Can opposition be made to the reduction of capital?

 

When can creditors object?

The right to object only arises in cases of effective capital reduction, that is, when the company's equity is reduced to the benefit of the shareholders or becomes available to the company.

Creditors may exercise their right to object if their credits:

• Have arisen before the last announcement of the reduction agreement.

• Are not due at the time of the announcement.

• Do not have sufficient guarantees.

This right protects against reductions aimed at purposes such as:

• The return of contributions to the shareholders.

• The forgiveness of outstanding contributions.

• The creation or increase of voluntary reserves.

• The reimbursement of shares to excluded or separated shareholders.

Deadline and practical effects

The creditor has one month from the last announcement of the agreement to exercise the right to object.

The main effect is the suspension of the execution of the agreement until the company provides sufficient guarantees.

Exceptions and nuances

Not in all cases is opposition possible. It is excluded when:

• There is no real risk to the collection of credits.

• Alternative protection measures less burdensome for the company can be articulated.

In limited liability companies, this right is only recognized when the reduction involves the restitution of contributions.

Capital reduction is a strategic decision that must also take into account the rights of creditors. For companies, this means planning rigorously, anticipating possible objections, and articulating the necessary guarantees.
At Valero Tax Legal, we support companies in the management of corporate operations, ensuring maximum legal security and avoiding conflicts that could hinder the business strategy.