Effectiveness of the sale of shares in a private document

The transfer of shares requires a public deed in order to be effective vis-à-vis the company and in general for the transfer to be enforceable against third parties, whereas the private share sale agreement is only effective between the parties but not as a substantive requirement.

The Resolution dated 10 September 2023 by the DGSJFP in case 8/2023 examines the transfer of shares in accordance with article 106 of the Capital Companies Act, which requires a public deed, not as an essential or substantive document, but as a means of proof and to make the transfer enforceable against third parties.

In the same sense, the DGSJFP reiterates that the company may consider the transfer not accredited and not proceed to register it in the shareholders registry book, even rejecting the shareholder status of the person requesting registration, if the is not accredited in a public document.

The case heard, on appeal, by the DGSJFP, consisted on the failure to convene the meeting due to the company’s opposition, since the alleged applicant shareholder lacked the alleged condition. The applicant had initially sold his shares by means of a public document with a resolutory condition. Once this condition was fulfilled, a notarized notice of termination was sent and a private sale and purchase agreement was signed by the parties, whereby the applicant acquired the shares again. The applicant sought to prove its ownership of the shares and shareholder condition through the abovementioned documents. However, the Registrar considered that, although the deed of sale was on record, neither the contractual termination nor the existence of a final court decision declaring the termination was on record.The private share sale document cannot be considered as it does not identify the parties or legitimise their signatures.

For all of the above, the applicant for convening the meeting would lack the status of shareholder and therefore the necessary legal standing to convene the meeting.

See Resolución de 10 de septiembre de 2023 DGSJFP.