Administradora de Restaurantes Dividend Prescription Claim Dismissed

I. Ordinary Proceeding for Extinctive Prescription and First-Instance Judgment

Order

The Tenth Civil Court of First Instance of Guatemala, in a ruling dated October 5, 2022, dismissed the extinctive prescription action filed by Administradora de Restaurantes, S.A. against Lisa, S.A. The plaintiff sought to declare time-barred the dividend payment obligations arising from seven annual ordinary shareholder assemblies held on October 3, 2001, May 3, 2004, May 30, 2005, August 14, 2008, December 17, 2009, April 29, 2010, and April 5, 2011, invoking the five-year limitation period under Article 1508 of the Civil Code.

Lisa, S.A. filed its answer in the negative and raised four peremptory exceptions: lack of veracity in the plaintiff's factual allegations; failure to meet legal prerequisites for invoking prescription (Clause 16 of the articles of incorporation required the Board of Directors to set the date and form of payment, a condition never fulfilled); interruption of prescription by judicial actions in related proceedings, including embargo orders obtained by Avícola Villalobos Group entities in proceedings 01044-2012-00279, 01045-2012-00210, 01045-2012-00242, and 01163-2012-00178; and non-existence of the claimed extinctive prescription, as dividend rights constitute imprescriptible property rights.

Lisa, S.A. submitted an economic study quantifying the value of its shares and illegally retained dividends at $334,578,171.00 as of January 2012, comprising $205,614,050.00 in share value and $128,964,121.00 in owed dividends. An accounting certification identified 25 group entities that had not paid dividends to Lisa, S.A. since June 1999, with $5,481,851.00 owed by the group. Lisa, S.A. also demonstrated that Administradora de Restaurantes, S.A. acknowledged in a letter dated November 8, 2018, that dividends could not be paid due to existing judicial embargoes obtained by entities within the same group.

The court focused on the fundamental legal question and concluded that Guatemala's Commercial Code does not contemplate prescription of the right to payment of corporate dividends. It determined that Article 105(1) of the Commercial Code confers upon shareholders an inherent right to participate in the distribution of profits; that the shareholder-company relationship does not constitute the debtor-creditor relationship required by Article 1501 of the Civil Code; that Articles 35 and 111 of the Commercial Code expressly recognize the distribution of accumulated profits from prior fiscal years; and that permitting prescription would produce a prohibited leonine pact under Article 34.

The court rejected all four of Lisa's peremptory exceptions as imprecise and internally contradictory. Nevertheless, the substantive outcome was entirely favorable to Lisa, S.A. through the dismissal of the prescription action itself.

The ruling represents a procedural victory for Lisa, S.A.: the court recognized that decreed dividends are property rights inherent to shareholder status and that the attempt to extinguish them through prescription contravenes the principles of Guatemalan commercial law.

II. Appeal Before the Third Chamber of the Court of Appeals

Appeal 156-2024

Administradora de Restaurantes, S.A. filed an appeal, admitted on June 26, 2024, arguing that the General Shareholders' Assembly is the competent body to decree dividends, that once decreed they are immediately enforceable, and that the first-instance court erred in not applying the Civil Code's five-year limitation period.

The Third Chamber of the Court of Appeals for Civil and Commercial Matters, in its ruling of October 24, 2025, affirmed the first-instance judgment in full. The appellate court determined that the right to participate in profits and in the assets remaining upon liquidation is a minimum right inherent to shareholder status under Articles 15 and 105 of the Commercial Code. It concluded that the fact that a shareholder has not collected dividends during the authorized period does not trigger prescription, and the shareholder may demand them at any time until the company's liquidation.

The Chamber dismissed the appeal, confirmed the first-instance judgment in all its terms, and condemned Administradora de Restaurantes, S.A. to pay appellate costs.

With this ruling, the attempt by Administradora de Restaurantes, S.A. to extinguish by prescription the dividend payment obligations decreed at the 2001 through 2011 assemblies failed conclusively at the appellate level. Lisa, S.A. preserved its rights to the unpaid dividends, and the cost award reinforces the judicial recognition that the claim was without merit.

III. Cassation Appeal Before the Supreme Court of Justice

Administradora de Restaurantes, S.A. filed a cassation appeal on the merits (Case No. 01002-2026-00010) against the ruling of the Third Chamber dated October 24, 2025, alleging violation of law by omission of Article 1508 of the Civil Code and misapplication of Article 105 of the Commercial Code, under Article 621(1) of the Code of Civil and Commercial Procedure.

Lisa, S.A. filed a brief for the oral hearing scheduled for March 30, 2026 before the Civil Chamber of the Supreme Court of Justice, requesting dismissal of the appeal on both fatal technical grounds and substantive legal grounds.

On technical inadmissibility, Lisa, S.A. argued that the appellant inverted the complementarity order required by the Civil Chamber's case law: the omission of Article 1508 of the Civil Code was raised before the misapplication of Article 105 of the Commercial Code, when the rule requires the reverse order. The appeal also failed to justify any exception to this rule despite acknowledging that the Third Chamber applied Article 105, and it did not demonstrate determinancia, the causal link between the alleged errors and the outcome of the ruling.

On substantive inadmissibility, Lisa, S.A. argued that the Third Chamber correctly applied Article 105(1) of the Commercial Code to establish the legal nature of the shareholder's right to participate in profits as a minimum, inherent right that subsists until the company's liquidation. It contended that Article 1508 of the Civil Code governs general extinctive prescription for pure credit relationships between creditor and debtor, inapplicable to the corporate shareholder-company relationship. The brief developed the foundations of imprescriptibility: Article 34 of the Commercial Code voids any clause excluding a partner from earnings; Article 35 contemplates the distribution of accumulated profits without a time limit; and the Commercial Code provides for prescription only in specific cases (Articles 253, 513, 577, and 799) without including dividend payment obligations.

Lisa, S.A. characterized the claim as a fraud upon the law, noting that the plaintiff itself prevented Lisa from collecting dividends through embargoes, exclusion as shareholder, and numerous judicial actions, and now sought to benefit from the prescription it facilitated.

The cassation appeal remains pending before the Civil Chamber of the Supreme Court of Justice.