SA & SRL Dissolution, Shares, and Bill of Exchange

Posted on Mar 17, 2025 in Commercial and Financial Management

Causes of Dissolution of an SA (Public Limited Company)

A Public Limited Company (SA) in Spain can be dissolved for the following reasons:

  • If the General Board agrees to it.
  • Compliance with the terms set by statute.
  • Having met the company’s objectives.
  • Losses that reduce the company’s net worth to below 50% of the share capital.
  • Reduction of capital below the legal minimum (€60,102).
  • Inability to carry out the company’s objectives.
  • Bankruptcy (before bankruptcy proceedings). If an agreement is signed, dissolution may not be necessary. However, if there’s no agreement and assets are liquidated, then dissolution is required.
  • Any other cause specified in the company’s statutes.

Concept of a Limited Liability Company (SRL)

A Limited Liability Company (SRL) is a corporation with legal personality, a company name, and a share capital divided and represented by shares. It is formed by the contributions made by the partners. These partners have limited liability for debts; the most they can lose is their investment.

Shares of an SRL

The nominal value of all shares coincides with the amount of social capital. The rights and obligations conferred on the holder’s participation are the same as the shares in the SA.

Shares are indivisible and cannot be represented by securities or book entries.

There is a mandatory record book for an SL. The Register of Certified Partners is kept in the Commercial Register.

This register records the original ownership of the shares and any changes in ownership due to transfers or the establishment of real rights (e.g., usufruct). Each member has access to the book or may request a certification from the Administrator(s) of the entries that affect them. Administrators are responsible for completing this book and for its safekeeping.

Concept of a Bill of Exchange and Parties Involved

A bill of exchange is a credit instrument that requires a specific person to pay a certain amount of money at maturity in a particular location. It is an instrument of payment or private credit. Key features include:

  • Anyone can issue a bill of exchange.
  • It is solemn and must meet certain requirements.
  • It is an abstract title: It is created for a reason, but over the life of the bill, it becomes disassociated from the original reason. The charge can be made without stating the reason that originated it.

Parties Involved in a Bill of Exchange

  • The Maker: The party who issues the bill.
  • The Drawee: The party authorizing the payment of the bill.
  • The Payee: The party to whom the bill is payable.

Classes of Endorsements

Endorsements can be classified based on their form:

  • Complete Endorsement: The endorsement specifies the name and address of the endorsee and endorser, the date of the endorsement, and the signature of the endorser.
  • Blank Endorsement: Some data is missing (at least the signature of the endorser must be present).

Effects of a Full Endorsement

(When the transfer of possession of the bill also conveys ownership)

  • Transfer: This endorsement conveys all rights to the bill.
  • Legitimation: The endorsee acquires the status of exchange creditor. On the due date, the endorsee collects the amount of the bill and keeps it.
  • Guarantee: The endorser guarantees to subsequent holders that the bill will be accepted and paid, unless the endorser has included a specific clause to the contrary.

Effects of a Limited Endorsement

(When only the possession of the bill is transferred, but not the property.)

  • Endorsement for Collection (Endoso de Apoderamiento): The endorsee represents the endorser. At maturity, the endorsee exercises the right of the endorser and receives the payment. The endorsee does not have ownership of the bill but can present it for acceptance and collection on behalf of the owner. They can bring any legal action, except against their own endorser. They can endorse the bill again, but only through another endorsement for collection.
  • Endorsement in Guarantee (Endoso en Garantía): Only possession is transferred as a guarantee for a receivable (e.g., the endorsee is a creditor of the holder of the bill). The endorser is liable if the bill is not accepted or paid at maturity. At maturity, the endorsee can collect the amount of the bill and hold it until the maturity of the principal obligation.