In a decision issued on 10 October 2022, the Directorate-General of Public Governance (DGSJFP) reversed a decision made by a registrar of Seville Mercantile Registry III that decided not to register as a public deed certain corporate agreements. The agreements in question simultaneously increased and reduced a company's capital, reiterating the verification of the balance sheet by the auditor as proof of the validity of an accordion feature.


On 31 December 2021, a deed was executed to certify certain corporate agreements (a capital increase and a capital reduction) adopted unanimously at the general shareholders meeting of the granting company. After approval of the balance sheet, the capital was reduced from €18,600 to €0 as a result of losses and was simultaneously increased to €3,100 through an amendment to the bylaws.

The deed was presented to the Seville Mercantile Registry and was rejected by a registrar from Registry III. The deed was withdrawn and presented again together with corrections, but it was still considered to have deficiencies. The registrar took into account solely the first of these deficiencies:

In this specific case, as the reduction and simultaneous increase was agreed in the general shareholders meeting held on November 18, 2021, and the balance sheet reflecting this operation must be verified by an auditor, it is not possible to correct the deficiency stated in the registration dated 28 March 2022 which agreed another increase by monetary contributions in the amount of 15,500 euros, so that added to the 3,100 euros, the initial share capital of 18,600 euros was reached. Remediable deficiency.

Subsequently, the appellant filed a writ against the deficiency in which it argued that the DGSJFP had issued numerous agreements which exempted the parties from the requirement to verify the balance sheet if:

  • the interests of the creditors are safeguarded; and
  • the right of preferential acquisition of the shareholders is respected, which requires unanimous approval of the agreement.

These conditions are understood to have been met by the appellant.

In response to this writ, the registrar of Seville Mercantile Registry III issued a report ratifying the decision taken, stating that an exemption from the requirement to verify the balance sheet could not be attributed to two corporate decisions taken at different times. The registrar referred the case to the DGSJFP.


The DGSJFP outlined the registry's legal framework, pointing out that the protective measures contemplated by law only make sense to the extent that the interests of affected shareholders and creditors may be damaged. The DGSJFP stressed that it is not right to require the completion of paperwork or formalities (eg, the verification of the balance sheet by the auditor) where this would hamper a company's economic progress without just cause.

Therefore, bearing in mind this legal framework, the DGSJFP affirmed the possibility of exempting parties from submitting the accounts to verification by an auditor if:

  • there is unanimous consent from all the capital shareholders; and
  • the interests of the corporate creditors are protected by maintaining or even strengthening the economic situation of the company as a result of a subsequent capital increase.

However, in this case, following the shareholders' agreement on an accordion operation in which the resulting capital was lower than the previous amount (thereby leading to the registrar's rejection because the balance sheet had not been verified), a subsequent general shareholders meeting that bore the registrar's decision in mind unanimously agreed to a new capital increase so that the capital matched the amount prior to the reduction. Therefore, the question raised in this specific case was whether such a subsequent agreement could remedy the first agreement so that either the deficiency or even the absence of validation thereby lose relevance.

The DGSJFP held that the important element of the regulation was not the timeframe in which the capital reduction and capital increase decisions were made, but their mutual causality. One could not be adopted without the other (article 343 of the Capital Companies Law (LSC)) – therefore, they could not be carried out in isolation (article 344 of the LSC). Consequently, the decision to reduce the capital could not be registered without the decision to carry out an increase in the capital (article 345 of the LSC).

The DGSJFP pointed out that this is what happened in the current matter: a unanimous decision was taken at the general meeting to reduce the capital to €0 as a result of losses. A simultaneous decision to increase the capital meant that the agreements lacked the legally enforceable requirement of verification. However, this shortcoming was remedied by means of the adopted increase agreement, which – because it was linked to the previous one – could not be considered in isolation. Therefore, the appeal was upheld.

For further information on this topic please contact Ignacio Cerrato or Álvaro García-Pelayo orat CMS Albiñana & Suarez de Lezo by telephone (+34 91 451 9300) or email ([email protected] or [email protected]). The CMS Albiñana & Suarez de Lezo website can be accessed at www.cms.law.