The current health crisis of COVID-19 and the declaration of a new state of alarm by the Royal Decree 926/2020, of 25 October, extended by the Congress of Deputies until 9 May 2021, has made it necessary to extend the term of some of the measures adopted by Royal Decree 8/2020, of 17 March.
Capital companies and other legal entities under private law (such as civil companies, cooperative societies, associations, and foundations) that have not been able to modify their articles of association to allow the holding of the general meeting or meetings of associates or partners by telematic means, may continue to use these means exceptionally during the year 2021.
The measures that have come into force on November 18 and that companies can apply throughout the year 2021, although these are not provided for in their articles of association, are the following:
- Corporations (“Sociedades Anónimas”) (listed or unlisted). The board of directors may provide in the notice of the general meeting for attendance by telematic means and remote voting (provided that the requirements established in the Law on Corporations for these companies and described below are met) and the holding of the meeting in any place in the national territory.
- Limited Liability Companies (“Sociedades de responsabilidad limitada”) and Limited Partnerships (“Comanditaria por acciones”). The General Meeting may be held by videoconference or by multiple telephone conference, provided that (i) people entitled to attend or those representing them have the necessary means (e.g., Internet connection, camera, microphone, etc.) and (ii) the secretary of the meeting recognizes their identity and states so in the minutes, which must be sent immediately to their e-mail addresses.
- Associations, civil societies, cooperative societies, foundations. The Assembly or the meeting of associates or members of the rest of the legal entities of private law may be held by videoconference or by multiple telephone conference, provided that (i) people entitled to attend or those representing them have the necessary means and (ii) the secretary of the meeting recognizes their identity and states so in the minutes, which must be sent immediately to their e-mail addresses.
During 2020, a large number of companies in the industry have held their meetings telematically, although, in some cases, their articles of association already provided for the use of these means. Therefore, we would like to remind our readers that the current Capital Companies Law allows the possibility that the articles of association provide for the attendance to the meeting by telematic means, both in corporations, listed or not, and in limited liability companies, if the following aspects are generally provided for (Articles 182, 189 and 521 of the Capital Companies Law):
- The identity of the subject and the security of the electronic communications are guaranteed.
- The terms, forms and ways of exercising the rights of the shareholders are expressed in the call for a meeting, allowing the orderly development of the meeting. For example, the directors may establish that the contributions and proposed resolutions are to be sent to the company prior to the time of the constitution of the meeting by those who are going to attend the meeting by telematic means, or that the replies to the shareholders who exercise their information rights during the meeting are to be made in writing during the seven (7) days following the end of the meeting.
In case of listed companies, in addition to the above, the Regulations of the General Meeting may provide for the exercise of the right to attend and vote remotely, including some or all the following forms:
- The real-time transmission of the general meeting. The Good Governance Code recommends that listed companies broadcast live through their web page the holding of the meetings and that the company has procedures that allow the delegation and exercise of the vote by telematic means;
- two-way communication in real time, so that shareholders can attend the general meeting from a different location. The Good Governance Code recommends that in the case of high capitalization companies, the attendance and active participation in the general meeting be allowed, to the extent that it is proportionate; and/or
- a procedure for voting before or during the general meeting without the need to appoint a representative who is physically at the meeting. Directive 2017/828 requires that when voting is done telematically, electronic confirmation of receipt of the vote be sent to the person who voted. Likewise, once the general meeting has been held and within one (1) month, the shareholder or its representative and the ultimate beneficiary may request a confirmation that the votes corresponding to their shares have been correctly registered and accounted for by the company (Draft Law for the transposition of the Directive (EU) 2017/828, introducing a new Article 527 (bis) in the Capital Companies Law).
Consequently, the companies will be able to hold the general meetings of shareholders through telematic means during 2021, without the need to modify their articles of association. However, our recommendation is that the companies propose in their next general meeting the amendment of their bylaws with the purpose of collecting the attendance and voting rights through telematic means.