It will be necessary to comply with the additional requirements that the new type of company imposes for such modifications, in accordance with applicable legislation.
For example:
In a transformation into a Public Limited Company (Sociedad Anónima), the capital increase will require compliance with the requirements of Article 295 et seq. of the Spanish Companies Act (Ley de Sociedades de Capital), including an expert report if it is non-monetary.
If the change of registered office involves relocation abroad, cross-border mobility regulations must be observed.
If the corporate purpose is modified, a report from the board of directors and the right of withdrawal may be required. Art. 346.1.a LSC
Article 29 confirms the technical possibility of combining several corporate modifications with the transformation, provided that the specific requirements of each operation are met in accordance with the new corporate form adopted.
This provision responds to the practical logic of processing all the modifications necessary to adapt the transformed company to its new legal status in a single registration file, without violating the guarantees associated with each specific operation.
ARTICLE 30. PUBLIC DEED OF TRANSFORMATION
This provision establishes the formal requirements and mandatory content of the public deed The public deed of transformation is the necessary instrument for the full effectiveness of the operation.
The law distinguishes two key aspects: who must execute it and what it must contain.
1. Executors of the Deed
“The public deed of transformation must be executed by the company and by all the partners who become personally liable for the company's debts.”
The execution of the deed corresponds, first and foremost, to the company, acting through its directors with sufficient powers.
In addition, the partners who, as a result of the transformation, become personally liable for the company's debts must appear in person (or be represented by a representative).
This occurs, for example:
If a limited liability company (SL or SA) is transformed into a partnership (general or limited).
In these cases, the liability regime changes, and therefore the express and individual consent of the affected partners is required.
This requirement protects the principle of freedom of contract and the exceptional nature of personal liability, pursuant to Articles 1255 and 1911 of the Civil Code.
2. Additional Minimum Content of the Articles of Incorporation
“In addition to the information required for the incorporation of the company whose type is being adopted…”
This implies that the articles of incorporation must comply with the general requirements for the incorporation of the new type of company (for example, minimum capital, number of shareholders, management structure, etc.), in accordance with the provisions of the Spanish Companies Act or other special regulations.
Furthermore, it must contain:
List of shareholders who have been automatically withdrawn
We can distinguish three main categories:
A.- Cases of VOLUNTARY WITHDRAWAL (classic under the Spanish Companies Act)
Basis: Articles 346 to 349 of the Spanish Companies Act
These function as a voluntary subjective right of the shareholder, which must be expressly exercised within a specific period (normally 1 month).
Typical examples:
Modification of the corporate purpose (346.1.a)
Replacement of the share transfer regime (346.1.c)
Non-distribution of dividends (348 bis LSC)
Any other scenario provided for in the bylaws
This regime remains in effect for non-structural bylaw amendments or amendments related to a transformation.
B. Cases of Right of Alienation (according to Royal Decree-Law 5/2023)
Basis: Articles 4, 5, 6, 11, 12, 24.1, and for intra-European cross-border structural modifications, 86, 100, 104, 106, 109, 111, 112, 117.
Applies to:
• Ordinary shareholders
• Holders of non-voting shares or stock (Art. 24.1)
• In cross-border structural modifications.
It should be noted that the right of alienation recognized in Royal Decree-Law 5/2023 is expressly contemplated in national transformation processes and intra-European cross-border processes, but does not appear in the same form in transactions destined for third countries that are not EU members.
This difference in treatment could raise interpretative issues in cases where, due to the country of destination, dissenting partners find themselves in a less secure position in terms of their asset or corporate protection.
Characteristics:
The partner can transfer their shares to the company, to other partners, or to a third party.
They receive appropriate cash compensation.
The right must be expressly exercised by the partner (it is not automatic).
This system is harmonized with EU law (Directive 2019/2121).
In practice, it is a form of withdrawal right, but with different terminology and an adapted procedure.
C. Cases of Automatic Withdrawal (according to Article 24.2 of Royal Decree-Law 5/2023)
Basis: Article 24.2 of Royal Decree-Law 5/2023
This article expressly regulates a case of automatic withdrawal, which is the only one recognized as such in the legal text.
Requirements:
The transformation implies that the partner becomes personally liable for the company's debts (e.g., from a limited liability company to a general partnership).
The partner did not vote in favor of the transformation agreement.
And they do not formally adhere to the agreement within one month from:
- the date of adoption (if they attended the meeting), or
- the date of notification of the agreement (if they did not attend).
In that case, they are automatically withdrawn, without needing to declare their intention, and must receive the corresponding valuation in accordance with the general provisions.
This provision is directly linked to Article 30.2, which requires that the deed of transformation include the list of automatically withdrawn partners.
Pay special attention to section 2, which states:
“The public deed of transformation must contain [...] the list of partners who have been automatically separated...”
This does not create a new instance of automatic separation, but rather provides formal and legal compliance with the automatic effect already regulated in Article 24.2.
In this regard, it is worth adding a further clarification:
Article 24 recognizes two exit routes For partners in structural modifications:
1. A right of alienation (paragraph 1), for dissenting partners, even those without voting rights, who may sell their shares in exchange for compensation.
2. Automatic withdrawal (paragraph 2), for partners who, as a result of the transformation, would assume personal liability and do not expressly consent.
ARTICLE 30.2: Deed of Transformation
This provision only requires that the deed reflect:
“the list of partners who would have been automatically withdrawn…”
But it says nothing about the partners who exercise the right of alienation pursuant to Article 24.1.
We understand that the deed of transformation should reflect both groups:
1. The partners who voluntarily exercise the right of alienation (for having voted against or for another reason).
2. The partners automatically withdrawn (for not assuming liability).
Because in both cases, the practical result is the same:
The partner is no longer part of the transformed company.
And must receive compensation for their shares.
Possible Interpretive Reorientation
Although Article 30.2 does not expressly mention the partners who sell their shares, it could be understood that their departure must also be reflected:
“The public deed of transformation should contain the identification of the partners who have exercised the right of sale pursuant to Article 24.1, as well as the list of partners automatically withdrawn (Art. 24.2).”
ARTICLE 31. EFFECTIVENESS OF THE TRANSFORMATION
The effectiveness of the transformation will be contingent upon the registration of the public deed in the Commercial Registry, which can only be carried out once compliance with the aforementioned conditions has been verified.
I. Constitutive Condition: Registration
This article upholds the classic principle of Spanish corporate law:
The transformation does not produce legal effects until its registration in the Commercial Registry.
This principle:
Has as its direct antecedent:
Article 19 of Law 3/2009, of April 3, on structural modifications of commercial companies, which stated verbatim:
“The effectiveness of the transformation shall be subject to the registration of the public deed in the Commercial Registry.”
And it is reaffirmed here as a formal and constitutive requirement, not merely a declaratory one.
II. Conditions Prior to Registration
The regulation adds that the deed cannot be registered until certain conditions have been met, which are:
Those mentioned in Article 30:
For the transformation to be validly registered, the following must be demonstrated, where applicable:
• That, if any partner has exercised the right to transfer their shares or equity interests pursuant to Article 24.1, the appropriate financial compensation has been offered and paid, or the transaction has been duly documented.
• And that the automatic withdrawal of those partners to whom Article 24.2 applied and who did not formally adhere to the agreement within the legal timeframe has occurred.
-.- That the list of automatically withdrawn partners is included (Art. 30.2),
-.- That the fulfillment of the right of withdrawal is recorded, if it has been exercised,
Therefore, the mere approval of the agreement and the execution of the deed are not sufficient; the personal effects arising from the transformation must be demonstrated.
Article 31 reaffirms that the effectiveness of the transformation is contingent upon registration, and subordinates said registration to the prior fulfillment of the requirements related to the rights of dissenting partners.
ARTICLE 32. PARTNERS' LIABILITY FOR COMPANY DEBTS AND PROTECTION OF CREDITORS
I. Dual Situation Contemplated by the Provision
1. Partners Who Become Personally Liable (Art. 32.1)
“Partners who, by virtue of the transformation, assume personal and unlimited liability for company debts shall be liable in the same manner as for debts incurred prior to the transformation.”
This refers, for example, to the case of a transformation of a limited liability company (SL or SA) into a general or limited partnership, where the partners cease to have limited liability and become personally liable.
In these cases:
- The transformation does not exonerate the new partners from liability for prior debts.
The principle of continuity of obligations applies: the transformation does not affect the substance of the legal relationship between the company and the creditor.
Added risk for the shareholder:
If they did not vote in favor and did not adhere to the agreement within the stipulated period, Article 24.2 (automatic withdrawal) comes into play, which limits this liability.
2. Shareholders who had personal liability before the transformation (Article 32.2)
“Unless the creditors have expressly consented to the transformation, the liability of the shareholders who were personally liable […] for the prior debts shall remain in effect.”
This section applies in The reverse of the first: when a partnership is transformed into a corporation, and therefore the partners acquire limited liability, the former creditors do not lose their personal guarantee unless they have expressly consented to the transformation.
Statute of Limitations:
The right to bring an action against the former partners expires five years after the publication of the transformation in the Official Gazette of the Mercantile Registry (BORME).
Once five years have elapsed since the publication of the transformation in the BORME, the creditor's right to claim liability from the former partners is definitively extinguished.
The "publication of the transformation in the BORME" referred to in this provision can be understood not as the publication of the resolution adopted by the shareholders' meeting, but rather as the registration that occurs after the public deed of transformation is recorded in the Mercantile Registry, pursuant to Article 16 of Royal Decree-Law 5/2023.
Only from that moment does the statute of limitations under Article 32.2 begin to run.
II. The Value of Article 32 as the Closing Factor of the Transformation Regime
This article fulfills an essential function:
- It balances the protection of shareholders and creditors,
- It guarantees the continued personal liability of shareholders when the transformation involves a change in the corporate liability regime,
- And it closes the transformation process, ensuring that it is not used as a legal loophole to evade debts.
