As defined by the Spanish Supreme Court (see, among others, STS 128/2009 and  138/2009 both on 6 March), <<shareholders’ agreements (also known in Spanish as acuerdo o pactos parasociales) are “those agreements through which shareholders intend to regulate, with binding force, some aspects of the company’s legal relationship without using the channels specifically provided for this purpose under the law and the bylaws>”.>>.

Validity of such agreements is set forth in article 1255 of the Spanish Civil Code (“CC“), i.e., they are valid provided that such agreements are not in breach of the law, morality or public order (see STS 616/2012 on 23 October). And their effectiveness between the partners/shareholderssigning the agreement is delimited, as any agreement between parties, by article 1257 CC, thus taking effect between the parties signing the shareholders’ agreement– and may even extend to their inheritors – who may compel each other to comply with such agreements.

Once the validity and effectiveness of the shareholders’ agreements have been settled, the problem arises when the bylaws contain covenants in contravention of the provisions of the shareholders’ agreement to the extent that the partners/shareholders approve in the corporate bodies (i.e., the general meeting and/or the administrative body) resolutions in contravention of the provisions of the shareholders’ agreement. In such cases, it will be necessary to determine whether such resolutions are enforceable against the company or, in other words, whether the shareholders are entitled to challenge the corporate resolutions made in breach of the provisions of the shareholders’ agreement.

As regards this matter, it is important to point out, first, that article 29 of the consolidated text of the Spanish Companies Act, approved by Royal Legislative Decree 1/2010, of 2 July (“LSC“) states that <<“agreements that are kept confidential among the shareholders shall not be enforceable against the company”.>>. Therefore, it could be generally stated that those agreements that are not incorporated into the bylaws shall not be enforceable against the company, regardless of the consequences that their breach may have between the signatory parties of such agreement.

Notwithstanding the foregoing, such statement cannot be upheld in all cases, particularly when we are before the so-called <<“omnilateral agreement”,>>i.e., a shareholders’ agreement approved by 100% of the shareholders who hold the capital stock of the company and who are still members when the conflict arises. In such cases, there are two possible scenarios:

• Those in which a corporate resolution is adopted exclusively in contravention of the provisions of the shareholders’ agreement. In such cases, the Supreme Court has stated that the shareholders’ agreements cannot serve as the exclusive basis for challenging the resolutions adopted by the corporate bodies (i.e., general meeting and/or administrative body) in contravention of such agreements by application of the provisions of the article 29 LSC (see, among others, STS 1136/2008 on 10 December, 128/2009 and 138/2009  both on 6 March,  and 131/2009 on 5 March). However, some judgments have considered specific circumstances (e.g., resolution approved by 100% of the shareholders, signed by the company, etc.) to apply the mechanism of good faith in its different ways (i.e., own acts, piercing the corporate veil, abuse of rights) to oppose the shareholders’ agreement against the company (see El Enforcement de los Pactos Parasociales, PAZ-ARES, Cándido, Actualidad Jurídica Uría & Menéndez no. 5/2003).

• Those in which the corporate bodies (i.e., general meeting and/or administrative body) approve a resolution in compliance with the provisions of the shareholders’ agreement but in breach of the provisions of the bylaws. In this case, the shareholders’ agreement is deemed enforceable against the company in application of the requirements of good faith (see STS 103/2016 on 25 February).

Considering the above, it is advisable that, insofar as possible, (i) the shareholders’ agreement be signed by 100% of the shareholders holding the capital stock of the company and by the company itself, and (ii) the provisions of the shareholders’ agreements be transposed into the company’s bylaws, subject to due legal advice by professionals with expertise in this field.