ADMINISTRATIVE LAW DIVISION
The reform of the rules governing the transfer of shares in private limited companies contained in the Draft Organic Law on Public Integrity has reopened an important debate for both commercial law and the business economy: whether eliminating notarial intervention truly provides a faster and more efficient method of formalising such transfers by reducing costs and preliminary formalities, or whether it simply shifts preventive control and potential legal disputes to a later stage linked to the Commercial Registry.
The Draft Public Integrity Law proposes that share transfers may be formalised through a private electronic document signed with a digital signature, dispensing with the requirement for a notarial public deed and assigning a central role to the Commercial Registry. The stated objective of the measure is to strengthen corporate transparency, improve the traceability of beneficial ownership, and facilitate the fight against fraud, money laundering, and opaque corporate structures.
At present, Article 106 of the Capital Companies Act requires the transfer of company shares to be recorded in a public document. Although the transfer may initially be agreed between the parties through a private document, its effects against the company and third parties arise only once it is executed before a notary as a public deed. The notary also verifies the identity, legal capacity, and authority of the parties, confirms their consent, and reviews the transaction’s compliance with the law and the company’s articles of association. The notary’s intervention therefore acts as a preventive filter designed to avoid disputes before they arise.
The proposed reform represents a significant change to this framework. Control would no longer be concentrated at the moment the deed is executed before a notary but would instead be transferred largely to the Commercial Registry. Under the new system, the change of ownership of the shares would take effect through registration of the transfer in the Registry. Such registration would become decisive in enabling the purchaser to exercise rights against the company and third parties, including voting at shareholders’ meetings, receiving dividends, or being recognised as a shareholder.
From an economic perspective, the proposal may appear attractive. Replacing the public deed with a private electronic document promises lower costs, shorter processing times, and a corporate framework better suited to an increasingly digital environment. For straightforward transfers, this model could provide greater flexibility and simplify the administration of private limited companies, particularly SMEs and family-owned businesses.
However, these apparent savings and gains in efficiency may prove to be only relative. Eliminating notarial control does not eliminate legal risks; it merely shifts them to a later stage. Defects in the private document, doubts regarding the identity or legal capacity of the parties, possible breaches of transfer restrictions contained in the articles of association, or disputes over ownership—issues that are currently identified and, where necessary, corrected before a notary—would under the new system emerge later, either during the Registry’s review process or when disputes arise between shareholders.
This situation could generate significant economic costs. A transfer that is not registered or whose validity is disputed may delay corporate transactions, obstruct the exercise of political and economic rights, hinder dividend distributions, or complicate the entry of investors. Rather than reducing burdens, the reform could increase the need for subsequent legal advice, corrective registry procedures, and litigation.
Furthermore, several experts have warned that the use of private documents, even electronic ones, may create opportunities for fraud, identity theft, or the use of nominee shareholders. Concerns have also been raised that certain transfers could remain outside the Registry until the parties choose to disclose them, thereby creating a legal reality separate from the registered one. Consequently, a reform intended to increase transparency could inadvertently create temporary areas of opacity unless accompanied by effective and sufficient safeguards.
The reform would also increase companies’ internal obligations. The annual electronic filing of the shareholders’ register and coordination with the Commercial Registry would require more organised corporate administration. For many SMEs, this may represent progress in terms of transparency, but it may also create an additional administrative burden. Directors would need to exercise increased diligence to avoid errors, delays, or inconsistencies between internal documentation and registered information.
Ultimately, the debate should not be framed as a choice between tradition and modernisation. The digitalisation of company law is necessary, but digitalisation does not always equate to simplification. The key question is whether the new system genuinely reduces transaction costs or merely replaces a visible and preventive cost—namely, notarial intervention—with less predictable costs arising later in the process: registration defects, delays, uncertainty regarding shareholder status, disputes, and potential liability for directors.
The real challenge is to design a model that combines digital efficiency, transparency, and legal certainty. If the reform succeeds in ensuring that the Commercial Registry provides reliable, up-to-date, and sufficiently verified information, it may strengthen confidence in commercial transactions. However, if it merely replaces public deeds with private documents without equivalent safeguards, the supposed initial savings may ultimately become a deferred cost for shareholders, companies, and third parties alike.
