The Resolution of the DGRN of 30th March 2016 published in the Official State Gazette (BOE) on 13th April 2016, influences situations of conflict between certain provisions of the company by-laws and the Spanish Capital Companies Act (“LSC”).
Pursuant to a decision taken by its board of directors, a joint stock company changed its registered office to a different municipality, within the same province, in accordance with the new Article 285.2 of the Spanish Capital Companies Act (“LSC”), through Act 9/2015 of 25th May.
However, the companies’ registry rejected the registration on the registrar’s understanding that a provision contrary to the by-laws exists, in particular, article 4 of said by-laws, which was drafted prior to the entry into force of the aforementioned Act 9/2015 and allowed the board of directors to change the registered office of the company only “within the same municipal district” meaning that the change to another municipality shall be the competence of the General Meeting. An appeal against the registry decision was filed by the attesting Notary and the case went before the Directorate General.
In the resolution of 30th March 2016, the Directorate General stated in it’s doctrine that whenever company by-laws are limited to refer to the law either expressly or generically, or indirectly, reproducing the supplementary legal regulation in their articles, the legal system in force at any time should be deemed applicable.
Applying this criteria to the matter at hand, the Directorate General made it clear that when there is a conflict: “As repeatedly established by this Executive Body, the statutory references on any matter regarding which shareholders refer to the in force legal system (whether by express or general referral to the Law or by way of any reproduction in the by-laws of the supplementary legal regulation) should be interpreted as indicative of the wish of the shareholders to abide by the supplementary system deemed appropriate by the lawmakers at any time. As a result of applying this doctrine to the issue in question, where there is a reproduction in by-laws of the respective legal rules which assign administrators the competence to change the registered address of the company within the same municipal district, it should be acknowledged that following the entry into force of the legal modification by virtue of which the competence of the administration organ is broadened “in order to change the registered office within the national territory” is the applicable rule, as understood by the registrar in the disputed decision. And, unless this conclusion is accepted, those companies whose by-laws reproduce repealed Art. 149 of the Joint Stock Companies Act – or the similar Art. 285.2 of the Spanish Capital Companies Act in its wording prior to Act 9/2015 – shall be at a disadvantage compared to other companies in which, through a lack of statutory prevision or where this consists of a mere referral to said articles, the administration organ can, as from the entry into force of the new regulations, change the registered office within national territory”.
The resolution concludes that “in this case it cannot be implied that the shareholders are against the application of the supplementary legal system regarding the organ competent to decide the change of registered office within the national territory by the fact that in the by-laws competence is attributed to the administration organ for the change of registered address “within the same municipal district”. The General Directorate granted the appeal and revoked the decision of the registrar.
Mika Otomo
Vilá Abogados
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10th June 2016
