In a move aimed at reducing uncertainty and fostering greater stability within the corporate sector, a new order modifying the nullity regime in corporate law was issued on March 12, 2025. This reform, consolidating provisions within the Civil Code, seeks to provide greater clarity and predictability for businesses. The changes, effective October 1, 2025, introduce significant alterations to how corporate decisions can be challenged and potentially nullified.

The “Triple Test” for Nullity: A New Standard

A core element of the reform is the introduction of a “triple test” that plaintiffs must satisfy before a court can declare a corporate decision null and void. This marks a departure from the previous system where nullity was frequently enough pronounced automatically.Now, three specific conditions must be demonstrably met.

1. Impact on Interests: the applicant must prove the alleged irregularity directly and negatively affects their interests. This prevents frivolous lawsuits from parties with no genuine stake in the outcome.Imagine a shareholder suing over a minor procedural error that has no financial impact on their investment; under the new test, such a suit would likely fail.
2. Influence on the Decision: The irregularity must have demonstrably influenced the content of the challenged social decision. It’s not enough to simply point out a flaw; the plaintiff must show that the flaw altered the decision-making process and the ultimate outcome.
3. Excessive Consequences: Even if the first two conditions are met, a court must consider whether the consequences of nullity would be “excessive” at the time of the ruling. This introduces a balancing test,weighing the need for legal compliance against the potential disruption to the company and its stakeholders. For example, if nullifying a major merger would bankrupt the company and cost thousands of jobs, a court might hesitate to impose that remedy.

This “triple test” parallels the “business judgment rule” prevalent in U.S. corporate law, which shields corporate directors from liability for business decisions made in good faith, with due care, and with a reasonable belief that they are acting in the best interests of the corporation.Both concepts aim to prevent courts from second-guessing business decisions unless there is clear evidence of wrongdoing or detrimental impact.

Modifying the Ripple Effects of nullity

Recognizing the potentially devastating consequences of nullifying corporate actions, the March 12th order also modifies the effects of nullity, aiming to protect the stability of companies.

Starting October 1, 2025, the nullity of an appointment or the irregular maintenance of a corporate officer or board member “will not train anymore” the nullity of decisions made by that individual. This change acknowledges that invalidating past decisions based on a flawed appointment could create a cascade of legal challenges and destabilize the company.This approach is similar to the *de facto* officer doctrine in U.S. law, which recognizes the validity of actions taken by individuals who, though later found to have been improperly appointed, acted in good faith and under the color of authority.

furthermore, the order allows for the deferral of nullity’s effects if retroactively applying it would produce “manifestly excessive” outcomes for the social interest. This provides courts with the flexibility to mitigate potentially catastrophic consequences, ensuring that the remedy aligns with the overall objective of justice. This is akin to equitable remedies available in U.S. courts,where judges can tailor remedies to achieve fairness and prevent unjust enrichment or hardship.

The statute of limitations for actions in nullity related to the company, its social decisions after its constitution, or contributions has also been reduced from three years to two years. This shorter timeframe encourages prompt action and reduces the period of uncertainty for companies. This aligns with the general trend in U.S. litigation towards shorter statutes of limitations to promote efficiency and finality in legal proceedings.

Narrowing the grounds for Nullity: Violation of Statutes

A noteworthy shift under the new order is that, with limited exceptions stipulated by law, “the violation of the statutes does not constitute a cause of nullity.” This considerably narrows the grounds upon which corporate decisions can be challenged.

The order, however, creates an exception: companies can include provisions in their statutes that specifically allow for the nullity of social decisions taken in violation of those rules. In such cases, no action in nullity is possible outside of these specifically enumerated provisions.

This approach encourages companies to clearly define what constitutes a critical violation warranting nullity within their own governing documents. It also provides a degree of certainty, as stakeholders will know exactly which statutory violations could lead to legal challenges. This parallels the concept of “corporate governance guidelines” adopted by many U.S.companies, which outline best practices and procedures to ensure compliance with laws and regulations, and to promote ethical and responsible corporate behavior.

Implications for U.S. Businesses

While these specific legal changes are occurring outside the U.S., understanding these shifts in corporate law thinking can offer valuable insights for American businesses. The emphasis on proportionality, the “triple test,” and the narrowing of grounds for nullity reflect a broader trend toward balancing the need for accountability with the desire to promote economic stability and prevent frivolous litigation.

U.S. companies operating internationally or engaging in cross-border transactions should be aware of these evolving legal standards. Moreover, the principles underlying these changes – such as protecting minority shareholders, ensuring fair treatment of stakeholders, and promoting responsible corporate governance – are increasingly relevant in the U.S. context. For example, the rise of ESG (Environmental, social, and Governance) investing reflects a growing demand for companies to consider the social and environmental impact of their decisions, not just shareholder value.

Potential Counterarguments

While the reforms aim to enhance clarity and stability, some argue that they could inadvertently shield corporate malfeasance. Critics might contend that the “triple test” sets too high a bar for plaintiffs, making it arduous to challenge even genuinely flawed decisions.Similarly, narrowing the grounds for nullity could leave stakeholders vulnerable to abuse of power by corporate insiders.

Though, proponents counter that the reforms are carefully calibrated to address legitimate concerns about uncertainty and frivolous litigation, while still providing adequate safeguards against corporate wrongdoing. They emphasize that the courts retain the power to intervene in cases of fraud, breach of fiduciary duty, or other serious violations of the law.

Looking Ahead

As these changes take effect on October 1,2025,it will be crucial to monitor their impact on corporate governance and litigation. it will be crucial to observe how the courts interpret and apply the new “triple test,” and whether the narrowing of grounds for nullity leads to unintended consequences. Only time will tell whether these reforms achieve their intended goals of promoting clarity, stability, and fairness within the corporate sector.