Commercial Law Essentials: Shareholder Rights, Securities, and Bills of Exchange

Shareholder Withdrawal Rights in S.A.s: Economic Aspects

The LSA (Ley de Sociedades Anónimas or equivalent) recognizes the right of separation for shareholders dissatisfied with an agreement adopted by the General Meeting in the three following cases:

1. Substitution of the company's legal purpose
2. Transfer of the registered office abroad
3. Transformation of an S.A. into a partnership or limited partnership, or by simple shares

Shareholders who have exercised their right of withdrawal shall be reimbursed for their shares. The determination of the redemption value of the shares is distinguished based on whether the shares are publicly traded or not.

Determining Share Redemption Value

• If the shares are publicly traded: The refund will be the average price in the last quarter.
• If shares are not publicly traded, three alternatives are available for determining the redemption value:
  1. The redemption value is fixed by agreement between the company and the stakeholders.
  2. Failing agreement, the value is determined by the company's auditor.
  3. If the company has no auditor, the value of the shares is determined by an auditor appointed by the Registrar of Companies of the registered office.

Dual Obligations in Securities: Civil Code 1170.2

Civil Code Section 1170.2 points out the existence of two obligations under the supply of securities because securities do not merely reflect the legal status of an underlying relationship. Instead, they represent a new requirement superimposed upon it. This creates two distinct relationships, the causal and the documentary, which are legally separate.

In essence, the creation of a security produces the documentary birth of an obligation, which is distinct from the fundamental obligation from which it originates and with which it coexists.

Impact of Endorsement on Bills of Exchange (Article 37 LC)

According to Article 37 of the LC (Ley Cambiaria y del Cheque or equivalent), the endorser responds in the same way as the endorsed party and may not raise personal defenses against it. An endorsement will be valid even if the endorsed obligation was void for any reason other than a formal defect.

When the endorser pays the bill of exchange, they will acquire the rights under it against the endorsed party and against those who are responsible to the latter.

Claiming Bill of Exchange Amount Before Expiry (Article 50 LC)

Yes, the claim holder can demand the amount of the bill of exchange before it expires in the following cases:

• When acceptance has been totally or partially denied.
• When the drawer, whether or not having accepted, is in receivership, bankruptcy, or has had their property unsuccessfully seized.
• When the drawer of a bill, whose submission to acceptance was prohibited, is in receivership, bankruptcy, or insolvency proceedings.

Check Payment Deadlines: Article 135 LC

According to Article 135 of the LC (Ley Cambiaria y del Cheque or equivalent), the revocation of a check does not take effect until after the deadline for its submission. If no revocation has been issued, the bank can still pay the check even after the submission deadline.