SCHEDULE OF RECOMMENDATIONS FOR PREPARING SHAREHOLDERS’ MEETINGS IF YOU ARE A MINORITY SHAREHOLDER

José DutilhManaging Partner, LeQuid, The J.Dutilh Law Firm For Social Impact

What is the General Shareholders’ Meeting? A corporate body in which the will of the shareholders is decided and where they exercise their rights.

Discriminatory treatment of minority shareholders at General Shareholders’ Meetings is common, often leading to the approval of decisions that are detrimental to them. It is therefore important to be aware of the rights afforded to them by law:

  • Ensure they are correctly identified.
  • Request information for 25% of the share capital to avoid denial.
  • Request the appointment of an auditor for 5% of the share capital to review the annual accounts when the company is not obliged to appoint an auditor, and even request a substitute when there is due cause (articles 265 and 266 of the Spanish Corporations Act, with a term of 3 months in order to do so).
  • Request that a notary attend the Shareholders’ Meeting for 5% of the share capital to take the minutes. His or her fees shall be paid by the company (art 203.1 Corporations Act). They can do so up to 5 days prior to the Meeting.
  • Request the addendum to the meeting call within 5 days of publication for 5% of the share capital, if they consider that there is a point on the agenda that should be included and has not been included in the meeting call.
  • Representation of 1% of the share capital to challenge a decision.

In cases where a vote is cast against an agreement, its opposition must be recorded in the minutes to allow for a possible challenge to the agreement on the grounds that it goes against the law, the articles of association or public order (Article 206 Corporations Act). An express formula could be as follows: “I state my opposition to the decision adopted on the grounds that it is detrimental to the company’s general interests, in the benefit of the majority”.

  • During the Shareholders’ Meeting, respect the right to speak.
  • Keep the book of nominal shares to avoid a possible violation of the right to vote.
  • Verify that the contents of the Shareholders’ Meeting minutes are correct by exercising the power to intervene in the minutes as provided by law (article 202 Corporations Act).
  • Exercise the right of separation if any of the reasons for doing so are applicable in accordance with the law or the articles of association. The term is one month as from the decision’s publication or the receipt of notification (article 348.2 of the Corporations Act). Legal causes refer to when the corporate purpose is substituted or substantially modified; extension of the duration of the company; reactivation of the company; creation, modification or early termination of the obligation to provide ancillary services, unless otherwise provided in the articles of association or any other provision established in the articles of association.

Public Limited Company

  • Ensure they are correctly identified (in the event that attendance identification cards are handed out).
  • Request the information and/or clarifications they consider relevant in relation to the agenda and prior to holding the Shareholders’ Meeting:
  • The deadline for submitting the request is 7 days prior to the meeting. They can also present questions in writing.
  • The administrators are obliged to respond in writing up to the day of the meeting.
  • During the meeting, they may request any clarifications they consider appropriate. If they cannot be answered at the time, the administrators have 7 days as from the end of the meeting to do so.
  • Administrators are obliged to provide the information unless:
    • They understand that it is unnecessary to safeguard the shareholder’s rights.
    • They have reason to believe it will be used for non-company purposes.
    • The publicity is detrimental to the company.
  • Furthermore, ensure that the shareholders making the request for information represent at least 25% of the share capital (unless a lower figure is established in the articles of association), as in that case the request cannot be denied..

            If a shareholder believes that his or her right to information has been infringed, he or she may:

  • Demand compliance with the obligation to inform, and the damages that this infringement may have caused (if the infringement takes place during the Shareholders’ Meeting).
  • Challenge the decision that affects them if the infringement is prior to the Shareholders’ Meeting and is considered essential, relevant or a determining factor in exercising the right to vote. The judge shall rule in a preliminary hearing as to whether or not the infringement is relevant.

Private Limited Company

If deemed necessary, examine the corporate offices and the documents used as support and precursor of the annual accounts. This may also be done in conjunction with an expert accountant.

Request the information they consider relevant to the items on the agenda (preferably before the Shareholders’ Meeting).

Please note that:

  • They may also request any clarifications they consider appropriate during the shareholders’ meeting.
  • The administrative body is obliged to provide the information requested unless it understands that the publicity would be detrimental to the company’s interests.
  • The information cannot be denied when the request is made by shareholders representing 25% of the share capital.

If it is understood that the right to information prior to the Shareholders’ Meeting has been infringed and the infringement is essential, relevant or decisive to exercising the right to vote, a decision may be challenged and the judge must rule in a preliminary hearing as to whether or not the infringement is relevant, in order to continue with the proceedings or, as the case may be, close the claim.