5-The Register Book of Partnership or Register Book of Contracts between the Single-Member Company and Sole Shareholder.

Should a Single-Member Company present a Register Book of Partners or Register Book of Nominative Shares?

It is known, that the administrative body of limited liability companies is obligated to maintain and present a Registration book of Partners, which should contain as follows: (i) the statement of the shares (complete identification, nationality, and address) and its subsequent transmissions, either if they are voluntary or forced; (ii) in its case, referring to the constitution of royalties or other charges on shares. In the case of public limited companies, this obligation is maintained regarding nominative shares, through a Register Book with the same content but known as “Register Book of Nominative Shares”.

If it is a newly created partnership, once the first inscription in the Register has been made, a first book will be legalized and will contain the initial founders’ ownership (“Libro Primero de Orden”). Legalizing this first book, a new book should be legalized within the following four months of the closing exercise if any modification of the shares’ titularity has occurred, or if they have suffered any charges.

In the case of a single-member company, the administrators are required to highlight the past figures concerning the sole partner and indicate moreover (with a literal transcription) every contract celebrated between the sole partner and the single-member company. This obligation will be performed through the legalization of a special registry book, known as “Register Book of Partnership”, also known as “Book of the Contracts between the Sole Partner and the Partnership” (article 16 of the Capital Partnership’s Act (Ley de Sociedades de Capital))

Due to the existence of a sole partner, it will not be an obligation to present a registration book of partners or nominative actions, including the partner’s identifying data and its shares in the Special Registration Book provided by this type of societies will be enough.


What does the Register Book of the Partnership consist of and why is it compulsory?

The obligation of running this registration book finds its purpose in the assurance of rights and guarantees of third parties related to the company, especially share creditors. Accordingly, transparency and publicity are important (although not vital) to avoid the application of a special regime of responsibility in terms of economic advantages obtained by the sole partner as a consequence of the contracts taking place. Thereby, the sole partner will respond before the company during the following 2 years after the celebration of the contracts with the company because of the advantages that, directly or indirectly, he may obtain due to signing them.

Thus, it is important to be aware that it will only be taken into consideration the contracts in which the partner performs before the company as a third party and not the others that comes out of the corporate relationship (accessory services, the effectiveness of agreed dividends), and as long as they have taken place within the period in which he has been a sole partner of the company. The contracts that took place before or after this circumstance will be left aside, even when they are included in the compliance obligation date as a result of them.

As an exception, this registration book is not demandable for limited liability companies or public single-member companies whose capital belongs to the State, Autonomous Communities or Local Corporations, or other entities or bodies under their authority.

That being said, the transparency and publicity regime that is expected of the single-member company should fulfill the following requirements:

1.Record every contract according to the required documentation form established by law.

2.Transcribe every contract to the Register Book of Partnership.

This way, the administrators should fulfill the Book precisely, by registration date order, without leaving any blank spaces and without any interpolations or deletions and, as it has been said, they should fully transcribe the content of the contract, it is not enough with the indication of its existence. By all means, the sole partner has to be identified, including every fact that is required for the fulfillment of the Register Book of Partners or Nominatives Shares.

Lastly, special care has to be taken to allude to each of these contracts in the Annual’s Memorial, in a clear and individualized way, separated, and recording its nature and conditions. This requirement is as important as the previous one because, in case of bankruptcy of the sole partner or the company, the contracts mentioned in the previous paragraph that has not been transcribed in the registration book, that is not referenced in the annual report or has not been referenced in a report according to the law, shall not be opposable to the mass.


María Roldán

Legal Area in Devesa & Calvo Abogados

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