If a capital reduction by cancellation of shares affects only one shareholder, is the consent of all shareholders required?

The Spanish Supreme Court has recently ruled on a particularly relevant issue concerning capital reduction transactions involving companies, specifically private limited liability companies (sociedades de responsabilidad limitada or “S.L.”).

Background

A private limited liability company resolved to cancel the shares held by one of its shareholders and return the shareholder’s contributions by transferring assets and making a cash payment. The resolution was approved by 81.81% of the share capital, but one of the shareholders voted against it.

The issue brought before the courts was whether the capital reduction could be implemented despite the absence of the consent of all shareholders. In its judgment of 3 June 2026, No. 853/2026 (ECLI:ES:TS:2026:2471), the Spanish Supreme Court upheld the nullity of the transaction.

Legal issues

Article 329 of the current Spanish Companies Act (Ley de Sociedades de Capital, “LSC”) provides as follows:

“Where a resolution to reduce share capital involving the return of the value of contributions does not affect all units of equity interest or all shares of the company equally, in private limited liability companies the individual consent of the holders of those units of equity interest shall be required, while in public limited companies the separate resolution of the majority of the shareholders concerned, adopted in accordance with the procedure set out in Article 293, shall be required.”

A first reading of this provision might suggest that, in addition to approval of the resolution by the majorities legally required, the only additional consent necessary would be that of the shareholders whose shares are directly affected by the capital reduction.

However, the Spanish Supreme Court interprets Article 329 LSC as requiring the individual consent of all shareholders where the capital reduction does not affect all shares equally. Among other arguments, the Supreme Court takes into account the following:

• The former wording of the Spanish Limited Liability Companies Act(Ley de Sociedades de Responsabilidad Limitada, “LSRL”). Before the consolidation of Spanish company law legislation, Article 79.2 of the former LSRL expressly provided that, where the capital reduction did not affect all shares equally, the “consent of all shareholders” was required.
• Article 201.1(II) of the Spanish Commercial Registry Regulations(Reglamento del Registro Mercantil), which provides that, in the deed recording a capital reduction of a private limited liability company, where the reduction does not affect all shares equally, it must be stated that all shareholders have given their consent to this form of capital reduction.

Ruling and conclusion

The Spanish Supreme Court resolves the interpretative doubts and confirms that the term “those shares”, as used in Article 329 of the Spanish Companies Act (LSC), refers to all the company’s shares as a whole, and not merely to those held by the shareholders directly affected by the capital reduction.

In conclusion, where a capital reduction involving the repayment of contributions does not affect all shares in a Spanish limited liability company equally, the individual consent of all shareholders is required, rather than merely the consent of those whose shares are to be cancelled.