In legal and procedural practice, it is not uncommon to encounter situations in which it becomes necessary to bring a claim against a company that has already been dissolved and deregistered. This raises a number of legal considerations, the first of which is, naturally, whether it is possible to bring an action against an entity that, in principle, has ceased to exist due to the extinction of its legal personality.
In this brief article, we will examine precisely this scenario, namely, one in which it becomes necessary to bring legal proceedings against a company that has already been dissolved.
As we shall see below, the extinction of a company’s legal personality, even following the cancellation of its registration in the Commercial Registry, does not prevent claims from being brought against the company. This is because Spanish law considers it necessary to provide legal mechanisms that allow any outstanding legal relationships to be properly concluded, thereby enabling interested parties to bring claims against dissolved companies.
Unlike natural persons, where—except in cases involving strictly personal obligations—claims may be brought against the deceased’s heirs, a company neither leaves a will nor appoints a legal successor in the same sense. Consequently, the issue must be approached differently.
With regard to legal entities, the typical situation concerns monetary claims against a company that has been wound up, whether or not it has undergone a formal liquidation process, arising from the appearance of creditors whose claims did not come to light during the liquidation proceedings. Nevertheless, other situations may also require legal action to be brought against a dissolved legal entity in order to properly establish the procedural relationship.
It is precisely in response to situations such as these that, over recent decades, various legal mechanisms have been developed, ultimately leading to the current legal approach. Under this approach, even after a company has been liquidated and its dissolution has been registered with the Commercial Registry, its legal personality is deemed to survive, albeit solely for the purpose of bringing any remaining legal and financial relationships to a close.
Be that as it may, these remedies—developed primarily through case law, with the collaboration of the Spanish Directorate-General for Registries and Notaries (Dirección General de los Registros y del Notariado, DGRN)—have undergone significant changes in judicial interpretation before reaching the current broadly accepted position.
Until 2017, the Spanish Supreme Court held that, once the company’s registration had been cancelled, the company ceased to possess legal personality altogether. Consequently, the only way for the company to participate in legal proceedings was to obtain a judicial declaration annulling the cancellation of its registration and reopening the liquidation process, effectively “reviving” the company so that the claims in question could be pursued.
However, current case law, both from the DGRN and the Supreme Court—which has adopted the DGRN’s position—relies on a legal fiction whereby “following deregistration, the dissolved company continues to retain legal personality as a residual legal entity until all legal relationships to which the company is a party have been completely extinguished. Consequently, the cancellation of its registration does not prejudice creditors, since the company retains the capacity to hold rights and obligations until all of its legal relationships have been fully settled.”
This doctrine is particularly clearly expressed in Judgment No. 1991/2017 of the First Civil Chamber of the Spanish Supreme Court, dated 24 May 2017, which, as noted above, follows the criterion previously established by the DGRN.
Accordingly, under that judgment, the legal personality of a dissolved company survives despite its deregistration from the Commercial Registry, although only in a limited and residual capacity until all legal relationships involving the company have been fully resolved.
This doctrine has subsequently been followed by several Provincial Courts of Appeal in cases concerning the passive legal standing of deregistered companies.
Furthermore, this solution is consistent with Article 400 of the Spanish Companies Act (Ley de Sociedades de Capital), which entrusts former liquidators with representing the company for the purpose of carrying out any legal acts that may still be necessary on behalf of the company, notwithstanding its deregistration.
It follows, therefore, that the company’s representation in legal proceedings should, in principle, be exercised by the person who acted as its liquidator. This is a logical consequence of the fact that such claims will generally concern matters arising out of, or connected with, the liquidation process itself.
A similar purpose is served by Article 399 of the Spanish Companies Act, which regulates so-called “subsequently discovered liabilities” (pasivo sobrevenido). Under this provision, former shareholders are jointly and severally liable for unpaid corporate debts, although only up to the amount they received as liquidation distributions. While this provision does not seek to prolong or revive the company’s legal personality, it does provide creditors with legal remedies where they have been prejudiced by the company’s dissolution.
In conclusion, Spanish law has adopted a practical and coherent solution that significantly facilitates the possibility of bringing claims against legal entities whose deregistration has already been recorded in the Commercial Registry, without requiring creditors to undertake procedural steps that, in practice, merely discouraged the exercise of legal actions against such companies.