Ancillary benefits act as an instrument to reinforce agreements between partners.
These are the agreements reached between them to regulate the internal functioning of the company , as well as the rights and obligations of the partners.
However, they are only valid and effective between the partners who subscribe to them , and therefore do not affect the company.
In order for them to do so, they would have to be incorporated into the company's bylaws.
This incorporation is done through accessory benefits.
Let's see them:
What are accessory benefits?
An accessory obligation is any obligation, whether to give (such as the transfer by the partner or partners to the company of some asset or patrimonial right), to do (such as the provision of services to the company) and even not to do (such as non-competition to the company), imposed on some or all of the partners.
It may or may not be linked to specific shares or stocks, but only if the benefit makes economic sense and is not part of the share capital.
Characteristics of accessory benefits
Ancillary benefits must be specific and determinable.
For example:
- The obligation of the partner to carry out a certain activity.
- The right of the partner to receive remuneration for his work.
- The obligation to work exclusively for the company or not to participate in the market.
- Not exercising competition against the company, etc.
Ancillary benefits in the corporate statutes
Article 86 of the LSC allows that “in the statutes of capital companies, ancillary services other than contributions may be established, expressing their specific and determined content and whether they are to be carried out free of charge or through remuneration, as well as any possible penalty clauses inherent to their non-compliance.
In no case will these form part of the share capital.
The bylaws may establish them as mandatory for all or some of the partners or link the obligation to perform ancillary services to the ownership of one or more specifically determined social shares or shares.
Therefore, if they have not been foreseen, there will be no place for them, but if they are foreseen, they can be established.
And in that case, we will have to refer to article 187 of Royal Decree 1784/1996 , of July 19, which approves the Commercial Registry Regulations , in which it is stated that "the statutes will detail its regime, with expression of its specific and determined content, which may be economic or in general any obligation to give, do and not do, as well as free or remunerated."
If they are remunerated , the statutes must determine the compensation to be received by the members who perform them , which may not exceed in any case the value corresponding to the service.
Importance of accessory benefits
By including in the bylaws the obligations by which the partners undertake to provide a specific service to the company, the agreements reached acquire a relevance that goes beyond the parties involved.
These agreements are not only valid for the partners who sign them, but also become effective in relation to the company.
Linking the agreements of the partners with the company, and vice versa, provides greater protection to the rights and obligations regulated through ancillary services , especially in situations of non-compliance.
Mechanisms are established to resolve conflicts , which may even include the right of the company to exclude the defaulting partner, or the right of the partner to withdraw from the company if it or the other partners fail to fulfill the obligations established through ancillary services.
In the case of limited companies, ancillary benefits may make ownership of the shares conditional on compliance with certain obligations.
This means that if a partner fails to comply with the agreed additional services, he or she may be excluded from the company.
On the other hand, the partner's position is also strengthened.
For example, if the company fails to meet the remuneration obligation agreed upon through an accessory benefit, the partner has the right to leave the company.
Ancillary benefits can also affect the investing partner, obligating him not only to the company, but also to other partners.
For example, this can happen when the investment partner's participation in future funding rounds is agreed upon.
When do accessory benefits expire?
The obligations established in the accessory benefits are created, modified and cancelled by agreement between the partners and the company.
Therefore, both to modify and to cancel the company shares, the consent of both the related partner and the company will also be required, unless the bylaws establish a specific period for the duration of the accessory benefit.
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