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On the process of dissolving and winding up a company in Spain

In order to dissolve and wind up a company the Spanish law requires an agreement among the shareholders.

The law mentions some special circumstances in which a company needs to be dissolved and just a simple majority is needed: 

  • The share capital value being diminished to its half due to losses.
  • Any other cause described in the articles of association.

When any of these causes occur the administrators have a two months period to call for a Shareholders Meeting. In any other circumstances, a free dissolution agreement needs to be approved under qualified majority voting, i.e., more than the half of all votes representing the companys share capital in an Extraordinary Shareholders Meeting.

After the dissolution agreement is made the winding up period starts. During this period, the company will add to its official name the term en liquidacin (winding up), the administrators will resign and they will be appointed as liquidators.

This new position is permanent unless the articles of association or the Shareholders Meeting decide otherwise. Within three months since the start of the companys winding up process, liquidators must formulate an inventory and a balance sheet of the company referring to the day in which the dissolution has been done.

Liquidators also must conclude the pending commercial and financial operations, executing all credits and debts, so that the company can be safely closed down.

Therefore they need to sell all companys remaining assets and also be in charge of the companys accountancy, being required to guard the companys official books, along with its documents and correspondence.

Liquidators need to inform regularly the companys partners and creditors about the state of the winding up process. Once all operations are concluded, liquidators will call for one last Shareholders Meeting in order to approve a final balance sheet, adding to it a report concerning the described operations and a project where it will be established the way in which the resulting liquid assets will be divided among the companys partners.

The partners will have a right to discuss and take this agreement to court within two months since it has been issued.

Once the creditors have been paid, the Stockholders equity will be distributed among the companys partners according to the rules determined in the articles of association or, in case that they dont exist, in accordance with the rules that the Shareholders Meeting establish.

The resulting quota for each partner will be proportional to his share in the Stockholders equity and will be paid in money.

When the period to contest the aforementioned agreement has been expired, the partners will have the right to receive the payment of their quota.

The document containing the agreement and the final balance sheet will be certified by a Public Notary, expressing that all the creditors and partners have been paid and satisfied. It will also include a list of all the partners, their identity data and their quota.

This document needs to be registered at the local Company House. From that moment on the company will be legally dissolved and extinguished.

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