While article 183 of the Spanish Companies Act (hereafter, “LSC”) allows the shareholder to delegate his representation at the general meeting to a third party, article 180 of the LSC establishes the obligation of the directors to attend the meeting. In this regard, the Spanish Supreme Court, in its sentence of 19 April 2016 (STS), establishes that “the attendance of directors at general meetings is part of their organic competences, and therefore cannot be delegated by representation“. The only exception to the above, as established by the Resolution of the Directorate General for Legal Security and Public Faith (hereafter, “DGSJyFP”) of 29 November 2012, would be when “it is a general meeting and provided that there is a prior agreement of all the shareholders to constitute a general meeting, and the mere fact that all the share capital is present is not sufficient“.
Indeed, the directors, as organic representatives of the company, cannot delegate their competences in favour of third parties, as the latter are not subject to the directors’ own regime of obligations, nor to their liability regime. In this sense, as stated in the Resolution of the DGSJyFP of November 15, 2023, “both the supervisory function that belongs to the general meeting (articles 160 and 164 of the LSC), the legal obligation that directors have to inform shareholders (articles 196, paragraphs 1 and 2, and 197, paragraph 2, of the same law), and the general duty of diligence (article 225) make the presence of directors at the general meeting necessary“.
Notwithstanding the above, as stated by the DGSJyFP in November 2023, “article 191 of the LSC, referring to the board of the general meeting, implicitly allows for members of the management body not to be present at the general meeting, by stating that shareholders may choose a chairman and secretary different from those of the board of directors“. Furthermore, article 159 of the LSC conceives the general meeting as a gathering of its shareholders, without making any reference to the directors of the company.
In this scenario, the question arises as to the consequences that the non-attendance of the directors may have on the validity or nullity of the resolutions adopted at the general meeting. In this regard, it is useful to refer to the pronouncements of the STS and the DGSJyFP of November 2023:
- The STS understands that, as a general rule, the validity of the resolutions adopted at a general meeting cannot be questioned, as this would mean “leaving the possibility of expressing the company’s will through the general meetings to the discretion of the administrators, as it would be sufficient for them not to attend to vitiate them as null and void“. Without prejudice to this, “it will have to be considered on a case-by-case basis to what extent non-attendance (…) can justify (…) the nullity of the meeting that would have been held in their absence“.
- The Resolution of the DGSJyFP states that, “although the STS (…) does not provide much detail on what this balancing exercise consists of, (…) it is clear (…) that when we are in the presence of the exercise of a reinforced right to information, the absence of all the directors may compromise the validity of the meeting or the validity of the resolutions adopted in breach of this reinforced right to information“.
In conclusion, we can affirm that directors have the duty to attend the general meeting, although their absence does not in itself determine the invalidity of the resolutions adopted at the meeting. Depending on the specific case, such validity could be questioned if the incorrect or non-provision of information (as a consequence of the director’s non-attendance) would have been essential for the reasonable exercise by the shareholder or partner, as provided for in article 204.3.b) LSC.
Beyond the above, it is recommended in most cases for the directors to attend the meeting. Otherwise, the company’s shareholders could hold the director liable under article 236 of the LSC for breach of article 180 of the LSC. In any case, the director could attend the meeting accompanied by a lawyer, if the bylaws allow it, or in the absence of a provision in the bylaws, provided that the chairman of the meeting authorises his presence. In this way, the director would be complying with the provisions of article 180 LSC and, in addition, would have the advice of a lawyer.
If you have any questions or need advice, please contact AGM Abogados.
Félix Navas Mir
Senior Lawyer
