The Spanish legal system allows others to represent a Company’s shareholders in the General Meeting. In order to exercise this voluntary representation, the Law establishes a list of conditions with a restrictive nature, in accordance with the closed nature of limited companies. As a consequence, representation is allowed for spouses, ascendants, and descendants of shareholders, for other shareholders, or those who hold general power conferred by public deed, authorised to administer any of the patrimony that the represented person had in national territory. Nonetheless, if the articles contemplate it, shareholders may be represented by other persons, with the law finally leaving the power of election to the members, as reaffirmed by the Spanish Supreme Court in its ruling of 15th April 2014, on the understanding that “if the law provides that the articles may authorise representation by other persons, it means that representation may be granted to someone who, without being another member or close relative, does not have a general power to administer all the member’s assets”. In this case, according to article 183 (2) of the Corporate Enterprises Act (LSC), a special Power of Attorney is required for each meeting.
The Regulations of the Spanish Commercial Registry require notaries who have been requested by the administrator to attend the meeting and take the minutes of the meeting, only to judge the capacity of the appellant and, except in the case of a meeting or universal assembly, to verify whether the meeting has been called with the legal and statutory requirements.
Consequently, in its ruling of 12th February 2014, the Supreme Court considers that if, when the meeting is established, any of the attendees disputes that one of the shareholders who intends to attend as a representative is deemed to have appeared, because the Power of Attorney submitted does not meet the requirements of Article 49.2 of the Law on Limited Liability Companies (currently LSC’s Article 183), and despite this the board of directors of the meeting agrees to include him among those attending because it considers the Power of Attorney provided to be sufficient, it is the company that must ensure that the sufficiency of said Power of Attorney is documented in the event that the resolutions adopted are challenged on such grounds.
It should be remembered that Spanish regulations do not require the Powers of Attorney of attendees who appear in representation to be attached to the minutes of the general meeting, whether or not they are in the form of a notarial deed. Furthermore, the rules that regulate the documentation of the constitution, development and adoption of agreements at the meetings of shareholders of Limited Companies require that only a list of those attending be drawn up as part of the minutes or attached to them, and that it should be indicated which shareholders attend in person and how many attends by proxy, as well as the percentage of share capital that each one represents.
Nonetheless, the Supreme Court considers that lack of evidence of said endpoint cannot harm the challenging shareholder, who did what was within his power to do by raising the objection when he had the opportunity to do so at the beginning of the meeting. That failure must be to the detriment of the company, since it is the company, through those who chaired the meeting, which must admit the sufficiency of the contested power and which has the possibility of justifying the sufficiency of that power by documenting it as an annex to the minutes of the meeting.
The Supreme Court gives its decision thereon establishing that the notary public who participates in the general meeting in order to draw up a record does not take appraisal functions of members of the board nor of regularity and legality of adopted agreements.
Hugo Ester
Vilá Abogados
For more information, please contact:
va@vila.es
