In this time of economic crisis, the conflict is just around the corner, and what seemed like bomb-proof friendships and business projects are called into question by economic hardships, in the same way that personal relationships deteriorate to the point of not being able to wanting to see in person, the one with whom until recently we shared our life and business.
This means that third parties are increasingly used to attend the Shareholders' Meetings of commercial companies, so that feelings do not surface in the midst of business relationships. It happens that the regulation that the Law of Capital Companies has for the representation in the Meetings of partners of limited companies and limited companies is not particularly clear, to say because of the enormous doubts that arise on a day-to-day basis. That has been the reason that has inspired me to write these lines so that they operate as a quick summary of the representation in the Boards of partners.
The regulation of this matter is contained in articles 183 to 187 of the Capital Companies Law. For a better understanding of the matter, we will differentiate between public limited companies and limited companies.
1.- LIMITED COMPANIES.
a.- The general rule.
The general rule is that any shareholder can be represented at the Shareholders' Meeting by another person, fulfilling two conditions:
a´) There must be a representation document, either in writing or electronically for those companies that can count on this means. Obviously there is no impediment for it to be a public deed, being advisable, in those cases where the validity of a private document may be called into question, either by authorship or by content.
b´) The authorization must be special for each Meeting, which, in the contrary sense, means that it cannot be generic for all Company Meetings.
The content of the authorization could be as follows:
(partner details) **** AUTHORIZES ** (representative details) to attend and represent him in his name at the General Meeting (Ordinary/Extraordinary) of the Company *** , which will take place on next day at *** at ** hours, with powers to exercise all legal and statutory rights that correspond to me in the celebration of said Meeting, and so I state it in *** to *** of *** of ** * , so that it takes as many effects as are appropriate.
b.- First exception. Request for representation.
When the representative is one of the administrators, the depositary entities of the titles or those in charge of registering book entries and, in general, whenever the request is made publicly, the document in which the power of attorney is recorded must contain or carry I annex the agenda, as well as the request for instructions for the exercise of the right to vote and the indication of the direction in which the representative will vote in the event that precise instructions are not given.
In other words, compared to the general rule, in these cases the authorization must be more complete, but the way it is granted does not change at all, which can be private or public. The justification for this measure stems from the fact that the representation is made at the request of the representative, as is the frequent case of listed entities.
c.- Second exception. family representation and by power to manage.
So far everything is clear, the problem is determined by the wording of article 187 LSC. Trying to explain this precept in harmony with the aforementioned rules, it turns out that when the representative is the spouse, ascendant or descendant of the represented person, it is not necessary that the representation document be special for each Board and that when there is a power of attorney to administer all the patrimony of the represented in national territory, this power would be valid, without further ado, to attend the Meetings on behalf of another. There are authors who have come to affirm that the representation in favor of the relatives could even be verbal, which does not mean that there should not be an authorization, for this reason it is best to stick to the general rule, and that the authorization is given in writing, and to avoid doubts, better in a public document.
2.- LIMITED LIABILITY COMPANIES.
a.- The general rule.
The general rule in limited liability companies is that any partner can be represented at the Shareholders' Meeting by means of a spouse, ascendant or descendant, or by a person who has a power of attorney to manage all the assets of the represented person in national territory.
In other words, unless the statutes say otherwise, there is no room for representation by a third party, for example a lawyer, except that the latter has a general power of administration of the assets of the represented person in the national territory.
In the case of representation through a spouse, ascendant or descendant, there must be a private document and it must be special for each Board.
b.- The exception.
The exposed regime has an exception in limited liability companies, consisting of the fact that the spouse, ascendant or descendant representation can be given for all types of Meetings, with the added requirement that it be granted in a public deed.
Unlike the regime of public limited companies, in limited liability companies the possibility of granting powers in favor of the spouse, ascendant or descendant, and that are generic to attend all types of Meetings, depends on being granted in writing.
C.- THE CONVENIENCE OF THE STATUTE MODIFICATIONS.
The exposed legal regime has the possibility of being modified by statute, to adjust it to the needs of society. In view of the problems that are revealed in daily life, it is highly convenient, by statute, to regulate the regime of representation by extending it to other people in the family circle, such as common-law partners or collateral relatives, or well providing representation through a third party outside the family circle but without the need for the power to have to be to manage all the assets of the represented person.
The truth is that most of the statutes ignore these matters and submit to the general regime, but it would be very interesting in limited companies that had a clause like this in their statutes:
The partner may be represented at the Meeting by any person. Proxy must be conferred in writing and on a special basis for each Meeting; but if the power of attorney appears in a public document, it will be valid for all the Meetings that are held while it is in force.
D.- ASSESSMENT OF THE REPRESENTATIVE POWERS.
The assessment of the representative powers in the Meetings of the companies will correspond to whoever exercises the function of Chairman of the Meeting, even in those cases in which the Meeting of partners is held with the presence of a Notary, since in this case, the Notary It will limit itself to collecting the declaration of the president that the Board is validly constituted.
In the cases in which the representative does not meet the legal or statutory requirements to act on the Board, the resolutions adopted may be challenged.