Arias Varona, Francisco Javier2025-01-182025-01-182021Arias Varona, F. J., "Abide or Leave. Withdrawal Right for Retention of Profits, Close Familiy Companies and Rule of Law", en Fleischer, H., Recalde, A. (Eds.), Family Firms and Closed Companies in Germany and Spain, Tübingen, 2023, pp. 65 y ss.978-3-16-159822-7https://hdl.handle.net/10115/58578Abusive retention of profits is a well-known issue of close companies. Majority shareholders can find alternative mechanisms to receive gains from the company and may use their power to decide the retention. Minority shareholders may then lose any interest in the company, as they cannot access to the result of the activity. The lucrative goal is, therefore, heavily compromised. This situation can be addressed in different ways. One is leaving the decision to the courts, that should decide case by case usually on the grounds of the existence of a duty of loyalty that is breached by majority shareholders when there is an abusive retention of corporate earnings. An alternative approach is to include a legal rule that may have two different contents: forcing a minimum dividend distribution whenever is legally possible (obligatory dividend) or granting a right to withdraw the company (right to exit) when no dividend is distributed in certain circumstances. Spanish law adopted in 2011 a legal rule with this latter content that was, however, suspended for several years. Since 2017 it is fully in force and has been recently amended (Dec 2018). This paper uses the example of Spanish law to exemplify the key issues of a legal provision granting a right to exit in the context of excessive retention of profits. One important conclusion is that it is hardly possible that a legal rule completely replaces the duty of loyalty. The experience shows that it will always be necessary to solve problems of opportunistic use of the rule and to ensure the necessary adaptation of the solution to the particulars of the case.enAttribution-NonCommercial-NoDerivatives 4.0 Internationalhttp://creativecommons.org/licenses/by-nc-nd/4.0/Minority Shareholders RightsRetention of ProfitsWithdrawal RightBook chapter10.1628/978-3-16-159823-4info:eu-repo/semantics/openAccess