The Law 5/2021 of the 12th April, published in the Official State Gazette (BOE – Boletín Oficial del Estado) of the 13th April 2021, aims to transpose the EU Directive  2017/828 of the 17th May 2017.

The transposition entails the modification of a good number of articles of the Spanish Companies Act approved by the Royal Legislative Decree 1/2010 (LSC – Ley de Sociedades de Capital). The majority of articles affected are applicable to listed companies, and aim to encourage the long-term involvement of shareholders. However, it also involves modifications in other aspects of corporate life, in particular a regulation regarding attendance by  electronic means and the holding of remote meetings which are not in-person. These developments will be briefly discussed in this article.

a) Attendance of partners / shareholders Meetings by electronic means.

The text of article 182 of the LSC has been amended in that the expression “(…) in joint-stock companies (…)” has been removed. In the previous text, joint-stock companies were expressly mentioned, but limited companies were not, hence creating doubt as to whether the article which allowed the attendance of meetings by electronic means was applicable only to joint-stock companies or to limited companies as well. The new text has removed the express reference to joint-stock companies, so it seems clear that the article applies to joint-stock as well as to limited companies. However, in the new text, while discussing the responses to the requests for information, the word “share-holder” (a reference to joint-stock companies) has been replaced with “partner” (a reference to limited companies), which is imprecise and a hindrance to the objective of clarifying this article. Despite this new cause for doubt, one has to continue to understand that the aim of the legislator is that article 182 is applicable to both joint-stock and limited companies, without distinction.

b) A new article 182 bis is created, dedicated to the regulation of the holding of meetings exclusively by electronic means.

With the condition that the bylaws provide for it, joint-stock or limited companies will be able to hold share-holders or partners meetings via electronic means, namely, without their physical attendance or that of their representatives. The article is not exhaustive and already establishes that those matters not expressly regulated therein will be provided for in the LSC for the holding of in-person meetings. However, this does not prevent, circumstantially, meetings from being held by electronic means while the extraordinary measures, brought about by the state of alarm enacted in Royal Decree 8/2020, and concordant provisions, are still in force, when this is not provided for in the company bylaws.

It is important to note that, in order to approve the modification of the bylaws which allows the holding of this type of meetings by electronic means, a reinforced majority, that is, at least 2/3 of the company capital present or represented at the meeting, is needed. The reasoning for this reinforced majority is questionable, for it is not going to prevent any imposition of majorities and, also, even though the modification is finally approved, the meetings will not be able to be held if the requirements discussed later on in this article are not fulfilled, particularly the second requirement, meaning that one or more of the partners would be able to block the effective holding of the meeting by claiming that the necessary electronic means are not available. In this case, what would happen if the meeting had already been convened to be held by electronic means and then, on the day of the meeting, one or more partners claim that it is impossible for them to connect to the meeting due to technical difficulties?

Indeed, the following are essential conditions for the holding of the meeting:

  • The identity and legitimacy of the partners and their representatives are appropriately guaranteed.
  • All of the attendants are able to participate effectively in the meeting via appropriate means of long-distance communication, such as audio or video, complemented with the possibility of written messages during the course of the meeting.
  • For this purpose, the company must implement the “necessary measures in accordance with the state of the technology and the circumstances of the company, especially the number of partners”.

This last requirement, of a technical nature, is vague enough to raise doubts about what is “sufficient” in each company, a question which is bound to create litigiousness. The legislator does not impose on the secretary of the meeting the specific obligation to identify the participants and the title with which they take part in the meeting, and instead seems to entrust this to technical means. We wonder if the facial recognition by the president or the secretary will be sufficient, or if it will be necessary for the participant to make a solemn declaration of their identity; or whether a computer application will have to be designed and used in order to allow access to the meeting via a specific code etc. Furthermore, it is necessary to emphasise the possibility and real risk that, in practice, people who are not partners or representatives may take part in the meeting, given that the access may by supplanted; to this, we may add the problems regarding confidentiality and privacy, such as the risk of the meeting either being reproduced before third parties who are not authorised to attend or it being easily divulged on networks (online or offline), just because the format of the meeting is digital. These questions may be minor in the meetings of listed companies, but they have more importance when it comes to small or medium-sized companies, where the meeting is a forum for a direct and sincere expression of questions and matters which in many cases are of secret and confidential nature.

With regards to the summons of the meeting, the notification to the partners/shareholders will have to follow that established in the company bylaws, but information about the processes and procedures which must be followed for the registration and creation of the list of attendees must be included in their content, as well as information for the exercise of the rights of the partners/shareholders and for their recording in the minutes of the meeting.

Another particularity is that it is forbidden to make attendance conditional upon the creation of the register of the list of attendees more than one hour before the start of the meeting.

In the case of meetings by exclusively electronic means, the meeting will be deemed to be held in the registered office of the company.

In case there is any doubt, section 7 of the new article 182 bis establishes that the provisions of this article are applicable to both joint-stock and limited companies.

 

 

Eduardo Vilá

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

23rd April 2021