On the 30th May 2018, the Directorate General for Registries and Notaries issued a decision with reference number 8053 rejecting the registration at the Commercial Register of null and void company resolutions, even though the annulment action had expired.
On the 11th April 2017, a public deed of corporate agreements was filed for registration at the Madrid Commercial Registry with the following content:
(1) The general partner’s meeting had been held in Valencia.
(2) 54.32% of the share capital was present
(3) The dissolution and the approval of the liquidation balance sheet of the company was unanimously agreed.
On the 27th April 2017, the Madrid Commercial Registry rejected the registration of the public deed, issuing a negative qualification note on the grounds that it contained the following defects:
(1) Article 11 of the company’s bylaws provided that the quorum required to adopt the resolution to dissolve the company and approve the liquidation balance sheet was 70%, whereas only 54.32% of the share capital was present at the general meeting.
(2) The meeting took place in Valencia, which was not acceptable, as the company bylaws did not provide for the possibility of holding the meeting in a place different from the registered office. Therefore, the holding of the general partner’s meeting in Valencia was contrary to Article 175 of the Spanish Companies Act.
(3) For the full qualification of the document, the full text of the notice calling the meeting should have been provided.
(4) The certificate did not state the date of issue thereof.
The same deed was submitted to the Madrid Commercial Registry again on the 25th January 2018, together with a letter from the liquidator dated the 8th January 2018, stating that it was not necessary to be bound by the 70% quorum since:
a. There were legal grounds for the dissolution of the company.
b. The annulment action on the corporate resolutions had expired, and as a year had passed without the agreement being challenged, the defects were deemed to be rectified.
On 15th February 2018, the Commercial Registrar issued a second qualification stating that the defects related to the provision of the full text of the notice calling the meeting and the date of issue of the certificate had been considered to be rectified, while still rejecting the registration of the public deed because the defects relating to the quorum and the place where the meeting was held still existed.
On the 14th March 2018, the notary public Mr. Joaquín Borrell García filed an appeal against the qualification note of the 15th February 2018, arguing:
(1) That the effectiveness of the agreements had been recuperated by the expiration of the annulment action, the agreement becoming unimpugnable
and being valid and capable of having full effect, and that the Commercial Registry had to take on this new legal reality.
(2) That the facts were not related to public order and therefore Article 205(1) of the Spanish Companies’ Act was not infringed.
(3) That the certificate submitted should provide sufficient proof that the agreements had not been challenged, due to the certifying capacity of the company’s director.
Finally, on the 15th March 2018, the Registrar ratified the qualification, submitting the file to the Directorate General of Registries and Notaries, which resolved the matter, stating the following:
(1) There being no dispute on the invalidity? nullity of the meeting, the question is whether, as the appellant maintains, the expiration of the annulment action allows the registration at the Commercial Registry to be completed.
(2) The existence or non-existence of expiration cannot be determined by the provision of public documents, nor can the registrar enter into an assessment of something which, by its nature, is reserved for the knowledge of the courts.
(3) It cannot be said that the agreements are not related to public policy, since it would be for the court to make such a statement. It also cites Supreme Court Judgment No. 596/2007 “the concept of public order in the area of corporate resolutions is one of the so-called indeterminate concepts and (…) it applies to resolutions(…) which represent an attack on the protection of absent or minority partners (…)”.
(4) The notice of appeal confuses the expiration of the annulment action with the validity of the agreements. The expiration of the action does not make valid the agreements initially considered null and void, it only makes them unassailable by challenge.
(5) Given the existence of null resolutions, the directors are bound by the duty of care and must carry out the necessary acts so that the general meeting may revoke or, where appropriate, replace the corresponding resolutions to bring them into line with the law.
Pedro Blanco
Vilá Abogados
For more information, please contact:
6th of July 2018
