Capital reduction
Reducing capital can put the company on a sound footing or allow a partner to leave. We explain the consequences and handle the whole process.
What it involves
A capital reduction is the operation by which a company reduces its share capital. It can be used to offset losses, to return contributions to the partners or to cancel the shares of a partner who is leaving. It is agreed by the general meeting, formalised in a deed and registered at the Companies Registry (Registro Mercantil).
Is this your case?
- The company has been carrying losses and its net assets have fallen well below its capital.
- You and your partners want to recover part of the money you contributed.
- A partner wants to leave and the company is going to cancel their shares.
- Your adviser has warned you that the company may be in a situation that requires dissolution (causa de disolución).
How we help
We study the accounts and the reason for the reduction to choose the right way to do it. We check that the operation respects the creditors' safeguards and the legal limits, or whether it is better to combine it with a capital increase. We prepare the notice of meeting, the minutes, any balance sheet required and the deed, and we handle the registration. We can help you in Spanish, Arabic, Tamazight, French and English, at our offices in Tenerife, Gran Canaria, Málaga and Barcelona or online, wherever you are in Spain.
If the company needs strengthening afterwards, we help you with a capital increase; and if closing is the best option, with company dissolution.
Frequently asked questions
- What is a capital reduction for?
- Mainly for two things: bringing the capital into line with the company's real net assets when it has had losses, or returning to the partners part of what they contributed. It is also used when a partner leaves and the company cancels their shares.
- If we return money to the partners, can creditors make a claim?
- The law protects creditors when capital is reduced by returning contributions, and those safeguards vary depending on the type of company. If they are not respected, the partners or the directors may be held liable. We review this before you take the step.
- My company has heavy losses. Do I have to do something?
- When losses are significant, the law may require you to reduce capital, increase it or even dissolve the company. If action is not taken in time, the director may end up personally liable. Contact us and we will look at your case.
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We speak Spanish, Arabic, Tamazight (Berber), French and English.