Belzuz Abogados has been advising various clients with family-owned businesses and enterprises, who express concerns about safeguarding their family business.
In this context, it is relevant to address the topic of a commercial company whose majority of share capital is held by shareholders with a family relationship. The intention is to continue the operation of the business, within the legal sphere of their successors, after the shareholders' passing.
In simpler terms, the shareholders of the company are the parents, and they wish for their descendants to continue the family business after their demise, preserving the work, effort, and dedication of the business's founder.
However, it is not uncommon for the descendants of these entrepreneurial shareholders to have accumulated substantial debts, either for themselves or as collateral for third parties, also to the extent that their assets may not be sufficient to cover these debts.
The parents, as shareholders, fear that the business may be at risk of loss because, upon inheritance, these shares become part of their descendants' assets and are, therefore, liable for any obligations incurred earlier in the legal sphere of the descendants. In the event of non-compliance, third-party creditors may seize these assets and, consequently, gain control of the family business, thereby losing its essence.
Nonetheless, there are legal solutions for the shareholders to safeguard the fate of the company during their lifetime, mitigating the risk that these shares will be exposed to execution by third-party creditors for the pre-existing debts of their descendants.
Among other solutions, we specifically point out the formalization of an exclusion clause of liability, which aims to exempt the assets left or donated from the fulfillment of debts that existed at the time of the gift or succession transmission.
For assets subject to registration, such as real estate, it is important to remember that the enforceability of this exclusion clause is also subject to registration; otherwise, the donated or inherited assets, despite the clause, will be liable not only for subsequent debts but also for previous ones. This is especially relevant when a creditor has registered a lien before the registration of this clause. These registration-related restrictions aim to protect third parties and commerce in general because, without the registration of the clause, there is an appearance that these assets are liable for the debts of their owner.
This topic has sparked extensive discussion within our legal community, as a validly constituted exclusion clause may have effects even in relation to a descendant/child/beneficiary who is insolvent or on the verge of insolvency. Therefore, the protected asset, under this clause, cannot be seized for the beneficiary's insolvency estate so that it can be held responsible for debts incurred before the succession acquisition, only being applicable to debts incurred after the mentioned acquisition.
Hence, for holders of family businesses who resonate with the topic discussed here, it is advisable to seek professional advice and analyze their specific situation.
Belzuz Abogados boasts professionals with extensive experience in commercial and corporate law who can assist all types of businesses in various matters, providing the necessary legal guidance and support.
Belzuz Abogados SLP
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