The Role of Expert Forensic Opinion in Shareholder Disputes

Why the law is not enough: the economic dimension of the shareholder conflict

The Spanish business fabric rests overwhelmingly on SMEs and mid-market companies, where the family business predominates. In these companies, emotional and intergenerational dynamics coexist with strictly financial objectives, and that mix makes them fertile ground for friction between the management body, the controlling shareholder and the minority.

The key point is that these conflicts rarely come down to interpreting a clause. What is really at stake is usually the disruption of the company’s economic equilibrium: the extraction of value by the controlling shareholder, the asymmetry in how the wealth generated by the business is shared, or disagreement over how much the company is worth when a partner wishes —or is obliged— to leave. In these disputes, the legal and the financial dimensions are inseparable.

The Spanish Companies Act (Ley de Sociedades de Capital, LSC) sets the framework —it allows challenges to resolutions that are contrary to the law, the bylaws or the corporate interest, and treats as harmful a resolution imposed abusively by the majority— but applying it requires answering questions that are purely economic:

• Was the transaction genuinely justified for the company, or were there reasonable alternatives?
• Was the consideration equivalent to the value transferred? Were terms applied that differed from market conditions?
• Did the decision effectively reduce the company’s assets or its economic prospects?
• Did the majority obtain a private benefit at the expense of the minority?
• Did the absence of dividends respond to genuine investment and solvency needs, or to a strategy of pressure?
• Is there a causal link between the director’s conduct and the loss being claimed?

Answering this requires far more than reading a balance sheet. It calls for understanding the business model, cash generation, intra-group relationships, pricing policy and the context in which the decision was taken. This is where the economic-financial expert and forensic report stops being an accessory and becomes the bridge between the operational reality of the company and the court’s decision.

What an expert forensic opinion is — and is not

In the corporate context, an expert forensic opinion is the professional conclusion issued by a specialist after analysing the economic, accounting and operational information relevant to the dispute. It usually takes the form of an expert report, although the work can begin well before proceedings start: to guide a negotiation, assess whether a claim is viable, or decide which documents should be requested.

It is worth clearing up, at the outset, a very common confusion —that between three pieces of work which look alike but are not interchangeable:

• Statutory audit: verifies whether the financial statements give a true and fair view under the applicable framework. It works through statistical sampling and materiality, and is not designed to resolve a specific dispute or to detect deliberately concealed fraud. A clean audit does not prove the absence of corporate harm.
• Forensic investigation: is aimed at establishing facts —identifying irregularities, following the money, reconstructing transactions, analysing related-party relationships— with no materiality threshold that would leave small items out.
• Expert report: translates that analysis into a defined evidentiary question, setting out the documents examined, the methodology, the limitations and the conclusions the expert can defend in court.

The essential difference is one of mindset: the audit presumes management’s good faith and checks compliance with the standard; the forensic analysis starts from professional scepticism and is geared towards proving the specific fact, reconstructing intent and quantifying the loss. You can explore this distinction in our guide to Forensic Finance.

An important point for whoever engages the expert: the expert’s task is not to replace the judge or to declare whether conduct was lawful. Their role is to analyse the facts from an economic standpoint, test hypotheses and quantify consequences. When the report is well framed, it moves the case from sweeping assertions —“the majority harmed me”, “the director stripped the company”, “my shares were worth far more”— to questions that can actually be proved.

The legal framework: expert evidence and “sana crítica”

The value of a forensic report in court depends not only on its technical quality but on how it fits within the expert-evidence regime of the Spanish Civil Procedure Act (Ley de Enjuiciamiento Civil, LEC). For the business owner in litigation, knowing three provisions avoids surprises.

Article 335.2 LEC requires every expert to state, under oath or promise, that they have acted with the greatest possible objectivity, taking into account both what favours and what harms either party. This duty applies also to a party-appointed expert: their role is not to defend a figure at any cost, but to issue a defensible technical opinion.

Article 343 LEC governs the challenge (“tacha”) of a party-appointed expert (kinship, an interest in the matter, a relationship of dependence or any other circumstance that undermines their professional standing). The challenge does not annul the report, but the court weighs it; hence a methodologically impeccable report withstands cross-examination far better.

And Article 348 LEC provides that the court will assess expert reports “according to the rules of sound criticism” (sana crítica). This grants the judge no arbitrary power: it imposes a reasoned, rational and logical process. The Supreme Court has consolidated that, in applying sound criticism, the judge weighs the expert’s standing and qualifications, the quality of the primary data, the scientific validity of the methodology and the internal coherence of the conclusions.

The practical lesson is blunt: where there are conflicting reports, the judge cannot pick one “just because”; they must give reasons why one report offers greater certainty, neutrality and empirical support. The best-argued and best-documented report wins, not the one claiming the highest figure.

Statutory audit versus forensic expert report

This table sums up why an audit report, on its own, almost never settles a shareholder dispute:

The main shareholder disputes and what the expert brings to each

Forensic opinion adapts to the type of conflict. These are the most frequent scenarios in the mid-market and the family business.

Challenging resolutions and abuse by the majority

The dispute may concern a capital increase, a related-party transaction, the sale of an asset, the approval of the accounts or a distribution decision. Abuse by the majority (art. 204 LSC) does not require the resolution to cause direct harm to the company: it is enough that it be imposed without justification to obtain a private advantage to the detriment of the minority. It is usually channelled through dilutive capital increases and the systematic retention of profits.

Faced with a capital increase, it is not enough for the company to claim it “needed financing”. The expert checks whether there was a genuine need for funds, what alternatives existed, how the issue price was set and what economic effect it had on the shareholders who did not subscribe: reconstructing the value before and after and showing whether value was transferred to those who took up the new shares. The expert does not decide whether the resolution is abusive; they provide the elements to assess its economic rationality and its effects on the company’s assets.

Disputes over the absence of dividends

Dividend policy is a recurring source of tension, especially in closely held companies where the minority has no market in which to sell. Article 348 bis LSC grants, subject to requirements, a right of withdrawal for insufficient distribution of dividends.

Retaining profits can be prudent if the company needs to preserve liquidity, reduce debt or fund profitable growth —and it is worth remembering that accounting profit is not the same as available cash—. But it can also be a means of pressure if, while dividends are refused, value is extracted by other routes: disproportionate remuneration, related-party contracts, loans, leases or personal expenses.

Forensic analysis looks at the whole set of cash flows —not just the proposed allocation of the result— and studies the capital structure, the trend in idle cash balances, debt coverage and the viability of the alleged investment plans. Showing that the company generates recurring cash surpluses well above its needs makes it possible to establish that the refusal to distribute is aimed at starving out the minority.

Withdrawal and exclusion of shareholders: fair value

When a shareholder leaves, valuing their shares is usually the heart of the conflict (arts. 353 et seq. LSC). “Fair value” is an indeterminate legal concept that requires precise technical translation. Absent agreement, an independent expert may be appointed by the Commercial Registry, and methodology becomes the battleground.

Valuing is not a matter of mechanically applying a multiple to EBITDA. One must define the valuation date, the information available at that date, the perspective, the going-concern assumption and the appropriate method, and normalise the results: in closely held companies it is common to find directors’ salaries above market, personal expenses borne by the company, real estate unrelated to the business or related-party transactions. The aim is not to inflate or depress profit, but to arrive at a base representative of the recurring economic capacity of the business. Our approach to business valuation combines several methods rather than relying on a single one.

A critical point is whether or not to apply minority or illiquidity discounts. The majority tends to argue that a minority stake lacks control and should be worth less. But in cases of forced withdrawal or exclusion, the prevailing practice holds that fair value must guarantee the exiting shareholder is made whole against the full value of the business as a going concern: applying a minority discount in favour of those who remain would amount to unjust enrichment at the expense of the departing shareholder.

Directors’ liability claims

Directors are liable to the company, the shareholders and the creditors for loss caused by acts or omissions contrary to the law or the bylaws, or in breach of the duties of office, where there is wilful misconduct or negligence (arts. 236 to 241 LSC). In addition, Article 367 LSC establishes joint and several liability for corporate debts where, a ground for dissolution having arisen (for example, losses reducing net equity below half the share capital), the general meeting is not convened within two months.

For the claim to succeed, three elements are needed: unlawful or negligent conduct, a certain and quantifiable loss, and a direct causal link between the two. The greatest difficulty is usually precisely the quantification and its connection to the conduct: the reduction in the company’s assets does not automatically equal the balance of an account or the entire amount of the transaction in dispute.

A typical example: a director sells an asset to a related entity at an allegedly low price. The loss is not the total value of the asset, but the difference between what was received and what would reasonably have been obtained on market terms, considering its characteristics, costs, liquidity and the relevant date.

In breach-of-loyalty cases (art. 228 LSC), the expert traces the diversion of business opportunities, inflated or non-existent contracts, unjustified use of cash and asset sales below market. And in liability for debts under art. 367, they carry out a timing analysis to pinpoint the exact date of the ground for dissolution and classify each debt as prior or subsequent to that milestone —because the director is liable only for the subsequent ones—.

Related-party transactions and value transfer

Many disputes arise from transactions between the company and shareholders, directors, family members or group entities: purchases, leases, management services, loans, guarantees or asset transfers. The object of the report is to determine whether the company gave more value than it received or assumed risks that were not its own, comparing prices, margins, rates and terms with market references (the arm’s length principle).

The difficulty is not only finding a comparable, but adjusting it: comparing the rate on an intra-group loan with bank financing requires considering guarantees, subordination, the borrower’s solvency and maturity. Two different rates do not, in themselves, prove an improper transfer of value. Often, a reasoned, transparent range is more reliable than a seemingly precise external figure.

Post-closing disputes in M&A transactions

After a business sale, disputes arise when the buyer detects deviations between what was presented in due diligence and the reality discovered on taking control. They usually revolve around the working-capital adjustment against the agreed target, the definition of net financial debt and debt-like items, and breaches of the representations and warranties (hidden liabilities, unprovisioned contingencies). The expert analyses the consistency of the accounting criteria applied in the closing accounts against past practice and isolates manoeuvres such as stretching supplier payments or failing to provision bad debts, in order to recalculate the indemnity or price adjustment.

Accounting manipulation and diversion of funds

Sometimes the conflict arises because the shareholder suspects the financial information does not reflect reality. Warning signs include: unusual manual entries, unsupported invoices, early revenue recognition, personal expenses borne by the company, large related-party balances, overstated assets, loans that are never repaid or discrepancies between the accounts and the bank movements. The investigation reconstructs the flow of funds and measures the impact; for its systematic treatment, see our internal fraud action guide and the specific analysis in the forensic report on accounting fraud. One caveat is worth stressing: not every anomaly is fraud. A rigorous report distinguishes between error, control weakness, a debatable business decision and intentional wrongdoing.

Matrix of disputes, legal framework and methodology

The toolkit: valuation and quantification of loss

The strength of an expert report depends on the scientific validity of its foundations. There is no single method valid for every case: the choice depends on the business model, the quality of the information and the purpose of the valuation. Even so, there are widely accepted frameworks worth knowing.

Valuation: discounted cash flow

Discounted free cash flow (DCF) is the most widely recognised approach for valuing companies with the ability to generate cash. Formally:

EV = Σ  FCFFt / (1 + WACC)^t   +   TVN / (1 + WACC)^N

where EV is enterprise value, FCFFt the free cash flow to the firm in period t, WACC the weighted average cost of capital, N the explicit projection horizon and TVN the terminal value, calculated with the Gordon-Shapiro formula assuming a stable perpetual growth rate g:

TVN = FCFFN · (1 + g) / (WACC − g)

The cost of capital weights the cost of equity (Ke) and the cost of debt (Kd), adjusted for the tax effect:

WACC = Ke · E/(E+D) + Kd · (1 − τ) · D/(E+D)

and the cost of equity is estimated with the CAPM, adding specific risk premia where the mid-market company shows singular features (small size, customer concentration, dependence on key people):

Ke = Rf + βL · (Rm − Rf) + αsize + αspecific

Before projecting, the historical EBITDA must be normalised: removing non-recurring expenses, directors’ salaries above market, the cost of prior litigation and extraordinary items. Without this clean-up, the projections are tainted by management’s past conduct and lose their evidentiary force.

Quantifying the loss: actual damage and loss of profits

The economic claim breaks down into two heads. Actual damage (damnum emergens) is the direct, present and measurable loss of assets: illegitimate cash outflows, diverted assets and unjustified liabilities assumed by the company. Loss of profits (lucrum cessans) is the reasonably expected gain that was not obtained, and requires counterfactual modelling: comparing the real scenario (affected by the conduct) with a reasonable counterfactual scenario (the trajectory the company would have followed without the harmful event), discounted to present value:

LC = Σ  (EBITDAcounterfactual,t − EBITDAreal,t) / (1 + r)^t

A key warning for the claimant here: Supreme Court case law is restrictive on loss of profits. It requires proof to a “reasonable likelihood” and rejects merely hypothetical gains —so-called “dreams of fortune”—. The counterfactual scenario cannot be an idealised version of the business: it must rest on contemporaneous evidence (historical results, budgets approved before the conflict, the order book, sector trends) and deduct the costs that obtaining those revenues would have required. A loss of turnover is not a loss of profit.

Two further cautions a good report always observes: avoiding double counting between actual damage and loss of profits (not adding the full value of a business line and, on top of that, its future profits where both reflect the same loss) and presenting sensitivity analysis: showing what happens if growth, margin, the discount rate or the duration of the loss vary. Sensitivities do not weaken the report; they show which part of the conclusion is backed by evidence and which depends on estimates. Where the information does not allow a single robust figure, presenting a reasoned range is more professional.

How a forensic expert works (and what you should demand)

For the business owner who will rely on an expert report, understanding the sequence of work helps to recognise a solid report and spot a fragile one.

• Turn the dispute into technical questions. The starting point is not “prove the other side acted wrongly”, but to frame questions that can be answered: determine fair value at a date, quantify the impact of certain transactions, reconstruct flows between related parties, or isolate what part of a loss derives from a specific decision.
• Design the document universe. The financial statements are only one part: the journal and ledgers, bank statements, invoices, contracts, minutes and emails all matter. A well-designed universe helps the lawyer make targeted disclosure requests (specific accounts, periods and counterparties) rather than asking for “all the accounting”.
• Ensure traceability. Every figure must be reconstructable back to its source document. Reproducibility —another professional being able to follow the same path— reduces reliance on the expert’s personal authority and is what holds the model together under cross-examination.
• Reconstruct the economic substance. A loan may function as a transfer with no real expectation of repayment; an invoiced service may lack evidence it was ever provided. Reconstructing is not correcting the accounts to the expert’s taste, but contrasting documents, dates and subsequent conduct to explain what happened.
• Write for a non-financial reader. The body of the report must take the reader from the question to the answer; the extensive calculations belong in annexes. The best report is not the longest, but the one that lets you see quickly what was analysed, what evidence supports it and how each conclusion is reached.
• Critically review the opposing report. Check whether the sources are adequate, whether the figures reconcile, whether the valuation date is correct, whether results were normalised or whether the counterfactual is viable. Effective criticism is technical: it is not about noting that the other expert is paid by the opposing side —both party experts are paid— but about showing which reasoning is more transparent and verifiable.
• Defend the report at the hearing. This is the decisive moment. The expert must master the annexes, hold their conclusions under cross-examination, distinguish data from opinion and explain simply, using visuals. Confidence is not denying all uncertainty, but showing it has been identified and handled correctly. A confused oral answer can undermine a technically impeccable written report.

Common vulnerabilities and how to protect against them

When to bring in the expert: the earlier, the better

One of the errors that most limits the usefulness of the report is bringing the expert in late. The LEC requires, as a general rule, that party-appointed reports be filed with the claim or the defence, so leaving the expert until the end dangerously narrows the margin. Bringing them in at the pre-litigation stage makes it possible to:

• Know whether the claim has economic viability: whether there is a quantifiable and provable loss or whether the claim rests on expectations the judge will dismiss.
• Size the amount realistically, avoiding inflated claims that erode credibility and short claims that leave money on the table.
• Preserve the evidence —records, bank movements, related-party documentation— before it deteriorates or disappears.
• Correctly define the date and object of the valuation and prepare precise disclosure requests.

Early diagnosis can also lead to an uncomfortable but valuable conclusion: that the loss is smaller than expected, that it cannot be separated from other causes, or that the information does not allow a robust opinion. Knowing this before filing saves costs and improves the negotiating position. In distress or insolvency situations time is especially pressing: clawback actions look back to the two years before the petition, so it is worth analysing the restructuring options and the insolvency date as early as possible.

Mistakes that weaken a shareholder-dispute report (and that you should avoid)

• Confusing the client’s interest with the technical conclusion. Inflated figures make it easy to attack the report as a whole: once an excessive item is discredited, the court distrusts the rest.
• Choosing the figure first and the method afterwards. The method is justified by its fit with the question, the business and the evidence, not by the result it produces.
• Using forecasts created for the litigation without corroboration. A projection does not become reliable by being embedded in a detailed model; it must be compared with historical results and earlier budgets.
• Ignoring the relevant date. Value depends on the reference date and the information knowable then; subsequent events are used only with caution.
• Confusing enterprise value, equity value and loss. These are distinct concepts; the report must explain how it moves from one to another.
• Applying discounts or premia without basis. Illiquidity or lack of control may be relevant, but not as generic percentages left unjustified.
• Omitting unfavourable information. An acknowledged limitation can be managed; an omission discovered under cross-examination discredits the whole report.
• Overwhelming the court. An excess of pages and jargon hides the answer and makes it harder for the judge to adopt the reasoning.

The report also creates value outside the courtroom

Although the report is prepared with litigation in mind, its usefulness often appears before judgment. An independent valuation brings closer the positions of partners arguing over an exit; the reconstruction of transactions dispels unfounded suspicions or confirms well-founded ones; a reasoned quantification of the risk facilitates mediation, a settlement or the buy-out of a partner’s stake. Once the parties understand the reasonable range of value or loss, the negotiation stops resting on positions and begins to rest on economic scenarios.

The forensic work also tends to expose corporate-governance weaknesses —the absence of policies for related-party transactions, lack of segregation of duties, excessive banking powers, poor documentation of decisions or weak control over intra-group flows— whose correction reduces the likelihood of the conflict recurring. In family businesses, where ownership, management and personal relationships intertwine, this combination of forensic analysis and Corporate Finance is especially valuable: it connects the evidence with the true drivers of the business rather than stopping at the immediate accounting effect of a transaction.

Conclusion: from suspicion to a defensible claim

In a shareholder dispute, the parties begin with opposing accounts of the same facts. For one, the transaction was necessary; for the other, it was value extraction. For some partners, the company could not distribute dividends; for others, the retention was pure pressure. Expert forensic opinion provides the method to order that controversy: it identifies the economic question, gathers the evidence, reconstructs the transactions, tests scenarios and quantifies the consequences on transparent criteria.

Its relevance lies not in dressing a legal position in complex numbers, but in making assertions verifiable. An excellent report is technically sound, procedurally timely, comprehensible and defensible under cross-examination; it acknowledges uncertainty without abandoning a conclusion and keeps its objectivity even when commissioned by one of the parties. The difference between a suspicion and a winning claim usually lies precisely in the quality of that evidence.

At Maraz Corporate Finance we prepare economic-financial expert reports and forensic work for conflicts between partners, liability claims, share valuation, related-party transactions and quantification of loss, combining financial analysis, valuation experience and clarity of exposition. If you are facing a shareholder dispute and need to turn complex information into evidence that withstands the rules of sound criticism, get in touch with us.

Javier de Rojas Roca de Togores

Partner — Maraz Corporate Finance

FAQs - The role of Expert Forensic Opinion in shareholder disputes

What is the difference between an audit and a forensic report?

An audit checks that the accounts comply with the standard (a compliance approach, with sampling and materiality). A forensic report investigates a specific fact for a dispute: it reconstructs transactions, follows the money and quantifies the loss with a view to evidence. A clean audit does not prove the absence of corporate harm.

I am a minority shareholder and suspect asset stripping. What can I do?

Commission an independent forensic analysis. The expert quantifies the harm from related-party transactions, disproportionate remuneration or abusive dividend retention, and values your shares. Acting early preserves the evidence and, in a distress situation, allows the insolvency date and possible clawback actions to be analysed before the legal deadline expires.

Can I claim loss of profits without a financial report?

It is possible, but very hard to win. The Supreme Court requires proof to a “reasonable likelihood”, not as a hypothetical gain. Without a model that quantifies the lost profits on a reasoned basis with verifiable data, the judge usually dismisses the claim.

Is a report useful if it is paid for by the litigating party?

Yes, provided it is objective. The law requires the party-appointed expert to consider both what is favourable and unfavourable, and penalises malicious falsehood. A report that looks “tailor-made” is easily challenged; objectivity is not only ethical, it is a tactical advantage, because it withstands sound criticism better.

When should the expert be brought in?

At the pre-litigation stage. A preliminary analysis says whether the claim is viable, helps size the amount realistically, preserves the evidence and serves as a negotiating lever. Many disputes settle without trial when one party puts a solid technical report on the table.