Irrevocability of the dividend

This general principle of law, which permeates the entire legal system, is not being applied by the Superintendence of Corporations (SS) in its power to interpret the corporate rules, for the reasons explained in this document. Since 2000, the SS has been building a consistent doctrine according to which the dividend decreed may be revoked by the shareholders' meeting provided that it has the express acceptance of all the associates (who are the holders of the right to receive it), as well as of the other beneficiaries who may be affected by the decision (understood, mainly, as former shareholders of the company holders of such dividend or persons who, not being shareholders, have the right to receive it, such as usufructuaries or pledgees of the shares).  However, in a recent Official Communication, the S.S., without any valid reason, changed its position establishing that the waiver of the dividend is only valid from the moment in which the dividend is decreed, and once decreed, it cannot be revoked, not even by unanimity of the shareholders.  The chronology of these doctrinal positions is as follows. In Official Letter 220-72552 of 11/22/2000, the SS held that the dividend could not be disregarded, reformed or revoked without the express acceptance of its holder.

In Official Letter 220-25048 of 05/27/2004, the SS established that, as a general rule, all decisions of the general shareholders' meeting are revocable as long as such revocation is made by the same body, is approved with the fulfillment of the legal formalities and does not involve decisions that have produced irreversible effects.  When there is the "express and written consent of all the parties" it is possible to revoke the decision to distribute dividends and instead create occasional reserves.

In Official Letter 220-049977 of 10/16/2007 the SS established that, if the decision is adopted by all the beneficiaries of the dividend, and situations with irreversible effects before them and other third parties have not been created, the revocation of the dividend is possible. In Official Letter 220-058699 of 03/31/2009, the SS established that, by unanimity of the associates, the determination to distribute profits can be revoked to -in its place- authorize the creation of occasional reserves.

In Official Letter 220-172783 of 12/22/2011, the SS established that as long as "each and every one of the partners expressly waives its right", it is feasible to revoke the decision to distribute dividends.

Finally, in Oficio 220-125732 of 09/18/2015, the SS established, regarding the waiver of the dividend, that this "is only possible when the right in question is concrete (...)", and regarding the revocation thereof, that "unless something has been enshrined in the bylaws on the matter, once the decision on the distribution of profits has been adopted, it cannot be revoked or modified, even with the unanimous consent of the shareholders (...)".

This disconcerting position implies that the bylaws of the S.A.S. must be reformed, so that they can validly revoke the decree of their dividends. Likewise, the legality of the bylaws clauses by which certain types of shareholders waive the right to receive dividends would be questioned -in the S.A.S.-.