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We very often find that Spanish companies whose shareholders – and even the directors – have other nationalities and/or reside in different places, far from the corporate domicile.
It is of special interest to anticipate such cases and to establish in the bylaws the possibility of attending general meetings -and board of directors’ meetings, where applicable- by means of remote communication, or the possibility of issuing a vote, also by remote means, by postal, electronic correspondence or any other means of communication.
Likewise, such a provision in the bylaws allows those shareholders living abroad or far from the corporate domicile to directly learn how the meeting is proceeding, without the need to travel or appoint a representative, which means a saving in terms of time, travelling and courier expenses, etc.
However, the Spanish Capital Companies Act (Ley de Sociedades de Capital – “LSC”) does not encompass the possibility of holding a general shareholders meeting by videoconference or other similar telematic means in the case of limited liability companies, and it is for this reason that it has become an issue discussed among notaries and registrars on various occasions, giving rise, for example to resolutions from the Directorate General for Registers and Notaries (Dirección General de los Registros y Notariado – “DGRN”) dated 19th December 2012, 25th and 26th April 2017 and 8th January 2018.
a)Attendance of the general meeting and voting by videoconference or similar method
Regarding the attendance of the general meeting by videoconference or similar means, in resolution dated 19th December 2012, the DGRN, draws from article 175 of the LSC, which establishes that:
“Unless otherwise stated in the bylaws, the general meeting shall be held in the municipality where the company has its corporate domicile” in order to affirm that although the article cited requires a physical location for holding the general meeting which shareholders may always attend personally, article 182 of the same legal text, in reference to joint-stock companies, allows attendance of the general meeting via telematic means.
Likewise, the DGRN indicates that article 189.2 of the LSC, also only in relation with joint-stock companies, establishes
“In accordance with what is provided for in the bylaws, the vote on the proposals on the points included in the agenda of any type of general meeting may be delegated or exercised by the shareholder via postal or electronic correspondence, or any other remote form of communication, provided that the identity of the subject exercising the right to vote is duly guaranteed.”
In this respect, the DGRN indicates that although articles 182 and 189 of the LSC only refer to joint-stock companies, this should not cause the LSC to prohibit limited liability companies from using videoconferences or other similar telematic means for the attendance and vote of shareholders at the general meeting.
Therefore, it concludes that once the physical location for holding the meeting has been set, which allows personal attendance, the possibility to attend and exercise the right to vote by video conference or telematic means must also be allowed in a limited liability company, as long as it is guaranteed that the remote attendees hear about what is happening in real time and that the shareholders may intervene.
b) Delegation of votes by telematic means
On the other hand, the same resolution of the DGRN of 19th December 2012, raises the question as to whether in a limited liability company it is possible to use videoconference or any other similar telematic means, not for attendance or voting purposes, but for delegating the vote. In order to respond to this, firstly we must look to article 183.2 of the LSC which determines the following, regarding limited liability companies:
“Representation must be granted in writing. If it is not stated in a public document, it must be specific for each meeting”.
A literal interpretation of the foregoing precept, would be that “in writing” requires a letter, document or any other handwritten, typewritten or printed paper. However, in the resolution of 19th December 2012, the DGRN rejects said literal interpretation, concluding that “in writing” does not exclude other forms of record and evidence that the representation has been granted, such as telematic or audio-visual means, in view of articles 3 of the Law on Electronic Signatures (Law 59/2003 of 19th December) and 23 and 29 of the Law on information society services and electronic commerce (Law 34/2002, of 11th July).
Therefore, in accordance with the aforementioned resolution, the company bylaws may also contemplate that for the delegation of the vote it is possible to use videoconference or any other type of remote communication, on the condition that it is registered on a type of electronic system that would be admitted in court as documentary evidence.
c) Casting a vote by telematic means without an attested signature or by way of a document sent by electronic transmission without a digital signature
Without prejudice to the above, in two subsequent cases in which the bylaws established:
“Likewise, the vote cast by the shareholder in writing with an attested signature (in notarial form), or through a document sent by electronic transmission with a digital signature shall also be valid. However, the Meeting may accept said means even without the attestation of the signature or the digital signature. In both cases, the vote must be received by the company at least 24 hours in advance of the time set for the start of the meeting.”
The registrar considered that, in accordance with article 189.2 of the LSC and by analogy with article 522 of the same Law, the casting of the vote by any means of remote communication may be carried out provided that the identity of the subject exercising the right to vote is guaranteed, and rejected the phrase “However, the Meeting may accept said means even without the attestation of the signature or the digital signature”.
However, in resolutions dated 25th and 26th April 2017 the DGRN considered valid the statutory prevision in that the general shareholders’ meeting -based upon its autonomy or free action- may accept the vote exercised by the shareholder in writing without an attested signature or by way of a document sent by electronic transmission without a digital signature, given that article 521 of the LSC only requires that the identity of the subject who votes is guaranteed, without predetermining in which form it is consigned.
Furthermore, as indicated by the DGRN, in the final paragraph, for preventative purposes the text “the vote must be received by the company at least 24 hours in advance of the time set for the start of the meeting” has been added, which allows for the careful control of the identity of the voting subject with sufficient notice.
d) Casting of a remote vote anticipated in the general shareholders meeting
More recently, in resolution dated 8th January 2018, the DGRN made a ruling on the application for the registration of a public deed of incorporation of a limited liability company, the bylaws of which provided for early remote voting in the general shareholders meeting.
The registrar rejected the registration of said section of the bylaws having understood that the early remote voting, only provided for regarding listed joint-stock companies –article 521.2.c) of the Spanish Capital Companies Act (LSC)– is not applicable to limited liability companies nor to joint-stock companies in general.
However, again, the DGRN concluded that, in the absence of prohibition by the LSC, the early remote voting in the general meeting, if regulated in the bylaws, is admissible in a limited liability company. And the same is applicable to the vote of board member in a summoned board of directors meeting which is to be held by personal attendance, if so provided for in the company bylaws.
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13th of April 2018