The usufruct of shares is an agreement through which a shareholder grants a third party the temporary right, for a defined period, to receive the dividends of a company issuing the shares subject to the usufruct, while retaining ownership of said shares as the bare owner.
Notwithstanding the existence of a usufruct, the shareholder retains the right to subscribe to new shares in the event of a share capital increase (such new shares also might be subject to the usufruct if agreed upon in the relevant agreement), as well as other rights deriving from the shares, including, in principle, the right to vote.
In this context, various international jurisdictions have addressed the issue of voting rights in the event of share usufruct differently. In some cases, it is established that voting rights must be agreed upon between the usufructuary and the bare owner, and in the absence of such agreement, these rights remain with the bare owner. For instance, specifically, Article 2352 of the Italian Civil Code and Article 218 of Argentina's General Corporations Law stipulate that voting rights belong to the bare owner, except for decisions concerning dividend distribution, where the usufructuary may exercise such rights as they are understood to be inherent to the usufruct itself. Conversely, Article 127 of Spain's Stock Companies Act exclusively reserves voting rights to the bare owner.
In contrast, with respect to Mexico, the General Law of Commercial Companies does not specifically regulate voting rights in the context of the usufruct of shares. Consequently, it is necessary to apply the supplementary rules of usufruct established under the Federal Civil Code. Article 901 of this statute provides that the usufructuary is entitled to receive all natural, industrial, and civil benefits generated by the asset subject to usufruct. Therefore, it can be deduced that, unless otherwise agreed, the right to vote belongs to the bare owner, while the usufructuary is required to facilitate the exercise of this right. Nonetheless, it is advisable to explicitly stipulate within the usufruct agreement whether the usufructuary may exercise voting rights, even if only regarding decisions related to dividend distribution, following examples such as those set forth in the Italian Civil Code.
Moreover, another relevant consideration is the participation of the usufructuary in profits accrued prior to the establishment of the usufruct. In Argentina, Article 218 of the General Corporations Law states that the usufructuary is entitled to receive any dividends declared during the usufruct period. Applying a literal interpretation, this provision could be interpreted as granting the usufructuary rights over dividends declared that originate from results of previous fiscal years, as dividends are "generated" from the moment they are decreed; prior to that date, they are merely accumulated profits. This approach may serve as a useful reference given the absence of specific regulation on this matter in Mexico. Therefore, it is advisable to specify within the usufruct agreement who shall be entitled to the decreed dividends during the usufruct period, even if they derive from profits of earlier fiscal years, or alternatively, to state that the usufructuary shall be entitled to the profits declared based on the results derived from the operations of the issuing company during the term of the usufruct.
In conclusion, the usufruct of shares is a flexible and useful legal instrument; however, its proper implementation requires a meticulous analysis of the applicable legal framework in each jurisdiction. In the case of Mexico, given the legislative gaps on this matter, it is prudent to ensure that the agreement addresses key issues, such as the exercise of voting rights and the treatment of dividends derived from profits of previous fiscal years, or alternatively, to specify if the usufruct comprises the profits declared based on the results derived from the operations of the company during the term of the usufruct agreement, in order to prevent conflicts between the bare owner and the usufructuary.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
