Company Law 26. March 2020

Spain: Measures adopted regarding the functioning of the governing bodies of companies

26. March 2020
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Ivo Portabales
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act legal Spain

Some measures adopted by Royal Decree-Law 8/2020, of 17 March, on extraordinary urgent measures to face the economic and social impact of COVID-19 (“RDL 8/2020″), articles 40 to 42, regarding the functioning of the governing bodies of companies during 2020 are detailed below.

On the convening and holding of General Meetings and the decision-making process

  • In the event General Meetings were convened before the state of alarm was declared but they were supposed to be held after such notice, the company’s governing body may modify the time and place of such meeting (or suspend its celebration) by publishing a note on the company’s website at least 48 hours in advance, or publishing said note in the Spanish Official State Gazette (in the event the company has no website). If the General Meeting is suspended altogether, a new one must be convened within a month after the state of alarm ends.
  • Sessions can be held telematically, in real time. Under these circumstances, sessions will be deemed to have taken place in the company’s registered address.
  • Agreements can be adopted by written votes without a meeting, if the chairperson so decides and at least two members of the governing body request it.

On the submittal of financial statements and other compulsory documents

  • Generally speaking, the deadlines currently in force for the drafting of financial statements and the submittal of reports and other compulsory documents are suspended. Once the state of alarm ends, these deadlines shall be reinstated, and companies will have three months for the drafting and submittal.
  • The period to approve the financial statements, once drafted, shall be three months from the moment the drafting period ends.
  • In the event of a mandatory audit, the period to verify the financial statements that were formulated before the state of alarm was declared will be of two months after it ends.

Other corporate provisions applicable during the state of alarm

  • Partners may not exercise their right of withdrawal until the state of alarm ends.
  • The reimbursement of contributions made by cooperative partners is suspended until six months after the state of alarm ends.
  • If the term for which the company was constituted ends, or the latter is the subject of a dissolution of some kind, the automatic dissolution shall remain on hold until (i) two months after the state of alarm ends (preferred option) or (ii) the deadline to adopt a dissolution agreement expires, from the date the state of alarm ends.
  • Administrators will not be liable for the corporate debts contracted while the state of alarm was in force, provided the cause for dissolution also falls within this period.
  • The expiration of registry entries is cancelled and will be reinstated the day after the state of alarm ends.

Provisions related to listed companies

  • The publication and submittal of their annual financial report to the Spanish National Stock Market Commission (CNMV), together with that of the audit report, may be done up to six months after the financial year ends.
  • The General Shareholders’ Meeting can be held within the first ten months of the business year.
  • When convening the Meeting, the Board of Directors can call for its online celebration and the remote casting of votes. The Board can also pick any place within the Spanish territory for its celebration, even if these options are not included in the company bylaws.
  • If, however, the measures imposed by the authorities prevented the General Shareholders’ Meeting from being held at the place specified in the call but the Meeting was validly constituted, another place in the same province could be chosen instead (provided the Meeting was held that same day and attendees were given reasonable time to reach the new destination).
  • In the event the Meeting had not yet been validly constituted, a call for another Meeting that has the same agenda and notice requirements as the one not held may be given (i.e., at least five days in advance).
  • Furthermore, the agreements telematically adopted by the Board of Directors shall be considered valid, even if this option is not part of the company bylaws.

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Ivo Portabales
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act legal - DA Lawyers
About the author

Ivo Portabales

Partner

More than thirty years experience in Corporate Law, M&A, and other commercial restructuring processes involving private and listed companies (private equity transactions, tender offers, venture capital, family business, etc.). Adviser on the creation of REITs and its IPO process and investments of venture capital funds in technology-based companies. Founder and Managing Partner of act DA LAWYERS, a law office that has been consolidating its position in Business Law since 1988.

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