Public worker-owned limited complany

18/01/2023

The law defines worker-owned companies (sociedades laborales) as limited or limited liability companies where at least the majority of corporate capital is owned by workers that provide compensated services personally and directly at these companies by means of a permanent work relationship.

A worker-owned limited company’s main characteristics are:

  • The majority of corporate capital must be owned by workers who provide compensated services by means of a permanent work relationship.
  • No shareholder may hold corporate stocks that account for more than one-third of corporate capital, unless:
    1. the worker-owned company is initially established by two worker-shareholders (each with 50% of capital and right to vote) with the obligation that, in 36 months, the company shall be adapted with all legal requirements,
    2. shareholders are public entities, with a majority public shareholding, not-for-profit or social economy entities, in which case shareholding may be greater without reaching 50% of corporate capital.
  • The number of hours-year worked by permanently hired workers who are not shareholders cannot be greater than 49% of the total hours-year worked by all worker shareholders. Workers with disability equal to or greater than thirty-three percent shall not be considered to calculate these percentages.
  • In addition to the legal or statutory reserves applicable, worker-owned companies must establish a Special Reserve endowed with 10 percent of liquid profit each fiscal year until at least double the share capital has been reached. This Fund may only be used to offset losses in the event that there are no other sufficient reserves available for this purpose and/or the purchase of the company’s own stocks or corporate shares.
  • They must keep a Book of Inventory and Annual Accounts, a Log (daily record of operations), and a Minutes Book that includes all agreements reached by General and Special Board Meetings and the company’s other collegiate bodies.
  • They must also keep a Shareholder Record Book, with the original ownership and transfers of corporate shares.
  • Corporate capital shall be divided into registered shares.
  • The shares of worker-owned companies are divided into:
    • Worker-owned category: owned by workers whose professional relationship is permanent.
    • General category: the rest.
  • Regardless of their category, shares shall have the same registered value and confer the same economic rights. The creation of shares deprived of the right to vote shall not be valid.
  • The inter vivos transfer of shares:
    1. They may be freely transferred to shareholder workers and non-shareholder workers with a permanent contract. Administrators must be informed of the number, features of shares, and the identity of the purchaser.
    2. In other cases, the seller of the shares must inform the company of the number and characteristics of said shares so that it can bring the proposal to other permanent workers, worker shareholders, and general shareholders. In the event that purchase offers compete, the following order of preference must be followed:
      • Non-shareholder permanent workers, in direct relation to their time with the company.
      • Worker shareholders, in inverse relation to the number of shares.
      • General-category shareholders, pro rata their holding in corporate capital.
      • Company. 
      • If there is no purchase offer, the seller may transfer them freely.
    3. All transfer of shares, regardless of their category, is subject to the company’s consent if said transfer exceeds legal limits.
    4. The voluntary transfer of shares may be prohibited if bylaws recognise the shareholders right to separate from the company at any time. Adding this clause requires the consent of all shareholders. Notwithstanding, the transfer of shares or separation may be impeded during a period no longer than 5 years after the company is established (or for shares coming from a capital increase, after issuance of the public deed of execution).

5. In the event that the shareholder worker’s professional relationship is terminated, the worker must offer purchase of their shares according to stipulations for voluntary “inter vivos” transfer. If no one uses their right to purchase, the employee will remain as a general-category shareholder. Corporate bylaws may establish special regulations for retirement, permanent disability of the shareholder worker, shareholder workers on leave, and shareholder workers who, due to legal or conventional subrogation cease to be workers at the company.

  • “Mortis causa” transfer shall be subject to the following regulations:
    • The heir or inheritor of the deceased party becomes shareholder.
    • Notwithstanding, the corporate bylaws may establish a preferential purchase right to the shares through the procedure set forth for “inter vivos” transfers.
    • The statutory right to preferential purchase cannot be exercised if the heir or inheritor is a worker at the company with a permanent contract.

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