The resolution of the Directorate General of Legal Security and Public Trust – GDLSPT (Dirección General de Seguridad Jurídica y Fe Pública-DGSJFP) of 31st January 2022 regarding the refusal of the Registrar of the Commercial Registry of Toledo to register a public deed due to defects in the call of the corresponding general meeting was published in the Official Gazette on 17th February 2022. In this case, the general meeting in question was called by the management body with expired posts, and on the other hand, the Registrar of the very same Commercial Registry called a shareholders meeting upon receiving the request for an enforced meeting call filed by one of the shareholders of the Company, albeit on a later date than the general meeting called by the management body. The resolutions passed in the meeting at issue included the modification of the company bylaws in order to modify the management body.
After filing the public deed, the registrar suspended the registration for the following two reasons:
1) the inappropriateness of assessing the document when the holding of a general shareholders’ meeting called by the Registrar pursuant to the provisions of Article 171 of the LSC (Spanish Companies Act) is pending; and
2) the expiration of the posts of the directors calling the meeting more than 7 years previously.
An appeal was filed against this decision, containing the following arguments:
1) The supervening lack of purpose of the meeting called by the Registrar of the commercial registry because of the previous summons decided by the management body; and
2) The survival of the faculties of the directors with expired posts to convene the general meeting aimed at regularising the disorder caused by the expiration of their office.
The Directorate General upheld the appeal only with regard to the first defect cited by the Registrar and dismisses and confirms the negative assessment with respect to the second defect for the following reason:
There is no regulatory provision, nor jurisprudential or administrative doctrine, that requires the suspension of the assessment by the registrar of the corporate resolutions adopted by the General Meeting of a company pending another meeting called by the commercial registrar for a subsequent date, even if the agenda is the same. It is not a matter of some general meetings enjoying preference over others according to the body or authority that calls them, but rather, the issue must be resolved in accordance with the competence to agree on the appointment, compliance with the requirements of publicity, and the validity of the corporate decisions adopted, with no other time sequence than that derived from the principle of priority.
Regarding the expiration of the directors’ term of office, the Supreme Court exceptionally deems the general meeting called by the management body with expired positions to be valid, in the following terms:
«However, as an exception, for the sake of the principle of preservation of the company and stability of the company and of the markets, in order to avoid the paralysis of the corporate bodies, and, ultimately, the incursion into a cause for dissolution, in cases of functional absence in the management body, pragmatic reasons already taken into account in Judgment 771/2007, of 5th July, which states that “the nullity sought would introduce a disturbance to the legal situation of the company”, force those who administer the company de facto with the expired post to be recognised as having powers to call a meeting aimed at regularising the organs of the company. »
As per the second paragraph of article 171 of the LSC (Spanish Companies Act), the call of the meeting carried out by any of the directors remaining in office may only have the object of the appointment of the new directors who are to occupy the posts. In spite of the foregoing, the recent resolutions issued by the Directorate General of Legal Security and Public Trust of 22ndOctober and 12th November 2020 have allowed the call of the general meeting carried out by a surviving joint director which is not aimed at filling the vacancy, but instead with the purpose of modifying the structure of the management organ (from joint directors to a sole director) and the designation of the convenor as sole director; in both cases, as they were limited liability companies in which the bylaws provided for different alternative manners of organising the administration (article 210.3 of the Spanish Companies Act), the change in the architecture of the management body did not require an amendment to the bylaws.
In the case to which this file refers, in which the corporate form adopted by the company is that of a joint-stock company, the change in the configuration of the management body (from a board of directors to a sole director) requires an amendment to the bylaws, for which, in accordance with the second paragraph of article 171 of the Spanish Companies Act, the expired director convening the meeting lacks the power to include it in the meeting agenda.
With this resolution, we may understand that in the case of joint-stock companies, when the general meeting is called by the management body with expired posts, the corporate decision to be taken must be the appointment of new directors for the purpose of regularising the disorder in the company and subsequently a new general meeting must be called for the amendment to the bylaws, if necessary.
Vilá Abogados
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25th February 2022
