By Anna Calbet
When you want to buy or sell company shares, if the company agrees to the transfer, you’ll save money on notary fees by signing a private contract and using a mechanism to give it a certain date while ensuring you are registered as a shareholder. Let us prepare a document for you that meets all the requirements, includes a certification of registration in the shareholders' registry book, and gives your document a certain date. A solution that is simple, affordable, imaginative, practical, highly discreet, and... perfectly legal!
How is it structured?
Article 106.1 of the Spanish Companies Act states that "the transfer of company shares must be documented in a public deed."
So, what value does a share transfer in a private contract have? Or, even better, is a sale of shares in a private document valid?
Most legal professionals, notaries, managers, or lawyers will tell you that it is essential to execute the transfer through a public deed "because the law says so," and they are telling you the truth: the law does state this.
But—there’s always a “but”—law is not an exact science, nor is it even a science, despite what some may claim. Therefore, one must always consider how judges, who are the real experts because they apply the law, interpret it.
The ruling of Section 1 of the Civil Chamber of the Supreme Court (STS 258/2012, dated January 5, 2012, appeal 931/2008) argues that a public deed is not an essential requirement for the validity of the sale; it only serves as evidence against third parties. Similarly, the STS 234/2011 ruling, dated April 14, 2011, appeal 1147/2007, follows the same reasoning.
This means that a sale of shares through a private document is valid between the parties and before the company, provided the company accepts the registration of the private document in the shareholders' registry book. The absence of a public deed, if you later sell the shares purchased through a private contract, can be remedied by obtaining a certificate issued by the company's administrator confirming that the shares you intend to sell are registered in your name in the shareholders' registry book. This certificate can also be replaced by presenting the shareholders' registry book to the notary, where the shares to be sold are recorded.
The reason why the Supreme Court considers a private document valid lies in the principle of freedom of form, which governs the Spanish legal system, as stated in Article 1278 of the Civil Code: "Contracts are binding, regardless of the form in which they are executed, provided that the essential conditions for their validity are met." This principle has been upheld by numerous case laws (e.g., STS 133/2004, dated February 19; STS 182/1999, dated February 27; STS 441/2007, dated April 24).
Another reason is that Article 1225 of the Civil Code provides that "a private document shall have the same value as a public deed between the parties who signed it."
To avoid the drawback that, under Article 1227 of the Civil Code, the date of a private document is not enforceable against third parties, it is advisable to file it with the Tax on Property Transfers as non-taxable. This will grant the document a certain date and make it valid against third parties as well.
See more at Tax/Corporate.
