New obligation for Spanish limited liability companies regarding the register of shares
What every Spanish limited liability company needs to know before the law comes into force
The Council of Ministers has approved the Draft Organic Law on Public Integrity (hereinafter, the “Draft Law”), legislation that introduces one of the most significant changes in the operation of Spanish limited liability companies (hereinafter, “SLs”) in recent years. The text is still undergoing the legislative process, but its practical implications are significant enough to warrant early consideration and analysis before it comes into force.
Specifically, the Draft Law proposes that any change in the ownership of shares must be officially recorded in a special section of the Commercial Registry to be legally valid. Until now, companies themselves have been responsible for maintaining these records internally. The reform represents a shift towards an electronic registration system, providing greater traceability of share ownership and directly affecting shareholders’ rights.
Legal framework: where we stand and what lies ahead
Under the current legal framework, transfers of shares in an SL are not registered with the Commercial Registry. Instead, they are recorded in the Shareholders’ Register, which is maintained internally by the company under the responsibility of its management body. Although the system works, it has a well-known limitation: third parties cannot establish with certainty who actually owns each share.
The Draft Law uses this premise to justify a fundamental structural change. Under the new legislation, registration will no longer be merely an administrative formality: it will determine the recognition of shareholder status and the exercise of shareholders’ rights vis-à-vis the company and third parties. In practice, anyone acquiring shares in an SL will not be recognised as a shareholder — and will therefore be unable to vote, attend general meetings, receive dividends or enforce their position against third parties — until the transfer has been registered with the Commercial Registry. In other words, signing a share purchase agreement will no longer be sufficient to be recognised as a shareholder.
The reform directly affects Articles 104 and 106 of the Spanish Companies Act. SLs will be required to maintain an electronic Shareholders’ Register connected to the Commercial Registry, recording the original ownership of each share, subsequent transfers, the creation of rights in rem or encumbrances — such as non-possessory pledges — and the identification of beneficial ownership.
Regarding the documentation of share transfers, the Draft Law removes the general requirement for notarisation and replaces it with a standardised electronic private document digitally signed by both parties. The procedures will be carried out through the platform available on the electronic portal of the Spanish Association of Registrars. Once registration has been completed, the Registry will issue an electronic certificate as official proof.
Practical impact on corporate transactions and corporate governance
If approved, this reform would require SLs to review numerous internal processes. The main practical implications include the following:
Purchase and sale of shares
When someone buys or sells shares in an SL, signing the agreement alone will no longer be sufficient: the transaction will not have full legal effect until it has been registered with the Commercial Registry. In company acquisition transactions, registration would become a mandatory step at closing or, at the very least, an obligation to be fulfilled immediately afterwards.
General meetings and changes in company management following a sale
When a company is sold, it is common for a general meeting to be held at the same time to appoint new directors. Under the new framework, the buyer would not be able to participate in that meeting as a shareholder unless their ownership had already been registered with the Commercial Registry, making it necessary to reconsider the sequence of these procedures.
Dividend distributions and payments to shareholders
The company must always verify registered ownership before making payments, returning capital contributions or transferring any other assets to shareholders. Making payments to someone who is not listed as a shareholder in the Register could be legally invalid, posing risks for both the company and its directors.
Security interests over shares (pledges and attachments)
If someone wishes to use their shares as collateral for a loan, that security interest will only be enforceable against third parties if it is registered with the Commercial Registry. This will directly affect loans secured by shares, enforcement of security interests and attachment proceedings.
Due diligence or legal review of the company
When assessing a company before acquiring or investing in it, reviewing the internal Shareholders’ Register will no longer be sufficient: it will be necessary to consult the new section of the Commercial Registry to establish the actual ownership structure, any encumbrances and the rights of each shareholder.
Articles of association and shareholders’ agreements
The Draft Law invalidates any provisions in the articles of association that seek to circumvent or limit the mandatory nature of registration with the Commercial Registry. It is also advisable to review private shareholders’ agreements to ensure they do not conflict with the new framework.
Liability of company directors
Keeping the Shareholders’ Register up to date and ensuring that the information is filed with the Commercial Registry will become a key obligation for company directors. Failure to do so on time could result in legal liability, particularly if it affects shareholders’ participation in general meetings.
Transitional period deadlines: something that should not be overlooked
Existing companies will also be subject to this obligation. Their directors will be required to submit an electronic certificate to the Commercial Registry, within one year of the legislation coming into force, containing an updated record of share ownership and any encumbrances affecting those shares. Failure to comply will have serious consequences: until the company fulfils this obligation, the Commercial Registry will block any registrations relating to it — with very limited exceptions, such as the removal of directors, dissolution or entries ordered by a judicial authority. In the most extreme cases, the legislation also provides for the automatic dissolution of the company if non-compliance continues for ten consecutive years.
A debate with arguments on both sides
The reform has a legitimate objective: to make companies more transparent, facilitate the identification of those who actually control them and improve the traceability of commercial transactions. However, the most controversial aspect is not the objective itself, but the means of achieving it. Removing the general requirement for notarisation of share transfers has attracted significant criticism. Some warn of the risk of losing important safeguards regarding identity, legal capacity, valid consent and compliance with the articles of association, which are currently provided through notarial involvement, as well as creating complications and indirect costs in ordinary corporate transactions. Ultimately, the reform seeks to streamline commercial transactions and improve public access to registry information, but at the expense of a legal certainty framework that has worked for decades. This lies at the heart of the debate.
The legislation is still undergoing the legislative process, and its wording may change. However, the direction is clear, and taking action in advance is more valuable than reacting later. For shareholders, investors, lenders and company directors, one thing is clear: ownership and shareholder status in an SL will no longer be matters that can be managed internally or through a simple agreement. What matters will be what is recorded in the Commercial Registry. This is where Baker Tilly's preventive legal advice makes the difference.
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