Upon the conclusion of June, Spanish companies whose financial year ends on 31 December should have convened and held their annual general meeting. This meeting allows the shareholders of the company to deliberate on: (i) the corporate management carried out by the governing body, (ii) the annual accounts for the preceding financial year, and (iii) the appropriation of profits.
Given the importance of the matters to be addressed, the holding of the annual general meeting is mandatory and must take place annually, as established by article 164 of the Companies Act in Spain (Ley de Sociedades de Capital or, hereinafter “LSC”).
Although, in practice, general meetings may be held universally and without prior formal notice (Article 178 LSC), the general rule requires the formal summons of the shareholders.
The convening of the meeting may only be decided and executed by the board of directors (Article 176 LSC) and must be made at least one month in advance for public limited companies and 15 days in advance for private limited companies, unless the articles of association provide otherwise.
Procedure for requesting the convening of the annual general meeting
If the annual general meeting has not been held within the legal timeframe, any shareholder may initiate a voluntary jurisdiction procedure before the Commercial Court or the Companies Registry of the company’s registered office, with the aim of ordering the convening of the meeting and setting a date for its holding.
This procedure is governed by the Law on Voluntary Jurisdiction (“LVJ”) and the LSC and has been developed through various rulings issued by the Directorate General for Legal Security and Public Faith (“DGSJYFP”). Its purpose is to ensure that the holding of the meeting does not depend solely on the will of the governing body. This is particularly relevant where the failure to convene the meeting may conceal irregularities in management, restrict the shareholders’ rights to information or oversight, or prevent the removal of the governing body.
In practice, due to the congestion of the Commercial Courts, the most expedient route is usually the application to the Companies Registry. In such cases, the Registrar will issue a decision within one month from the date of submission of the application, after hearing the governing body. The specific date for holding the meeting will depend on the company’s circumstances and the time required to prepare the meeting, considering the statutory notice period and form, whether the annual accounts have been prepared, and whether an audit is required.
Advantages of the procedure
In addition to obtaining the convening and a date for the meeting, the shareholder initiating the procedure is entitled to convene the meeting in place of the governing body, as well as to request and oversee the preparation of the meeting, the corresponding documentation, and the exercise of the right to information.
Furthermore, pursuant to Article 119.3 of the LVJ and the doctrine of the DGSJYFP (Resolution dated 20 November 2017), the appointment of a chairman and secretary other than those stipulated in the company bylaws may be requested from the Companies Registrar. This allows, for example, the requesting shareholder to act as chairman and for a territorially competent notary to draw up a notarial record of the meeting.
Final considerations
Although only the items provided for this type of meeting—approval of the annual accounts, corporate management, and appropriation of profits—may be included on the agenda of the Annual General Meeting, the inclusion of a points for questions and answers is permitted. Furthermore, during the meeting, resolutions that do not require prior inclusion on the agenda may be deliberated.
Do you require legal advice?
At AGM Abogados, we have extensive experience in applications for convening meetings through the Companies Registry and the courts. If you are a shareholder and have not been summoned to the annual general meeting, we can assist you in obtaining its convening, exercising your rights, and minimising any potential damages resulting from mismanagement by the governing body. Contact AGM Abogados.
