Right of separation due to change in corporate purpose

The Provincial Court (AP) of Madrid considers that the lack of coincidence between the corporate purpose and the activities actually carried out by a company does not allow a shareholder to separate from the company.

In its judgment no. 46/2025 of February 7, 2025, the AP analyzes the challenge to a shareholders’ meeting agreement regarding the inclusion of certain CNAE codes in the corporate purpose clause, with the aim of adapting the articles of association to current regulations. The plaintiff shareholders argued that, beyond this formal amendment, the company was carrying out activities unrelated to its statutory purpose, such as investments in other companies and real estate activities, which in their opinion constituted a substantial de facto amendment to the corporate purpose. On this basis, they requested recognition of their right to withdraw in accordance with Article 346 of the Capital Companies Act (LSC).

The AP rejected the plaintiffs’ claim on several grounds. Firstly, it held that the approved amendment to the articles of association did not constitute a substantial alteration of the corporate purpose, but merely a technical adaptation. In the absence of an agreement involving an essential transformation of the corporate purpose, there could be no question of the emergence of a right of separation.

Secondly, the AP examined whether the activities carried out de facto by the company could be equated with a substitution of the corporate purpose. It concludes that it is not sufficient for the company to have invested in other entities with different purposes or carried out some specific real estate transactions. For a substitution to exist, it is necessary to exercise effective control or management over the investee companies, which was not the case here, as the shareholding was minority and had no influence on management. Furthermore, the real estate activities, their relevance, or their regularity were not sufficiently proven.

The AP also points out that the purpose of the right of separation is not to protect the shareholder from the exercise of non-statutory activities, but rather from a substantial formal modification of the corporate purpose adopted by the majority. It is a legally established right and cannot be extended beyond the conditions laid down by law.

Finally, the AP found that there had been an abuse of rights by the plaintiff shareholders. The investment in the investee companies had been made more than a decade ago with the knowledge of the minority shareholders, which reveals an opportunistic attempt to use the right of separation outside its protective purpose.