People who call asking how to remove a shareholder usually arrive with the conflict already ripe: months of meetings that end badly, decisions deadlocked, a shareholder who stopped contributing two years ago and still draws money. The question sounds procedural. It is not. In a Spanish limited company, being a shareholder is a property right, and property is not taken away because living together has become impossible.
Better to say it early and save time and money: Spanish law has no general ground of expulsion for falling out. Not loss of trust, not lack of commitment, not the fact that one of you works twelve hours a day and the other none. If that was not provided for in the articles of association or in a shareholders' agreement, the law will not fill the gap.
That said, there are three routes, and one of them solves the real problem in most cases.
First, the question to ask yourself: shareholder or director?
In eight out of ten conversations, what the client wants is not for the other person to stop owning, but for them to stop deciding. Those are different things, and their difficulty is radically different.
Removing a director is straightforward. Article 223 of the Spanish Companies Act allows the general meeting to dismiss a director at any time, with no cause required and even if the matter is not on the agenda. An ordinary majority is enough. If the articles required a reinforced majority, the law caps it: it may not exceed two thirds of the votes.
In other words, whoever holds the majority of the capital can, at a meeting called this week, remove the other from management without explaining why. They remain a shareholder, they still collect dividends if there are any and they still vote, but they do not sign, do not contract and do not run the bank account. In a great many disputes, that is exactly what was wanted.
Second route: expulsion, available only on listed grounds
Expulsion of a shareholder is governed by articles 350 to 352 of the Companies Act and the list is short. In a limited company, a shareholder may be expelled where they:
- wilfully breach an obligation to make ancillary contributions, where such obligations exist;
- being a director, breach the non-compete duty;
- being a director, have been ordered by a final judgment to compensate the company for acts contrary to the law or the articles, or performed without due diligence.
Beyond that, only the grounds the shareholders themselves wrote into the articles will do. And here is the detail almost nobody knows: adding, amending or deleting a statutory ground of expulsion requires, under article 351, the consent of every shareholder. Translated: on the day of the conflict it is already too late. That clause is drafted while everyone still gets along, not once they do not.
Even where a ground exists, the procedure has one more obstacle. Article 352 requires a resolution of the general meeting, and where the affected shareholder holds 25 % or more of the capital, expulsion also requires a final court judgment, unless it is based on the compensation order mentioned above. With a shareholder at 30 % and no prior judgment, expulsion is litigation, not a resolution.
And even if you win, you do not keep their shares for free: their fair value must be reimbursed. Failing agreement on the figure, article 353 refers the matter to an independent expert appointed by the Commercial Registry, whose report is binding. Expulsion, in short, is paid for.
Third route: let them leave
The mirror image of expulsion is withdrawal, governed by articles 346 to 348 bis. It entitles a shareholder to leave and be paid when the company adopts certain resolutions that change the rules they signed up to: replacement or substantial modification of the corporate purpose, extension or reactivation of the company, creation or modification of ancillary obligations, conversion or transfer of the registered office abroad, among others.
One ground weighs more in practice than all the rest, that of article 348 bis: once the fifth financial year since registration has elapsed, a shareholder who has recorded a vote in favour of distribution may withdraw if the meeting does not resolve to distribute at least 25 % of the legally distributable profits of the previous year, provided profits were obtained in the three preceding years. The provision admits nuance and may be excluded or adjusted in the articles, but only unanimously.
That article is, in practice, the minority shareholder's lever after years of watching the company make money and distribute none. And it is, for the majority shareholder, a good reason not to leave the conflict to the passage of time.
What actually works: buy, do not expel
With the map in front of you, the conclusion is almost always the same. The quick, clean and predictable route is not expulsion but buying their shares, with or without the credible threat of the other routes.
There the lawyer's work is not procedural but a matter of negotiation and structure: agreeing a valuation method both sides can accept, deciding whether the company buys (treasury shares, within the limits of articles 140 and following) or the other shareholders do, spreading payment over time with security, releasing the personal guarantees and cross securities that almost always turn up, and documenting a mutual waiver of claims so the matter does not come back in three years.
Where a purchase is impossible because there is no money or because the other side will not sell at any price, two structural exits remain: a demerger, if the business can be split in two, and dissolution. If the company is genuinely deadlocked, that is, if its governing bodies cannot function, article 363.1(d) allows dissolution to be sought through the courts. It is the nuclear option and normally serves better as an argument at the table than as a destination.
Advice is only worth something if the person giving it can afford to say no. If your case has no legal foothold, we will tell you on the first call and not on the third invoice.
What to do this week if this is your situation
Before you sit down with anyone, gather four things: the current articles of association, the shareholders' agreement if there is one, the shareholding list with exact percentages, and the last three sets of annual accounts. With those, it takes twenty minutes to know which route exists and which does not, and that conversation goes better before the first formal notice is sent than after.
If you would like to go through it with us, the initial consultation is thirty minutes, costs 60 euros plus VAT, and exists precisely for that: to tell you whether you have a case.
This article contains general information for informative purposes and does not constitute legal advice or an investment recommendation. The rules cited may have been amended after publication; always check the text in force before taking a decision.