Analysis of Partnership Agreements and Company Law
Assumption 3
Silvia and Company SC Partnership
Jose and Silvia M formed a partnership in 1998 under the name Silvia and Company SC. The company’s sole objective is fashion design. In 2000, they decided to increase the share capital and admit new members. Three new members each contributed €10,000, increasing the total share capital from €100,000. The deed stipulated that Jose and Silvia would be the sole administrators of the company, excluding the three new members from participation in administration.
After three years, the three new members agreed to appoint themselves as administrators, replacing Jose and Silvia. Consequently, Jose and Silvia filed a lawsuit with the district court to nullify this agreement.
Questions and Answers
1. Is the second agreement of the three new members valid?
No, the agreement of the three new members is invalid. Jose and Silvia were appointed as sole administrators in the initial deed without opposition from the other three members. According to legal provisions, the appointment of administrators specified in the deed cannot be revoked unless there is evidence of bad faith or prejudice to the company.
Legal Basis:
- Article 132 of the Code of Commerce states that if the power to administer and represent the company is conferred upon a specific individual in the partnership agreement, they cannot be deprived of this power unless they act in bad faith and harm the company. In such cases, other partners can seek termination of the agreement through a competent court.
- Article 1692 of the Civil Code states that a partner appointed as administrator in the partnership agreement can carry out all administrative acts, even with opposition from other partners, unless it stems from bad faith. Their power is irrevocable without legitimate cause. However, powers granted after the agreement can be revoked at any time.
2. Is the initial agreement excluding the three new members from administration valid?
Yes, the initial agreement appointing Jose and Silvia as administrators and excluding the three new members is valid. This agreement was established in the deed without express opposition from the three new members. Revoking this agreement would require legal action through a competent court, proving that Jose and Silvia acted in bad faith against the company’s interests.
3. Is express opposition necessary for the validity of these agreements?
For the first agreement (appointing Jose and Silvia as administrators), unanimous agreement and no express opposition from other partners were required. As it was a public agreement, it cannot be revoked without cause. Therefore, in the second agreement (between the three new members), the act is invalid.
4. Would the company have to be dissolved if both agreements were hypothetically valid?
No, the company would not have to be dissolved. Disagreement on administration does not constitute grounds for dissolution as outlined in Articles 221 to 224 of the Code of Commerce. Partners can request separation if compensated. The three new members could request separation.
5. Is the economic value of shares considered in the adoption of these agreements?
No, the economic value of shares is only relevant for profit and loss sharing. In collective societies, each partner has one vote.
6. Could the three new members demand the inclusion of their names in the business name?
Yes, all partners in a collective partnership have the right to have their names included in the business name. Article 126 of the Code of Commerce states that the company must operate under the name of all partners or any of them, adding “… and company” in the latter case. In this case, the company name is correct and includes all members (new and old). Changing the name requires an agreement and does not necessitate a separate undertaking.
7. What formal requirements are needed to expand the purpose of Silvia and Company SC?
Expanding the company’s purpose requires the agreement of a majority of the members. The agreement must be formalized by a notary to amend the partnership agreement, which is then filed with the commercial register. Company registration documents are public, not private. The same procedure applies to capital increases and address changes.
The company can operate under the expanded purpose between the notarized agreement and its registration in the commercial register. Business operations conducted during this period are valid, assuming no opposition to the expanded purpose arises.