The Law 5/2021 of the 12th April, published in the Official State Gazette (BOE – Boletín Oficial del Estado) on the 13th April 2021, aims to transpose the Directive (EU) 2017/828 of the 17th May 2017. In this Law, a substantial number of articles of the Spanish Companies Act is modified. In this article, we will discuss a new article, which regards intra-group transactions, introduced to the Spanish Companies Act as article 231 bis.
a) Transactions subject to the approval of the general meeting
Pursuant to section 1 of article 231 bis, the approval of the transactions performed by the company with its controlling company or other group companies subject to a conflict of interest, will be the concern of the general meeting
(i) when, by its very nature, it is legally reserved for the competency of the general meeting and,
(ii) in any case, when the amount or value of the transaction or total amount of the set of transactions established in a framework agreement or contract exceeds 10% of the total assets of the company.
b) Transactions subject to the approval of management bodies
The approval of the any other transactions performed by the company with its controlling company, or other group companies, subject to a conflict of interest, will be the concern of the management body.
The approval will be able to take place with the participation of the related directors who represent the controlling company, in which case, if the decision or vote of said directors is decisive for the approval, (i) it shall correspond to the company or, (ii) to the directors affected by the conflict of interest, when they can prove that the agreement is in accordance with the company’s interest if it is challenged and also prove that they exercised the due diligence and loyalty if they are held liable.
The approval of transactions performed by the company with its controlling company or other companies of the group subject to a conflict of interest may be delegated by the management body in appointed bodies or in members of senior management, as long as they are transactions performed within the ordinary course of the company’s activity, including those which arise from the execution of a framework agreement or contract, and which are concluded within market conditions. The management body must set up an internal procedure for the regular evaluation of the fulfilment of the said requirements.
For the purposes of the approvals made in accordance with this article 231 bis, those transactions made with controlled companies of the group will not be considered as transactions made with a group company subject to a conflict of interest, unless there is a significant shareholder in the controlled company who is a person with which the company cannot carry out the transaction directly without applying the regime of transactions with related parties.
This article 231 bis came into force on the 3rd May 2021.
Lastly, it must be considered that this regime of intra-group transactions applies to the transactions carried out between a company and its controlling company or another group company subject to a conflict of interest. For this reason, we can understand that there is the possibility that the transactions with the parent company which owns 100% of the capital, with a subsidiary with 100% of the shares or with a “sister” company in which the structure of property of both is common and for 100% of the company capital are not subject to this regime, for there is no conflict of interest which has arisen from a lack of opposing interests.
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7th May 2021
