By Nick Potter

In this series we look at real-life examples of the most common mistakes in English by native Spanish lawyers.

These and lots more invaluable tips are compiled in two e-books/paperbacks, here: 50 English Tips for Spanish Professionals and More English Tips for Spanish Professionals.

participation

Some false friends only exist in particular specialist fields – they may only be a false friend in business usage, for example.

In everyday language, participar means to participate or take part (in a protest, a competition or an event, say).

Question: In which ONE of A – E below is “participate/participation” used correctly?

A We could define the transaction as the sale of a participation representing up to 100% of the share capital of the Spanish Target Company
B A is a Company participated at 99,9% by B
C If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office
D If the company is wound up, shareholders are entitled to participate in the resulting equity, in proportion to their contributions
E The incorporation of subsidiaries and/or subscription, purchase or sale of shares or quotas in other companies

The answer is C. It is taken from a Loan Market Association Syndicated Multicurrency Term and Revolving Facilities Agreement (soon to be a major movie).

When a borrower takes out a loan from a syndicate of banks, each lender “participates” in that loan. It has a participation in the relevant facility, the money it commits to lending. This is one example of where an old meaning of participation is still used in corporate finance. Lucky employees, directors or shareholders can also participate in a company’s profits.

I’m using participate here to mean “to share in” something. So why are all the other examples wrong?

One of the RAE’s definitions of participar is: Tener parte en una sociedad o negocio o ser socio de ellos. Like participar, the English word participate originates in the 15th century and also derives from the Latin verb, participare, to share in.

However, in modern English, tener parte en una sociedad o negocio means to own or have shares, shareholdings or stakes in companies or businesses. Ser socio means to be a shareholder or member of those companies.

So within this meaning, participar translates as to own, have a share in or have a stake in.

A We could define the transaction as the sale of a participation stake representing up to 100% of the share capital of the Spanish Target Company
B A is a Company participated at 99,9% 99.9% owned by B
C If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office [CORRECT]
D If the company is wound up, shareholders are entitled to participate share in the resulting equity, in proportion to their contributions

Hang on, you say! Where’s the false friend in E?

It’s cuota.

In E, the author translated acciones o participaciones as “shares or quotas”.

Why?

To find out, let’s take a look at Spain’s Companies Act (Ley de Sociedades de Capital). The law deals with different types of companies with a share capital and, like any similar legislation elsewhere in the world, makes a distinction between a public limited company (known as a sociedad anónima) and a private company limited by shares (sociedad de responsabilidad limitada).

The rules are different for private company shares than for shares in public companies.

Article 92 says “Las participaciones sociales no podrán estar representadas por medio de títulos o de anotaciones en cuenta, ni denominarse acciones, y en ningún caso tendrán el carácter de valores” (my underlining).

Spanish lawmakers (el legislador español – note the plural in English!) chose to make a linguistic distinction between shares in these different kinds of companies i.e. to call them different things. Shares in a public company are acciones. Shares in a private company are participaciones sociales. This different language extends to issuing shares (public company shares se emiten; private company shares se crean), subscribing for shares (acciones are suscritos; participaciones are asumidos) and share premium (prima de emisión; prima de asunción). They even give different names to private and public companies’ books.

But here’s the thing. This is not a linguistic distinction that is made, or can be made, anywhere in the English-speaking world. The EU translates both acciones and participaciones sociales in companies as shares.

Sadly, or perhaps amusingly, many translators of acciones o participaciones have needlessly searched for a second word as a synonym for shares e.g. shares or quotas. This is wrong. Cuota in Spanish is a false friend here. A company’s cuota de mercado is its market share, for example. Not a market quota.

Quotas are cuotas in the sense of fixed numbers of people or things required or allowed by an authority, as in this example:

  • EU ministers have rejected binding quotas for the distribution of refugees, despite the difficulties faced by Greece, Italy and Hungary

So if you talk about quotas in companies, people will think you are referring to production targets set by management or minimum numbers of female directors required by a law. Not shares.

In E, two different words in Spanish translate the same way in English.

E The incorporation of subsidiaries and/or subscription, purchase or sale of shares or quotas in other companies
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