Article 363 of the Spanish Companies Act (“SCA”) establishes as causes for the dissolution of a company, among others, "losses that reduce the net equity to an amount lower than half of the share capital...". Moreover, article 364 SCA establishes that upon the occurrence of the aforementioned dissolution cause (or any other dissolution cause established in the referred article 363 SCA), unless the declaration of insolvency has been requested or the commencement of negotiations with creditors has been notified pursuant to the Insolvency Act, the company’s management body shall have a period of two months to call the General Shareholders Meeting (“GSM”) for the purpose of either adopt the resolution to re-establish the accounting imbalance situation or to adopt the resolution to dissolve the company. Finally, this section of the SCA is closed by articles 366 and 367 which, respectively, establish that:

(a) If the GSM is not called within the aforementioned two-month period or, having been called, the GSM is not duly convened or does not approve the resolution related to the company’s dissolution, the management body will have a two-month period to request the company’s judicial dissolution (366 SCA);

(b) In the event that the management body does not proceed to request for judicial dissolution, it will be liable with the company on a jointly and severally basis for all corporate debts after the occurrence of the dissolution cause, adding the "iuris tantum" presumption to consider that all the corporate debts are prior to that date, unless proven otherwise by the directors (367 SCA).

In this context and as a consequence of the COVID-19 pandemic, Law 3/2020 of 18 September was enacted in order to mitigate the detrimental effects derived from the crisis it caused. In its article 13.1, the aforementioned Law 3/2020 established that, for the purposes of determining the eventual concurrence of the dissolution cause due to losses under article 363.1(e) SCA, losses produced during the financial year 2020 would not be considered. This mechanism, popularly known as the accounting moratorium, was subject to successive amendments and extensions. First, by Royal Decree-Law 27/2021, which extended the moratorium also to the losses for the financial year 2021, and subsequently, extended by Royal Decree-Law 20/2022, which extended the application of the moratorium to the financial years beginning in 2022, 2023 and 2024. Hence, for financial years commencing in 2024, the losses of the financial years 2020 and 2021 should not be considered for the purposes of determining the existence of the dissolution cause due to loses established in the referred article 363.1 SCA.

Since the last accounting moratorium was due to expire on December 31st, 2024, the Government approved the Royal Decree-Law 9/2024 (also known as the Omnibus Decree), the article 5 of which establishes a new extension of the moratorium until the end of the financial year beginning in 2026. However, on January 22nd 2025, the Spanish Parliament did not validate the Omnibus Decree and as such, the new extension of the accounting moratorium was not approved.

In practice, the end of the accounting moratorium means that, as from the financial years commencing in 2025, for the purposes of determining the potential existence of the situation of dissolution due to accounting imbalance, the losses of the financial years 2020 and 2021 shall be taken into account. Hence, if the balance sheet, considering the losses for the referred financial years, shows that the net equity is lower than half of the company’s share capital, the management body shall call the GSM subject to the terms, for the purposes and under the consequences established in articles 364 to 367 of the SCA indicated above.

GERARD LLEBOT