In this note we briefly describe the extraordinary measures established in articles 40 and 43 of Royal Decree 8/2020 of 17th March, applicable to private law legal entities as from this date, and which shall remain in effect for the term of one month, without prejudice to any extension, upon the  prior assessment of the situation by the Government:

  1. Sessions by videoconference, even when not established in the company by-laws:

This measure applies to the sessions carried out by the governing body and the management organ of associations, commercial or civil law companies, the governing council of cooperative societies and the board of trustees of foundations, during the period of alert. The telematic means which is used must ensure the authenticity and bilateral or plurilateral connection in real time with image and sound from the remote attendees. The session shall be deemed as held at the registered office of the legal entity.

  1. Votes in writing and without session, even when not established in the company by-laws:

During the period of alert, the governing body and management organ of associations, commercial or civil law companies, the governing council of cooperative societies and the board of trustees of foundations, may pass agreements through written votes and without session,  provided that it is decided by the president, or when requested, by at least two members of the organ. The session shall be deemed as held in the registered office of the legal entity.

In said cases, persons with powers of certification shall record the agreements passed in the minutes, stating the name of the partners, or where applicable, of the directors, and the system followed for forming the will of the corporate body in question, with an indication of the vote cast by each one of them, in accordance with article 100 of the Commercial Registry Regulation, even though they are not commercial companies.

  1. Suspension of the deadline for formulating annual accounts and the extension thereof for a period of three months:

The term of three months as from the date of close of the financial year is suspended so that the  governing body and management organ of obliged legal entities may formulate annual accounts (and other legally obligatory documents). Said term, which generally ends on 31st March, shall be resumed for another three months as from the date upon which the state of alert is lifted.

  1. Extension of the term for the audit of annual accounts, which have already been formulated, for a further two months:

In the case that, on the date of the declaration of the state of alert (14th March 2020) the governing body and management organ of obliged legal entities had already formulated annual accounts for the previous financial year, and when an audit is obligatory, the term for the accounting verification of these accounts shall be understood to be extended for two months as from the date upon which the state of alert is lifted.

  1. Extension of the term for the approval, when necessary, of the annual accounts:

The ordinary general meeting for approving the annual accounts of the previous financial year shall meet indispensably within the three months following the date upon which the term for formulating the annual accounts ends (instead of 30th June).

  1. Modification or revocation of the summons of the general meeting which has already been published.

If the summons of the general meeting had been published before the declaration of the state of alert, but the date of holding the meeting was subsequent to this declaration, the management organ may modify the place and time intended for holding the meeting or withdraw the agreement for the summons via an announcement published at least forty eight hours beforehand on the company website and, if the company does not have a website, in the “Official State Gazette – Boletín oficial del Estado”. In the case of the withdrawal of the agreement for the meeting summons, the management organ must proceed with a new summons within the month following the date upon which the state of alert is lifted.

  1. Remote notary functions:

A notary required to attend a general partners meeting and draw up a record of the meeting (in accordance with what is set forth in article 203 of the Spanish Companies Act) may use remote communication methods in real time which adequately guarantee the fulfilment of the notarial function.

  1. Suspension of the exercise of the right of withdrawal in companies:

In capital companies, the partners may not exercise the right of withdrawal, even if there is a legal or statutory cause (Articles 346 and thereafter of the Spanish Companies Act), until the end of the state of alert and any extensions thereof that may be agreed.

  1. Six-month extension for reimbursing the contributions to cooperative members who leave:

The reimbursement of the contributions of the cooperative members who leave during the effect of the state of alert shall be postponed until six months have elapsed  as from the date upon which the state of alert is lifted.

  1. Two-month extension for the full dissolution of capital companies when the term set out in the by-laws has elapsed:

If, while the state of alert is in effect, the term of duration of the company as established in the company by-laws expires, the company shall not be wound up (article 360.1.a) of the Spanish Companies Act) until two months have elapsed as from the date on which the state of alert is lifted.

  1. Suspension of the obligation of the directors to summon a general meeting in order to agree the winding up of the company:

If, before the declaration of the state of alert and during the effect thereof, there is a legal or statutory cause for the winding up of a company, the legal deadline for the summons of the general partners meeting on the part of the management organ for passing the agreement for the winding up of the company or the agreements with the purpose of weakening the cause for winding up (article 365 of the Spanish Companies Act) shall be suspended until the date upon which the state of alert is lifted.

  1. Waiver of the director’s responsibility for company debts.

Article 367 of the Spanish Companies act establishes the joint and several liability of the directors for company obligations arising subsequent to the occurrence of the legal cause for winding up when the obligation to summon the general meeting within two months is not fulfilled, so that, where appropriate, the winding up resolution may be adopted.

In this respect and in line with measure 11 above, the Royal Decree provides that if the legal or statutory cause for winding up has occurred during the state of alert, the directors will not be liable for the company debts incurred during that period.

  1. Suspension of the term for the duty of filing for insolvency:

While the state of alert is in effect, a debtor in a situation of insolvency shall not have the obligation to file for insolvency. The courts shall not admit petitions for involuntary insolvency proceedings filed during the state of alert or during the two months following the lifting of the state of alert. Any applications filed for voluntary insolvency shall be admitted preferentially, even if they are filed at a later date.

Likewise, debtors who have notified the competent courts for the declaration of insolvency of the initiation of negotiation with creditors in order to reach a refinancing agreement, or an out-of-court payment agreement, or to obtain adherence to an advanced proposal for agreement, although the deadline of three months has expired to which section five of article five bis of the Insolvency Act 22/2003 of 9th July refers, shall not be obliged to file for insolvency, while the state of alert is in force.

 

Carla Villavicencio

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

20th March 2020

 

 

Please note: Article 40 of Royal Decree-Law 8/2020 of 17th March, was partially modified by Royal Decree-Law 11/2020 of 31 st March. For more information regarding the modifications, which affect the extraordinary measures (1), (3), (4) y (6), you may consult the following link: EXTRAORDINARY MEASURES FOR LEGAL ENTITIES DUE TO THE STATE OF ALERT (II)