All Spanish companies must hold, within the first six months of each financial year, an ordinary general shareholder meeting to approve the company’s management, the annual accounts for the previous year, and the allocation of profits. In this context, the holding of exclusively telematic general shareholders’ meetings arises as an alternative to mobility restrictions and difficulties in traveling both within and outside Spain due to COVID-19.
Article 182 of the Revised Text for the Spanish Capital Companies Act (TRLSC), already included the possibility of telematic attendance at Public Liability Company meetings, if the identity of the subject was duly guaranteed and the by-laws provided for this option. However, it was not until the entry into force of Royal Decree-Law 8/2020, dated 17 March, that the possibility of holding telematic general shareholders’ meetings was introduced for both Public Liability Companies and Limited Liability Companies, even if this option was not included in the articles of association. This option initially lasted for the duration of the state of emergency.
Subsequently, this modality was extended, among others, through:
- Royal Decree-Law 21/2020, dated 9 June, on urgent measures of prevention, containment, and coordination to deal with the health crisis created by COVID-19
- Royal Decree-Law 34/2020, dated 17 November, on urgent measures to support business solvency and the energy sector, and on tax matters
- Royal Decree-Law 5/2021, dated 12 March, on extraordinary measures to support business solvency in response to the COVID-19 pandemic.
Finally, on 3 May 2021, Law 5/2021, dated 12 April, which amends the Revised Text of the Spanish Capital Companies Act, approved by Royal Legislative Decree 1/2010, dated 2 July, published on 13 April 2021, comes into force, making it possible to hold general shareholders’ meetings exclusively through telematic means, both for Public Liability Companies and for Limited Liability Companies, via the introduction of Article 182 bis TRLSC.
This provision establishes that the articles of association may allow the directors to call a general shareholders’ meeting, with no physical attendance of shareholders to hold the meeting, which is deemed to be held at the registered office. This modification to the articles of association shall require the approval of at least two-thirds of the share capital.
The general shareholders’ meeting held exclusively by telematic means must duly guarantee the identity and legitimacy of the shareholders, and all members of the meeting must be able to take part with proper means of communication (audio or video, complemented by the possibility of written messages), both to exercise their rights as shareholders and for monitoring the interventions. The directors shall implement the measures to ensure compliance with the above requirements. The announcement of the call to the general shareholders’ meeting must reflect all formalities and procedures related to the registration and drawing up of the list of attendees.
Other modifications to the TRLSC
Other modifications to the TRLSC introduced by Law 5/2021, dated 12 April, include:
- The reinforcement of the directors’ duty of diligence (Article 225)
- The extension of the cases of individuals related to the directors (Article 231)
- The simultaneous registration of the capital increase and its execution (Article 315)
- The right to know the identity of shareholders and ultimate beneficiaries (Articles 497 and 497 bis)
- The so-called loyalty actions (Articles 527 ter a 527 nonies)
- The need for directors of listed companies to be natural individuals (Article 529 bis)
- The remuneration of directors (Articles 529 sexdecies a 529 novodecies)
- Relevant modifications relating to linked transactions (Articles 529 vicies y ss).
Although holding telematic meetings was initially a solution to the mobility restrictions due to COVID-19, what is certain is that introducing exclusively telematic general shareholder meetings via Article 182 bis TRLSC enshrines this possibility permanently.
Saphira Mouzayek
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