Deadlocked 50/50 Company in Spain: Criminal and Commercial Solutions

Corporate deadlock is one of the most destructive situations in Spanish commercial law. When two shareholders each hold 50% of the capital and the relationship breaks down, the company is paralysed: resolutions cannot be passed at the General Meeting, the annual accounts are not approved, the management body is not renewed. As criminal lawyers, we know the ways out — and the criminal tools shareholders use as leverage.

How Does Deadlock Arise?

A 50/50 deadlock builds up over months or years through a gradual deterioration of the relationship. The most frequent causes: strategic differences, inequality of dedication, disputes over the shareholder-director's remuneration, accounting distrust, and the entry of third parties (spouses, heirs, new investors).

Consequences of Deadlock

• Inability to approve accounts: the annual accounts are not filed, which can lead to the closure of the company's registry page.
• Lapsing of offices: directors are not renewed and their power of representation weakens before banks and third parties.
• Personal liability: directors may be personally liable for company debts if they fail to promote dissolution when a legal cause concurs (Art. 367 LSC).
• Loss of value: clients, suppliers and employees flee an ungovernable company.

Solutions Through the Commercial Route

1. Judicial dissolution (Art. 363.1.d LSC): any shareholder may ask the court to dissolve the company for paralysis of the corporate bodies.
2. Appointment of a judicial administrator to manage the company while the conflict is resolved.
3. Mediation or arbitration, where the articles of association provide for dispute-resolution clauses.
4. Sale negotiation: shotgun clauses or valuation by an independent expert.

The Criminal Route as Leverage

A criminal complaint is increasingly used as a strategic tool in 50/50 corporate conflicts. Conduct that may constitute an offence: unfair administration (if the shareholder-director diverts clients or self-awards a disproportionate salary); denial of rights (Art. 293 CP, preventing the other shareholder from accessing the accounts); falsification of accounts (Art. 290 CP); and coercion (Art. 172 CP). The complaint pursues a criminal sanction and, above all, generates negotiating leverage.