50/50 partners in deadlock: court-ordered winding up of the SL

The case, in five lines

What is brought

Application for judicial winding up of the company on the ground that its bodies are paralysed, under articles 363.1.d) and 366 LSC, through the non-contentious proceedings (expediente de jurisdicción voluntaria) of Ley 15/2015 or, where other claims are worth joining, through ordinary declaratory proceedings, with a request that a liquidator other than the directors be appointed where objective circumstances justify it.

Before which court

The Commercial Section of the Tribunal de Instancia (the first-instance court) for the company's registered office, as follows from article 366.1 LSC and article 126 of Ley 15/2015 on non-contentious jurisdiction. Its decision can be appealed before the Audiencia Provincial (the provincial appeal court).

Deadline

The action to seek dissolution is not subject to a limitation period: it can be brought as long as the paralysis continues. For a shareholder who is also a director, two two-month periods run: one to call the meeting from the moment the ground arises (art. 365 LSC), and one to apply for judicial winding up from the day of the meeting that did not resolve on it, or from the scheduled date if the meeting was never validly constituted (art. 366.2 LSC). If those periods are missed, the director becomes jointly and severally liable for the company's debts arising after the ground (art. 367 LSC).

Who can bring it

Active: any shareholder, whatever the size of the holding, the directors and any interested party (art. 126.2 of Ley 15/2015). Passive: the company itself, never the other shareholder, because article 366.1 LSC requires the application to be brought against it. Your partner may appear and object, but he is not the party against whom the order is sought.

Financial risk

In the non-contentious proceedings the expenses are, as a rule, borne by the applicant, and those of experts and witnesses by whoever proposes them; in declaratory proceedings the losing party usually bears the other side's costs. If the application is dismissed, you remain inside a deadlocked company and, if you are a director, exposed to new debts. If it succeeds, the company is wound up, and its value in liquidation is usually lower than that of a going concern.

A tie is not enough: the paralysis the law requires

Article 363.1.d) LSC requires the company to be wound up where its bodies are paralysed so that it cannot function. The decisive part of that sentence is the second half. It is not enough for two 50 % shareholders to argue, nor for one particular vote to end in a tie: the law requires that the company be unable to function, and that is what will have to be proved before the Tribunal de Instancia (the first-instance court).

The Tribunal Supremo (the Supreme Court) has held that the relevant paralysis is one that is serious, persistent and cannot be resolved through the company's own mechanisms, typical of a clash between two groups of shareholders of equal weight. Courts recognise it above all where the general meeting cannot approve the accounts, allocate the result, or appoint or remove directors, even though the business keeps invoicing. The fact that the business makes money is not, on its own, an obstacle: the ground looks at how the company is governed, not at its profit and loss account.

What destroys it is a manufactured deadlock. If the party seeking dissolution provoked the tie in order to take the clientele to another company or to buy cheaply in the liquidation, the other side will plead bad faith and abuse of rights, which article 7 of the Civil Code does not protect. That is why the account of the facts must show reasonable proposals that were rejected and a disagreement on essential matters, not an exit strategy dressed up as a conflict.

Staying away does not block the meeting: it hands it over

This is the mistake that has cost the most cases. In a limited company the law sets no minimum attendance for the meeting to be validly constituted, and article 198 LSC passes resolutions by a majority of the votes validly cast, provided they represent at least one third of the total. With your partner present and you absent, he alone approves the accounts, appoints a director and decides everything an ordinary majority is allowed to decide.

Paralysis therefore exists only where both of you attend and vote in opposite directions, or where the articles have raised the majority so that neither of you can reach it without the other. Staying away from meetings as a protest does not create the ground for dissolution: it makes it disappear and leaves you outside the company's governance. The first thing we review is the articles, because the whole strategy depends on the majorities they set, and also whether they submit company disputes to arbitration, as article 11 bis of the Ley de Arbitraje (the Arbitration Act) allows, which would take the matter away from the Tribunal de Instancia.

The same rule works in your favour if it is your partner who fails to turn up. If you attend the meeting called to dissolve the company and he does not, article 364 LSC refers to that ordinary majority in article 198, and the dissolution resolution can be passed with your vote, provided the ground genuinely exists and can be defended if he challenges it. Voluntary dissolution without a statutory ground is a different matter: article 368 LSC requires the formalities for amending the articles, and in a limited company that majority cannot be reached with 50 %.

Before the court, ask for the meeting, and ask properly

Article 366.1 LSC opens the court route where the meeting has not been called, has not been held, or has not passed the dissolution resolution or those needed to remove the ground. The meeting therefore comes first. Article 365.1 LSC allows any shareholder to ask the directors to call it if, in that shareholder's view, a ground for dissolution exists, and that request, dated and provable, is the first document in the file.

If you are joint directors and your partner will not sign the notice, or if he is the sole director and does not call it, the law provides ways out. With 50 % you far exceed the five per cent in article 168 LSC: once the director has been served a notarial demand, the meeting must be held within the following two months. If it is not called, article 366.1 already opens the door to the court, and article 169.2 LSC also allows it to be called by the Letrado de la Administración de Justicia (the court clerk) or by the commercial registrar of the registered office, which is useful where you want the meeting actually to vote on an exit.

The agenda is not improvised. Article 365.2 LSC allows the meeting to resolve on dissolution or, if it is on the agenda, on the measures needed to remove the ground. We include both: dissolution and, as an alternative, the purchase of one partner's shares by the other or an amendment to the articles that breaks the deadlock. And five days in advance we ask for the meeting to be minuted by a notary, as article 203 LSC allows anyone holding five per cent: those minutes are not put to approval and are the best evidence of the tie.

No time limit for the shareholder, but one for the director

The law sets no limitation or prescription period for seeking dissolution on the ground of paralysis. As long as the deadlock continues, the ground renews itself every day and the action remains alive. That does not mean waiting comes free: if an agreement is reached in the meantime, the split of the capital changes or one of you gives way, the ground disappears and the action with it, and meanwhile the business keeps losing contracts.

If you are a director as well as a shareholder, the clock is different and very short. Article 365.1 LSC requires you to call the meeting within two months of the ground arising, and article 366.2 LSC to apply for judicial winding up within two months of the day of the meeting that did not resolve on it, or of the scheduled date if it was never constituted. Article 367 LSC punishes either failure: you become jointly and severally liable, with your own assets, for the company's obligations arising after the ground, and the law presumes, unless the contrary is proved, that debts claimed in court arose later. You are not liable for them if, within two months of the ground arising, you applied for insolvency or notified the court of negotiations with creditors.

The difficulty lies in dating the paralysis, which does not show up in a balance sheet the way losses do. Our approach is cautious: as soon as an ordinary meeting cannot approve the accounts because of a tie, or cannot renew the director's appointment, we treat that date as the date the ground arose and we act. Liability towards creditors is covered in our guide on company debts and directors; here it is enough to know that the director who waits to see what happens is the one who ends up paying.

Two procedural routes, and only one requires prior negotiation

Judicial winding up can be sought through the non-contentious proceedings governed by articles 125 to 128 of Ley 15/2015. Article 126 gives jurisdiction to the Commercial Section for the registered office, gives standing to directors, shareholders and any interested party, and requires a lawyer and a court representative (procurador), whom the firm provides. It is a quicker route, and your partner's objection does not, on its own, turn the proceedings into contentious ones.

Here is the nuance that almost nobody explains. Article 5 of Ley Orgánica 1/2025 requires a prior attempt at an appropriate means of dispute resolution in the declaratory actions of book II of the Ley de Enjuiciamiento Civil (the civil litigation statute), but its paragraph 3 expressly excludes the commencement of non-contentious proceedings. Through the non-contentious route there is no admissibility requirement of that kind; through declaratory proceedings there is, and a claim without that prior attempt is not admitted.

The choice is not neutral. Declaratory proceedings, with their prior negotiation, suit a case where dissolution is to be joined with other claims, such as the liability of a director who has diverted funds, or where the facts are so disputed that they call for extensive evidence; some commentators and courts maintain that this door remains open even though the non-contentious route exists. The non-contentious route suits a case where the deadlock is obvious and, above all, where you are a director and the two months in article 366.2 LSC leave no room to negotiate first.

Winning dissolution does not free you from your partner

The decision declaring dissolution does not close the business: it opens the liquidation period, and the company keeps its legal personality, adding the words «en liquidación» (in liquidation) to its name, as article 371 LSC provides. The assets must be sold, receivables collected, creditors paid and the remainder shared 50/50. Because a business in liquidation sells for less than a going concern, a well-grounded application is usually the best lever to get the other partner to negotiate a purchase.

And here comes the surprise. Article 376 LSC provides that, unless the articles say otherwise or the meeting resolving on dissolution appoints liquidators, whoever were directors at the time of dissolution become liquidators. If the two of you were joint directors, you become joint liquidators and the deadlock continues, now inside the liquidation. That is why the application must ask for, and justify, the appointment of a different liquidator.

That request does not succeed because of a bad personal relationship. The doctrine set out by the Dirección General de Seguridad Jurídica y Fe Pública (the Directorate General for Legal Certainty and Public Faith), following the Tribunal Supremo, treats departing from the rule in article 376 as exceptional and reserves it for objective circumstances: fraud, a director's manifest unsuitability to liquidate, complexity of the assets, or entanglement with other companies. They must be proved. And it is wise to ask from the outset for the claim to be noted on the company's page at the Companies Register: there are cases in which, because this was not done, another dissolution was resolved in the meantime and other liquidators were registered.

How we run the case, step by step

1. 1

   We read the articles, the shareholders' agreement and the minutes

   We check what majorities the articles set, whether there are deadlock-breaking, arbitration or withdrawal clauses, how management is organised and which meetings have ended in a tie. That tells us whether there is real paralysis, whether you are on the clock as a director and which route suits the case.

2. 2

   We formally demand that the meeting be called

   We serve the board of directors with a notarial demand to call a meeting with dissolution on the agenda and, as an alternative, the measures to remove the ground, and five days in advance we ask for it to be minuted by a notary (arts. 168, 203 and 365 LSC).

3. 3

   We put the tie on record at the meeting

   We vote on dissolution and on the exit proposal and record each shareholder's position. If the meeting is not called, we document that; if it is called but not constituted, we document the scheduled date, which is what starts the two months in article 366.2 LSC.

4. 4

   We choose the route and, where required, negotiate first

   If the deadlock is clear, or you are a director with the clock running, we use the non-contentious proceedings, which do not require prior negotiation. If other claims must be joined, we first lead the negotiation required by article 5 of Ley Orgánica 1/2025 with a written, dated proposal.

5. 5

   We file the application against the company

   Before the Commercial Section of the Tribunal de Instancia for the registered office, through a procurador, with the evidence of paralysis, a request for an independent liquidator where there is an objective ground, and a request that the claim be noted at the Companies Register.

6. 6

   We oversee the liquidation or close the buyout

   Once dissolution is declared, we monitor the sale of assets, the payment of creditors and the distribution of the liquidation share. If your partner prefers buying to liquidating, we negotiate the price on the basis of an expert valuation and put the exit in writing.

The law that applies

• Art. 363 LSC. Lists the statutory grounds for compulsory winding up, including, in letter d), paralysis of the company's bodies such that it cannot function, alongside ceasing activity, qualifying losses and grounds set in the articles. BOE-A-2010-10544
• Art. 365 LSC. Requires directors to call the general meeting within two months when a statutory or articles-based ground exists so that it resolves on dissolution, allows any shareholder to request that meeting, and lets the meeting resolve, if it is on the agenda, on the measures to remove the ground. BOE-A-2010-10544
• Art. 366 LSC. If the meeting is not called, not held or does not pass the resolution, any interested party may seek dissolution before the Commercial Section for the registered office, bringing the application against the company. Directors must seek it within two months of the meeting, or of the scheduled date if it was not constituted. BOE-A-2010-10544
• Art. 367 LSC. Makes directors who do not call the meeting within two months, or do not seek judicial winding up in time, jointly and severally liable for company obligations arising after the ground, presumes that debts claimed in court arose later, and releases them if within that period they applied for insolvency or notified negotiations with creditors. BOE-A-2010-10544
• Art. 198 LSC. In a limited liability company resolutions are passed by a majority of the votes validly cast, provided they represent at least one third of the votes attached to the shares; blank votes are not counted. BOE-A-2010-10544
• Art. 376 LSC. Unless the articles provide otherwise or the meeting resolving on dissolution appoints liquidators, whoever were directors at the time of dissolution become liquidators. BOE-A-2010-10544
• Art. 126 Ley 15/2015. Assigns judicial winding up of a company to the Commercial Section for its registered office, gives standing to directors, shareholders and any interested party, and makes representation by a lawyer and a procurador mandatory. BOE-A-2015-7391
• Art. 5 LO 1/2025. Requires prior recourse to an appropriate means of dispute resolution, with identity of subject matter, in the declaratory actions of book II and the special proceedings of book IV of the Ley de Enjuiciamiento Civil, and expressly excludes the commencement of non-contentious proceedings. BOE-A-2025-76

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

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