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M1-Introduction to civil law
1-Concept------>Business 2-Sources, types of rules 3-Charasteristics of civil law
1)Concept Is an specific private law wich object is business person is the main concept and the
activities they develop in the market Business person is a natural person that develp a business activity on behalf of itself
2)Sources Are stablished in the code of comerce in Art2 in this order
1º Comercial Act 2ºBusiness practice 3º Civil law (civil code): I)Acts. II)Custom III)Legal principles
The sources of the contracts are: 1º Comercial acts 2ºCivil Law
3) Jeraquia de leyes
Constitution: is upon all the laws
Law:Act National written law/rule of general aplication
Degrees:Approved by goverment
Orders:By the ministers (Have to be empowered by a degree)
Circulars: Bank of spain, market regulation
B.parties
Law: They are approved by the goverment and at the end by the parlament.
2Exceptions: -Legislative royal degree -Law royal degree
Executive power
Court juridical power ▲Legislative (parlamento/
senado)
Regional Act Top rule of region is “estatuto”/statute (obviously under the constitution) 1)Constitutition 2)Regional statute
-Mortgage of a B. est - Given as a warranty the business itself Requirements of transfer: -Guarantee Economic and legal unity of the business -Guarantee the purchaser continues the purpose of the business Sale and purchase. (Not the transfer of shares) Contract by which the seller transfers the ownership of a business to a purchaser that pays a price Not specific regulation to this kind of contract, so it will be stablished by the will of the parties. Some specific articles apply.
Characteristics: -It has to by transmitted the organization of elements. -The business has to be in operation. -The seller must transfer the ownership of all the elements, not only the material ones (also inmaterial) -The form of the contract. Not an specific form is required, it could be done even orally, but public document is recommended. -Usually, the sale and purchase is preceded by a negotiation phase. In that phase the seller must provide information about the business, financial situation… That information is sensitive/ confidential, the purchase signs a non-disclosure of that information (protection against competition). -Typical obligations are to pay the money and deliver the object. Additional obligations apply to these contracts. For example, obligation of assisting the purchaser to transfer the know-how. Also, not-to-do obligations: prohibitions of competency after the sale, contracts with employees… (Example NH hoteles-AC) Obligations for the parties: Purchaser - pay the agreed money/price Seller - delivery the object of the business. Obligations with the local. Public document is required, property register Oblications with physical assets.Required a physical delivery Industrial properties. Written and registered in the patents and brand register The on-going contracts. Purchaser must substitute seller in the contracts signed by the business Debts. All the agreements bw the parties, the creditor must agree, the bank must permit the transfer of the debt. Exception: Labour debts (with employees and social security), in that cases both seller and purchaser have a joint and several obligation. To-do obligations. Purchaser may require the obligation to assist to the seller.
Lease. Transfer the permission for a period of time in exchange of a price. There is not a concrete regulation for these contracts, so it is applied General Lease law (L-24/94 Civil code) and the will of the parties. It is different to lease the local (civil operation) and lease the business (commercial operation). Civil rights of the landlord don't apply on business leasing. Mortgage. Business is given as a warranty of a debt payment. (The saergeme as a house mortgage). The contract must include a list of elements subject to the pledge (mortgage). Minimum: Local, fixed installations. Customers and organization cannot be included. Also, not competency protection.
Same applies to Corporate Business Person. Fixed assists, Inventory and cash are subject to the liability. In case of liquidation , the money goes to pay: 1)Privileged credits (social security,) 2)Comon credits (senior Debts), 3) Subordinated debts, 4) Preferent shares, 5)Shareholders General Partnership - Joint and several liabilities, and subsidiary Limited Liability Partnership: 2 types or partners: -Normal - Joint and severaly liable, subsidiary -Limited liability - Liability limited to their contribution
2 techniques to limit the liability: -Constitute a Full owned Limited company. The owner has 100% of the shares,
-Agents - Promote business on behalf of the b.p in exchange of a fee (permanent way not occasional). Commercial relationship not labor -Mediators - Their function is to bring together the b.p and the customer, but does not act on behalf of the business. Aproaches parties and obtains a fee. Commercial relationship.
M5 - Legal protection of the B
1.Protection of competition Limited to prevent those competitions that affect the free competition of the market. Tries to prevent monopolies and agreements between companies (oligopoly).
- Control of concentrations. -EU Reg.1/2013 (for the practice)
- EU Reg 139/2004 (Art 1)
- Act 15/07 (antitrust/competition act) -Act 3/2013 (creation of CNMC, Comision Nacional de Mercados y Competencia) Authorization of EU commission - EU regulation should be applied when the companies involved (in a deal) are of European dimension. It is of European dimension when the companies´ turnover is 5000M worldwide and 2 companies have an European revenue of 250M€. Exception: when 2/3 of the revenues is in one and the same country (when previos requirements are met). Operations that can lead to a concentration: -Merger (fusión) -Purchase/acquisition -Joint ventures and joint control (agreement between 2 parties to control a company) Control - possibility to exercise a decisive influence. Art 4 SMA:- 50%+1 of voting rights -rigth to appoint 50% + 1 of directors When the competition act (15/07) is applicable: When they have (jointly) more than a 30% of the market or when total turnover of all of them is over 240M (in Spain) and 2 companies have each 60M (also in Spain). Then you have the obligation to notify to the CNMC and obtain their authorization. CNMC -Belongs to Spanish Government, Council is the main/supreme body, The directory of investigation analyzes the situation of enterprises.
Proceeding - In the case of a merger, the two enterprises have to notify, in case of purchase the purchaser, and in joint venture/control both parties 2 phases: -1st. Maximum period 1 month, the operation is studied and the council takes a decision. Possible decisions: Authorize, Authorize with some requirements, Open 2nd phase (problems are observed and a deeper analysis is required), Forward to EU commission -2nd (if required). Max period 2 months. The directory of investigation sends a report to the parties involved/affected by the operation (competitors, consumers…).Then the council can Authorize, Auth. with conditions, or reject/forbid the operation. The decision (if auth with cont or reject) must be notified to the parties and to the minister of economy. This minister may send the proceedings to the council of ministers (government). They then have a period of 1 month to either confirm the decision or authorize (with or without conditions) corresponding to general interest.
-Forbidden practices (Art.1-6 competition act).
- Collusive practices. Competitors reach agreements to limit the competition. It can be verbal, formal… Apart for agreement, also concerted practice/recomendation, parallel conduct
- Abuse of dominant position. -Fix prices (or other conditions of the transactions)
Art 1.3 Some abusive practices are allowed because they contribute to technical/economical development, and production of goods and services. The benefits must be shared with the consumers.
3 types of sanctions: -Administrative. Imposed by CNMC, can be monetary (fines) or impose obligations (prohibition to sell a product…). The infringement can be minor (max sanction 1% of total turnover), serious (5%), or very serious (10%). -Civil. Only for collusive practices, they can be declared null by a commercial court (not directly from CNMC). -Others. Negative impact/social effect caused by the infraction being published to the media (by the CNMC). On the sanctions imposed to a legal person, the effects are also for responsible representatives (CEO, directors…).
Permitted practices: -Legal exceptions. Abusive practices arised from applying a law -Conducts of minor importance. Not relevant in economic terms (key element: market share, less than 10%). -Findings of inapplicability. Decided by the CNMC as a reason of general interest
-Monitoring Public Aids.
Public aids cannot affect the competition. The CNMC analyzes particular cases.
M6 Corporations
2 Definition, charact., effects and elements of the contract of corporation
Def : A voluntary association with the aim of a common purpose obtained though the contributions of each member. Its the consequence of an agreement (contract) between contributors (shareholders, partners…). This contract is the link between the members. It is permitted a corporation of only 1 person. Partnership and company are the two main types of corporations. The contract of corporation has the following effects : -Mandatory. Rights and duties arise from the contract. Principles (below) -Organizational. Unify a group, that can develop a relation with third parties.
Principles - Fidelity - You cannot obtain benefit harming the company -Equal treatment - All similar members shall be treated equally Elements of contract of corporation : All the elements of the general contract -Will of the parties. The consent. Shall be expressed freely -Object. The contributions of the members -Subject: Parties. Members of the corporation (shareholdrs or partners) -Cause. Common purpose pursued by the corporation (the ultimate aim, f.ex: Obtain profit). Activity developed shall be established here and in the bylaws (estatuto) -Form. As a general law, an specific form is not required, except in the case of Public/Private Limited Companies, that have to be in public deed (escritura pública).
- Commercial nature of corporation
A corporation can have commercial or civil nature. There are 2 scopes to determine this: -Objective. All corporations that develop a business activity are of commercial nature -Subjective. There are some types of corporations that are always of commercial nature. These are Public/private limited companies, Limited Liability Partnership by shares (LLP), Economic Interest Group (EIG), and Reciprocal Guarantee Corporation (RGC). If not, it is of Civil Nature (by this scope).
- Differences b/w partnership and companies
Partnership (Sociedad). Regulated by Code of Commerce.
- Personal Corporation. The key element is the identity of the members. The condition of the partner cannot be transferred without the approval (by unanimity) by the other partners. All the decisions shall be adopted by unanimity, by all the partners. There is not a distinction between the owner and the manager. The partners are also the managers The partners are personally liable for the debts of the partnership. General Partnership, Limited Liability Partnership, Economic interest Group, and Temporary Joint Venture are considered personal corporations.
Public Limited Companies, Private Limited Companies, Limited Liability Partnership by shares, Reciprocal
Guarantee Companies and Cooperatives are considered capital corporations.
- Legal Personality
Consequences Consequences of not registering the company on the business registry once the contract is signed: -Contract will not have effect on third parties, only between the contract-signing parties. -The Directors are subject to a harmful liability regime, they will be jointly and several liable for the liabilities of the corporation.
If the corporation has registered, it can relate with third parties, has a business person status, and has a separation between members´assets and companies´ones.
The corporation, as a consequence of having legal personality, has:
- Legal name. Has to be established in the contract and bylaws. To differentiate from other companies. Requirements: A single legal name, and shall be able to be expressed written and orally. It cannot use official terms, or induce to a mistake to the activity developed or other corporations.
- Nationality. It implies the regulation that will be applicable to the corporation
- Legal Domicile. The corporation has to choose one to fulfill some obligations. It shall be established in the contract and in the bylaws. Requirements: Placed in Spain (Spanish regulation), only one legal domicile, cannot be rotatory (change every year/month…). Corporations have freedom to choose their Legal Domicile.
Abuse of Legal Personality Sometimes, Companies use their Legal Personality to commit fraud. Ex: Foreigners cannot buy land near to nuclear plants, but they constitute a Spanish corporation to do so. This would be an abuse of their Legal Personality.
M8 - Public Limited Companies (I) (Sociedades anónimas)
1.Definition
A corporation where the share capital is divided into shares that comprise the contribution of the shareholders, whose liability is limited to their contribution. (Art 1.3)
It is a capital corp. because there is a share capital. The main element is the capital, not the person. Share capital is divided into shares. Shareholders will not face the debt with their personal assets. The company will face the debt with its assets.
A PLC must have a legal name chosen by the managers. This name must contain “Sociedad anónima” or “SA”. Legal propose- objeto social. Stablished in the bylaws. Description of the company´s activity.
2.Constitution of PLC
Registered in the business registry (public deed). Its constituted at the signing of the contract and it becomes a business person.
The contract of corporation is called Deed of corporation or deed of constitution. Minimum content (Art 22.1 Companies Act).
3.Shareholders contributions
Shareholders contribute with assets/cash. Depending on how much you contribute, you get a certain number of shares. Types of contributions: -Cash. The payment has to be proven -In kind (en especia). Not cash, any kind of asset. These type are subject to economic valuation , developed by a valuator appointed by the business registry. 2 exceptions to this valuation: -When the contribution is/are listed shares (shares in the stock exchange market). -Assets that have been object of valuation in the preceding 6 months.
Purchases made within the first 2 years of the company whose value is over 10% of the share capital shall be subject to a valuation. At least 25% of the contribution has to be paid in the moment of acquisition. The rest is called passive dividend (money you owe to the company). The bylaws shall establish how passive dividend has to be paid to the company.
Accesory benefits. Obligations the shareholders commit themselves to do at the moment of the contribution. It can be a to-do (work for the company…) or a not-to-do (dont compete against the
company…). If the shareholder does not complain with the accessory benefit is not regulated in law, it has to be stablished in the bylaws.
4.Share capital
All companies has to be constituted with a share capita. (value=value of shares x nº of shares). Purposes of the share capital: -It determines the voting rights of the shareholders. -Used as a warranty for the creditors.
