Does my daugther’s common law partner have the right to become shareholder in my company?

If you have ever asked this question, surely you will be interested in this article. In another case, I recommend also that you take interest in it if you do not want to have as a shareholder to someone who does not wish to.

What is a common law partner?

I am referring to those couples who share their life in an affective relationship analogous to the conjugal, without contracting marriage.

What are the premises upon which we should leave?

They are, in my opinion, the following:

  1. Children, all or any of them, do not necessarily have to become shareholders in the family company.
  2. Couples of my children –leaving aside feelings– are not my children.
  3. Couples of my children do not have to become shareholders in the family company (are intentionally omitted the terms “all or any of them” and “necessarily”).

You should continue reading this article if you agree with these premises and if not you should also as a simple precaution.

Consultation

A few days ago a client of the firm raised me the following query:
I have a daughter who has a relationship with her couple for 4 years. They have just had a child.
We are planning in the company to increase the social capital to allow, among others, to my daughter to enter in the capital stock.
I am concerned that her common law partner has any right over the shares of my daughter in the future.

Had he any reason to worry?

Yes. The daughter’s common law partner might become the holder of the shares of my client’s company or having had the right to exercise its rights in the event that any of the following circumstances occurs:

  1. The breakdown of the common law partner.
  2. The death of my client’s daughter.

Breakdown of the common law partner

Notwithstanding the provisions about the common law partner that, as applicable, may be set forth by the regional regulations, in general terms the economic relations among the members of the common law partner are subject to the principle of freedom of choice  (article 1255 of the Civil Code), and can hold between them pacts that they deem appropriate to order their economic relations and choose between any of the possible schemes (i.e. separation of property, ordinary community of goods, regime of participation, etc.), provided that the covenants are not contrary to laws, limiting equality of rights corresponding to each member of the couple or seriously harmful for one of them, because in that case they would be invalid and would lack validity.
In case there is no express covenants, the covenant may be tacit whenever there are circumstances that determined that the will of the members of the unmarried partner has been put all property in common and constitute a community of goods (i.e. existence of bank accounts in common, etc.).

The death of my client’s daughter

As the child of the common law partner was under age at the date of death of my client’s daughter, the parent who survive in the exercise of parental authority might have had right to administer the property inherited by his son and, therefore, to exercise the rights of the shares of my client’s company.

Recommendations

Surely, it happening all you will after reading this article: that the daughter does not undersign the capital increase.
As I suppose that when you are reading this article, just like when attending the office of a specialist lawyer, you expect something more than simply a recommendation to not do what you are considering to do, in this occasion I hope not to disappoint you, just as I hope not to have disappointed my client when I recommended him was, prior to the capital increase, the following:

  1. His daughter and his common law partner’s daughter should establish clearly the economic regime which governs their common law partner, so that it is clear that the shares of the family company are acquired only and exclusively with money belonging to the daughter.
  2. His daughter should issue a will naming administrator of property to be inherited by his son to someone other than her common law partner (in this case to her parents or in lieu thereof to any other members of the same family branch).

 

May 2016
© 2016 José Luis Vecilla Camazón. All rights reserved

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