On 23rd May the Spanish Council of Ministers passed the remittance to the Parliament of the Draft Bill reforming the Capital Companies Act, which aims at improving corporate governance in Spain. The principal modifications included in the Draft Bill concerning non-listed capital companies are the following:

1. COMPETENCES OF THE SHAREHOLDERS MEETING

Intervention in management issues and essential transactions: The shareholders meeting would be allowed to give management instructions unless otherwise stated in the by-laws. Likewise, the shareholders meeting would have the authority on essential transactions (those that amount to more than 25% of the total assets of the balance sheet).

Objection to company resolutions.

  • The deadline to challenge company resolutions would increase from 40 days to one year.
  • In order to be allowed to challenge company resolutions, it would be necessary to own at least 1% of the share capital.

2. MANAGEMENT OF THE COMPANY

Duties and liability system of the directors:

  • The scope of liability would be increased to cover not only the damages caused, but also the return of any unjust gains.
  • Competences of the board of directors: With the aim of keeping for the board of directors the decisions concerning the essential core of the management and supervision of the company, there would be additional non-delegable faculties.

3. REMUNERATION OF THE DIRECTORS

Programmatic references: The remuneration of the directors would have to be reasonable and always in accordance with the economic situation of the company and with the assigned functions and responsibilities.

Managing directors: In case of remuneration of the managing director due to the exercise of executive faculties, it would be necessary to sign a written agreement that would include the different items of remuneration. This would be approved by a qualified majority of the board of directors and the abstention of the concerned individuals.

4. OTHER MODIFICATIONS

It would be compulsory to include in the annual accounts the average term of payment to providers. Non-listed companies that do not file abridged annual accounts would have to publish said information in their web page, if they have one.

The Draft Bill, which also includes several modifications that would affect listed companies, will be debated in the Spanish Parliament before it is passed definitively.

 

 

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

29th May 2014