What happens to the quotas (“participaciones”) in a company when the shareholder dies?

Question

José Manuel Alburquerque · Accepted Answer

They pass to the shareholder's heirs, or to the legatee to whom he or she left them, who become shareholders. However, the articles of association of a private limited company (“sociedad limitada”) may give the other shareholders, or the company itself, the right to buy them at their fair value. Until the heirs divide them among themselves, they must appoint a single person to exercise the shareholder rights. In a private limited company The heir or legatee becomes a shareholder. The articles of association may give the remaining shareholders or, failing them, the company a right to buy the quotas. The price is their fair value on the date of death and is paid in cash. The time limit is three months from when the company is notified of the inheritance. In a public limited company (“sociedad anónima”) Shares are inherited freely, unless the articles of association expressly restrict their transfer by inheritance. If they do and the company does not accept the heir, it must present him or her with a buyer or buy the shares itself at their fair value. That value is set by an independent expert other than the company's auditor. What you should know You need to notify the company of the death and the inheritance and to review the articles of association and any shareholders' agreements. Until the estate is divided, the quotas belong to all the heirs. They must appoint one of them to exercise the shareholder rights and all of them are answerable to the company for the shareholder obligations. Under the Catalan rules of the “impuesto de sucesiones”, the Spanish inheritance tax, there may be a 95 % allowance on the value of the quotas, for the part relating to the business activity. Only the spouse or partner, descendants, ascendants and relatives up to the third degree, such as siblings or nephews and nieces, are entitled to it. It does not apply if the company is mainly engaged in managing assets, such as let flats or investments. In addition, the deceased must have held at least 5 % or, together with his or her family, 20 %. And the deceased or, in the second case, one of those relatives must have run the company, with the pay for doing so making up at least half of his or her income from work and business. The heir must keep the quotas for five years. It is the quotas that are inherited, not the company's assets. If the testator wants a company asset to go to a particular person, the will must provide for how to take it out of the company, because neither the will nor the executor binds the company.