Inscribed in a line that we would dare to call “progressive” regarding the interpretation of the principle of integrity of social capital, the Resolution of the General Directorate of Registries and Notaries of December 4, 2019 (BOE Tuesday, January 21, 2020, page 5958) revokes the negative rating of the Commercial Registrar IV of Madrid, and admits the incorporation of a limited company through the contribution in kind consisting of the “Know How” of one of its founding partners.
The resolution is structured in (1) the reproduction, for the purposes of interest, of the Supreme Court Judgment of October 21, 2015, (2) the comparison for analog purposes between the “Know How” and the “Goodwill “, which may constitute an object of contribution in kind, and (3) the reasoning of the Directing Center on the suitability of” Know How “to be considered an asset that – also – can be contributed to the share capital. Specifically it is reasoned in this last point:
“According to article 58.1 of the Law on Capital Companies,” in capital companies, only assets or economic rights subject to economic valuation may be subject to contribution. “And the object of contribution questioned in the registry qualification, even if an intangible asset, has a patrimonial character, is susceptible to economic valuation and appropriation for what can be contributed to society and is apt to produce a profit.In addition, it is different from the mere obligation to make, so that the norm that prevents work or services from being contributed (article 58.2 of the Capital Companies Law). Therefore, the defect cannot be confirmed. ”
The first criticisms of this novel and surprising doctrinal turn have not been long in coming, and highlight the uncertainties that this registration consideration will entail as a consequence of its impact (i) on the principle of integrity of social capital (how can it be seized? How will it be accounted for? Can it be subject to depreciation or accounting impairment?) And (ii) on intra-corporate relationships (how much is valued? What would happen in cases of capital reduction? And in those of dissolution and corporate liquidation ? Can titles that reflect or support this type of intangible asset be transmitted? What happens if the holder of the “Know How” dies?).
The comparison of the “Know How” with the “Goodwill” does not seem very correct in order to justify the contribution of the former, already sanctioned in the RDGRN of October 31, 1986, since although both concepts have the nature of intangible assets , the “Goodwill” refers mainly to items with economic value that cannot be demarcated from the company because they are their property, such as the clientele or business reputation (we estimate that if the clientele depends on one of the partners or if the business reputation is due to the presence of one of the partners, such elements could not be included in the “Goodwill”), and that for inclusion in the business asset needs to be acquired onerously in order to assign an objective value that, it is said, would coincide with its transmission value.
However, and on the contrary, from a material point of view “Know How” does not belong to society, although it has been contributed in exchange for shares, since it is not possible to split a set of practical knowledge of a personal nature – “Know How” which in the contractual sphere would be considered a very personal obligation – of its holder. In other words, the ownership of “Know How” is completely non-transferable from a material point of view, so that this element is not suitable to be classified as a social asset, and therefore to be considered as a contribution in kind.
On the other hand, it was necessary to allude to the Resolution commented on the lack of character of the “Know How” of work or service, and this due to the interdiction in that sense of Article 58.2 LSC, mentioning that the “Know How” is different from the “mere obligation to do”, quite brief and weak justification, because, although it may be considered that the “Know How” exceeds the mere obligation to do, its externalization – in the form of activity, organization, direction or any other – inevitably requires a “do” that collides with the prohibition of the aforementioned provision. In other words, a “doing” (work or service), however qualified, does not lose the character of “doing”, and “knowing” without “doing” is deprived of any economic value.
Finally, the Resolution mentioned does not refer to the amount of the share capital or the total participation in it of the partner or partners who contribute their “Know How”. In fact, if it is the only contribution that the partner or partners make, the value of the “Know How” should coincide with that of the share capital, but, where appropriate, the issuance or assumption premium, with which, said value would have its corresponding reflection in accounts 100 and 110 of the PGC. On the other hand, due to its nature of intangible assets, the “Know How” should be expressly mentioned in note 7 of the Report. Needless to say, the founding partners and the people who derivatively acquire the shares issued in return to the contribution of “Know How” for the term will respond to the company and to the social creditors. five (5) years since the contribution occurs (art. 75 LSC).
As we have mentioned, although it is true that, according to common experience, the figure of social capital is not a sufficient guarantee against creditors, the principle of reality of social capital – that the figure of social capital has a real economic support – continues configuring the regulation of this institution. It is unfortunate that the Commercial Registrar IV of Madrid lacks active legitimacy to challenge this Resolution of the Directing Center before the commercial jurisdiction (STS 149/2019) because with it a dematerializing line of social capital and corporate equity is inaugurated, a line that – if It may well respond to the process of intellectualization of high value-added services – it should be accompanied by an in-depth review of the precepts intended to protect third parties in good faith.
Published in Legal Today on 13.02.2020, http://www.legaltoday.com/practica-juridica/mercantil/prop_industrial/el-know-how-tiene-caracter-de-aportacion-no-dineraria)