RD 5/2023, on corporate reorganisations

Articles 4 to 6 of the law is devoted to establishing provisions common to all structural modifications. Some of these formal and material requirements may not need to be met depending on the structural operation and, therefore, the special legal regime of each modification must be examined.

The derogated Law 3/2009, of 3 April, on structural modifications of commercial companies (LME) did not contain some of the requirements that are now necessary, so the Spanish Directorate of Legal Security and Public Faith (DGSJFP) will have to define the scope in each resolution and close any loopholes in the law.

Management board report for employees

The report of the management board is now divided into two sections: one section for shareholders and one section for employees.

According to article 5.4 RD 5/2023, the section for shareholders will not be required if all the shareholders with voting rights in the company or participating companies, or the individuals, who, according to the law or the articles of association, hold such rights, agree. It will not be necessary either if this is established in the structural modification special regime (for example, in special mergers – articles 53, 54 and 56 – or simplified spin-offs – article 71).

The article 9 RD 5/2023 expressly sets forth that the documents indicated in article 7 RD 5/2023 (among them, the report of the management board, without distinction between the addressees) do not need to be published or submitted if the structural modification is agreed upon unanimously at a general meeting. 

Therefore, one of the doubts that arises when preparing the documentation for a structural modification is whether the report for employees needs to be provided or not.

According to the wording of article 9.2 RD 5/2023, there is no possibility to dispense with the obligation of presenting the report for employees, except when article 5.8 RD 5/2023 applies (all employees are  members of the administrative or managing body of the company or participating companies, or it is an internal structural modification).

It is advisable that the certificate of the minutes of the general shareholders' meeting in which the structural modification is approved expressly states that the documentation established  in article 7 has been made available to the employees. The report does not need to be subsequently incorporated into the public deed. It only needs to state that the employees have been provided with the report.

Tax and social security

Certificates showing that the company is up to date with tax and social security obligations are covered in articles 20.3.3º, 40.9º, 64.3º, 74.1.5º of the Royal Decree 5/2023. Although this measure does not appear in the common provisions, in practice, certificates signifying that the company is up to date with tax and social security obligations must be provided when dealing with the most common structural modifications.

The tax obligations to which the legal text seems to refer, which has been confirmed by the registry's criteria, are state tax obligations and, in the event that the operation affects companies with registered offices in regional treasuries (haciendas forales), the corresponding tax authorities will have to issue the relevant certificates.

Doubts are also raised as to the validity of these certificates. Although some registrars consider that certificates issued 12 months before the date of the structural modification project are valid (or three  months in the case of non-periodic obligations, according to article 75 of Royal Decree 1065/2007, of 27 July), the Madrid Commercial Registry believes that it would be prudent to require that the certificates should not be issued more than three months before the date of the project.

Structural modification changes

Changes in the structural modification project are covered by article 8.7 of the RD 5/2023. The RD 5/2023 introduces the possibility of making changes to the structural modification project at the same meeting at which the structural modification is approved, even once the project has been published or submitted. However, the royal decree does not give any indication beyond the majorities required to approve the changes.

This possibility opens the way to abuse and lack of protection for shareholders who, in order for the protection mechanism provided for in article 12 RD 5/2023 to be applied, need to have voted against the approval of the structural modification. If the call is not for a general meeting and the shareholders do not attend the meeting at which the project is changed, they may be denied the right to receive cash compensation.

These changes also affect the protection rights of creditors, who have 1 month from the publication of the project to initiate the actions provided for them in article 13 RD 5/2023. If the project is published, but then the project is changed at the meeting, when does the time limit starts?

In view of these doubts, the registry's criteria, based on the Resolution of the DGSJPF dated 3 October 2013, establishes that any change made by the administrative body must be published (article 7 RD 5/2023) and any modification subsequent to the call of the meeting must give rise to a new call and the corresponding extension of deadlines.

This criterion does not resolve all the doubts. We will have to wait for future decisions (or court rulings) that help us to sort out the issues regarding the process to make changes to the project.

Declaration of solvency

Statutory declaration of solvency (declaración de expresa solvencia) of the company is covered by article 15 RD 5/2023). According to the wording of this provision, the declaration of solvency is optional for the Management Board.

The standard practice is not to provide express guarantees to creditors because the transaction involves the universal succession of obligations. In these cases, some registrars consider that the statutory declaration of solvency should be mandatory for registration of the operation.

This criterion is based on article 14.1 in fine, as a statutory declaration of solvency of the Management Board is deemed to be a sufficient guarantee for creditors.

The registry's criterion is to follow the wording of this provision almost to the letter and understand that this declaration is not mandatory.

Osborne Clarke comment

The RD 5/2023 introduces many new measures in the procedure for structural modifications. We have highlighted just a few of them.

Until the Directorate General resolves all the doubts, we recommend relying on a good legal team, which has relations with the commercial registries and which can adequately resolve the issues that may arise from the application of the law.

Each structural modification has its own particularities, and we will need to keep an eye on all of them to ensure a smooth registration process of the operation.