SPAIN - COVID-19 - LIMITATION REGARDING DIVIDENDS.
Companies thar benefit from ERTE procedures due to force majeure causes and the public resources destined to them may not proceed to the distribution of dividends corresponding to the fiscal year in which these ERTEs are applied, except if they previously return the exempt fees from which they benefited to Social Security.
This limitation on the distribution of dividends will not apply to those entities that, as of February 29, 2020, had fewer than 50 workers.
Certain positive and negative covenants to “give” or “provide”, “perform” or “refrain” from certain acts or uses other than capital contributions are included in a company’s Articles of Association for some or all of its partners. These covenants usually involve concrete activities that the Partners are to carry out because of their particular professional or technical capacity, their expertise in new markets, their contacts in the industry, etc.
If these covenants are dealt with as accessory services, they become “essential” to the Partnership, to such an extent that if the Partner fails to carry out its accessory service, it may even be excluded from the Partnership.
The possibility of excluding a Partner that fails to fulfil its duty is undoubtedly a very interesting solution for the remaining Partner, inasmuch as the Partnership’s existence as a legal entity remains unaltered and it may continue to do business as such.
Under the accessory services system, the Partner must carry out certain important activities:
1. Organization of corporate management.
2. Organization of an efficient direct sales network.
Exclusion of a Partner implies the obligation of the remaining Partner to pay the former the value of its membership interests in accordance with the company’s balance sheet.
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