Short answer
In a dispute between partners, first review the articles of incorporation, the bylaws and any shareholders' agreement: they contain the voting, exit and dispute rules. Then document everything in writing. Many disputes end with a negotiated exit of one partner; if not, the Ley General de Sociedades Mercantiles (LGSM) gives shareholders specific court actions, some with very short deadlines.
Documents to review first
- Articles of incorporation and bylaws: who manages the company, how votes are cast and which majorities apply.
- Shareholders' meeting minutes and the share registry (arts. 128-129).
- Any shareholders' agreement (common in a SAPI and permitted for an S.A. by art. 198).
- Powers of attorney granted: who can sign and operate bank accounts.
Minority rights in an S.A. and a SAPI
| Right | S.A. (LGSM) | SAPI (Securities Market Law, art. 16) |
|---|---|---|
| Request a shareholders' meeting | 33% (art. 184) | 10% |
| Challenge a meeting resolution in court | 25%, within 15 days of the meeting's close (art. 201) | Lower thresholds may apply (LMV art. 16 and bylaws) |
| Sue directors for liability | 25% (art. 163) | 15% |
| Appoint a board member | 25% (art. 144) | 10% per board seat |
Any shareholder may also report irregularities in writing to the statutory auditor (comisario), who must address them in its report to the meeting (art. 167). A single share is enough to request a meeting if none was held for two consecutive years (art. 185).
Deadlines to watch
- Challenge a meeting resolution (S.A.): within 15 days after the meeting closes, if you did not attend or voted against (LGSM art. 201).
- Withdrawal right: a shareholder who voted against a change of corporate purpose, nationality or transformation may withdraw and be reimbursed, if requested within 15 days of the meeting (art. 206).
- Actions between partners and the company: five years (Commerce Code art. 1045).
How does a partner exit?
The usual routes are selling the shares to the other partners or a third party (respecting any preference or board-approval clause), withdrawal in the cases the law allows, or the buy-out mechanisms of the shareholders' agreement (put and call options, drag-along and tag-along, LGSM art. 198). If the bylaws or agreement set a valuation method, it applies; otherwise, the price is negotiated or set by an independent appraiser. Each route has tax effects that should be reviewed with the company's accountant.
Common mistakes
- Withdrawing company funds "to protect yourself".
- Boycotting shareholders' meetings in protest.
- Signing minutes without reading them or in blank.
- Discussing the dispute with customers or employees.
- Missing the 15-day window to challenge a resolution.
Frequently asked questions
Can the shareholders remove a managing partner's powers?
Yes. The shareholders' meeting can revoke appointments and powers with the majority the bylaws require; the minutes are then formalized before a notary.
Is mediation useful between partners?
Yes. It is confidential, faster and helps preserve the business. A well-drafted settlement can be made enforceable.
What is a shareholders' agreement?
A contract among shareholders with additional rules: exits, drag-along and tag-along rights, voting arrangements and dispute resolution. LGSM art. 198 expressly allows these agreements in an S.A.
Can I sell my shares to a third party?
Yes, unless the bylaws require board authorization (LGSM art. 130) or grant the other shareholders a preference.
Can a shareholder be excluded from an S.A.?
There is no general exclusion mechanism in an S.A. as there is in other company types; it depends on the bylaws (LGSM art. 91, section VII) and the shareholders' agreement.
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