Luis Prados Ramos



A few days ago I published the entry referring to attendance by representation at the Shareholders' Meetings of mercantile companies, and this one, to a certain extent, is complementary to it, since its inspiration derives from the same company, and from the problems that are currently going through.

I am of the opinion that the understanding of company law is best done by exemplifying the cases in large business groups. This is how I usually tell the staff of my Notary's Office that when they are faced with the drafting of corporate agreements, they should think as if they were the secretary of a large corporation, with many shareholders. But having said this, I must also point out that the company law system, in my opinion, fails when we are faced with small family companies, in which there is total confusion between partners, family and administrators.

This confusion is accentuated when the company's administration system is configured as a Board of Directors, which in reality constitutes what I call mini-partners' meetings, and it is frequent the surprise that some of the director-partners get when the operating rules are not identical.

The differences must start from a theoretical aspect, which is the different function that one fulfills and the other, an aspect that I am going to omit, in order to be as simple and precise as possible, and to be able to highlight the most daily aspects, limiting myself to the limited liability company.

1.- Regulation.

The shareholders' meetings have specific regulations in the Capital Companies Law, with the possibility of adaptations via the bylaws, while the Board of Directors has the possibility of self-regulating its operation.

2.- call initiative.

The meeting is called by the administrators (or liquidators), which when articulated through the Board of Directors, will require a prior agreement of the Board. If there is a CEO, he may call the Meeting if he is within the powers attributed.

The convening of the Council will be made by the President or whoever acts in his place; Exceptionally, it can be called by the administrators who make up at least one third of the members of the board if, prior to a request to the president, the latter, without just cause, has not made the call within a period of one month.

3.- Form of call.-

The call of the Meeting will be made in the manner provided in the bylaws, within the margin allowed by law. That is, it can be an advertisement published on the company's website; in the "Official Gazette of the Mercantile Registry" and in one of the newspapers with the largest circulation in the province in which the registered office is located; or it can be an individual and written communication procedure, which ensures the reception of the announcement.

The convening of the Board does not have any requirement established by law, it is enough that it be carried out through a system that allows it to be known by all the directors.

In both cases, the Universal Meeting is allowed, that is, the meeting without the need for a prior call, provided that all the partners or directors are present or represented and those present unanimously accept the holding of the meeting.

4.- Call period.

The Board of partners must be convened at least 30 days in advance.

It is sufficient for the Board of Directors to be called sufficiently in advance for the Directors to be aware of the call; A minimum term can be established in the bylaws.

5.- Form and agenda of the call.

The call for the Shareholders' Meeting requires that the place, date and time and the agenda of the meeting be determined.

The Board of Directors does not need to determine that agenda, except in the case of a call by the administrators who constitute at least one third of the members of the board, in which case the agenda must be stated. Obviously, the place, date and time must be stated.

6.- Place.

The Shareholders' Meeting must be held, unless otherwise provided in the bylaws, in the municipality where the company has its domicile. If the place of celebration does not appear in the call, it will be understood that the meeting has been called to be held at the registered office. The possibility of setting alternative places for holding the Meeting, such as the capital of the province, is convenient.

The Council can, in principle, be held anywhere.

7.- Quorum of attendance and majorities.

 The Shareholders' Meeting does not require a specific quorum to attend, but it does require a majority of the votes validly cast, as long as they represent, depending on the case, one third, one half or two thirds  of the votes corresponding to the shares into which the share capital is divided.

The board of directors will be validly constituted when the number of directors provided for in the bylaws attend, present or represented, provided that they reach, as a minimum, the majority of the members. It is possible that the statutes establish the necessary attendance of all the directors for the valid constitution of the Council.

Once the agreements are established, they are adopted by a majority of those attending the meeting. This majority can be increased, without reaching unanimity, but not reduced, and it is possible to establish a casting vote for the President.

8.- Assistance through representation.

Attendance by representation in the Shareholders' Meetings is possible, and can be attributed, by the appropriate means, in principle to any person. For a more well-founded treatment of this matter, I refer to this entrance from this blog.

On the Board of Directors, the representation can only be attributed to another Director, and there is no specific way to do so.

9.- Assistance from third parties.

The presence of third parties may be authorized by the president at the Partners' Meetings. However, the Board may revoke the authorization. The statutes may authorize the attendance of directors, managers or technicians.

In the Council, if the Statutes or the Regulations of the Council do not say anything, only the president is the only one who can authorize a third party to attend the meeting, without prejudice to the fact that the Council can agree on the presence of a third party when it considers it convenient.

10- The record.

The minutes of the Board must be approved at the end of the meeting by the Board itself or within the following fifteen days by the president and two auditors

In the case of the Council, the minutes will be approved by the council itself, and in the absence of a statutory provision, they must be carried out at the Council meeting itself or at the following one.

The agreements of the Board of partners as well as the Board of Directors must draw up minutes, which will be taken to the minute book and which will be formed by the president and by the secretary. The minute book may be unique or there may be one for each body.

11.- The notarial deed.

For the Shareholder Meetings, it is expected that the presence of a Notary Public may be required to draw up the minutes of the Meeting and must be done when requested by partners representing 5% of the share capital five days in advance. If there is a notary presence, the approval of the minutes is not required.

The presence of a Notary Public in the Board of Directors is not regulated by law, but nothing prevents him from being required to draw up the minutes, as in the Shareholders' Meetings, and with the same effects.

Lleida on October 9, 2014

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