A shareholder may only be represented at a general meeting by his spouse, ascendant or descendant, by another shareholder or by a person holding a general power of attorney conferred in a public document with powers to administer all the assets that the represented shareholder has in the national territory.
A shareholder may only be represented at a general meeting by his spouse, ascendant or descendant, by another shareholder or by a person holding a general power of attorney conferred in a public document with powers to administer all the assets that the represented shareholder has in the national territory. The bylaws may extend the representation to other persons. Such representation must be conferred in writing at each meeting unless it is done by means of a public document.
The general meeting of shareholders is one of the decision-making bodies of the company with more powers, both in its ordinary and extraordinary meetings.
Royal Legislative Decree 1/2010, of July 2, 2010, which approves the revised text of the Capital Companies Act, regulates the operation and composition of the general meeting in Title V, Article 159 et seq. of the Act.
The meeting is composed, as its name indicates, of all the partners of the company, and all of them are subject to the resolutions adopted at the meeting (including dissidents and those who have not participated in the meeting).
In the limited liability company, participation in the shareholders’ meeting cannot be restricted to the possession of a minimum amount of capital, as this is prohibited by Article 179 of the Capital Companies Law.
This is not the case in public limited companies, where such a restriction is permitted if it is provided for in the articles of association.
If a shareholder of a limited liability company wishes to attend the meeting by proxy, he/she will have to comply with the provisions of Article 183 of the Law. This representation is very specific to certain cases to a very reduced group of people; this is so, by the own essence and legal sense of the limited companies, where the idea is that they are mercantile of greater or smaller size, but where the partners are known between if they are not a great quantity of them, being characterized many of these companies by their condition of family members.
Well, the representation in general meeting of a partner can only be made by his spouse, ascendant or descendant, by another partner or by a person who has a general power of attorney conferred in public document with powers to administer all the patrimony that the represented one has in national territory. The bylaws may extend the representation to other persons. Such representation must be conferred in writing at each meeting unless it is done by means of a public document.
With respect to voting, each shareholding entitles the shareholder to cast one vote. The right to vote is limited when there is a conflict of interest between the interests of the company and the personal interests of the shareholder in question. In other words, when the resolution to be adopted at the meeting directly affects the shareholder, he/she cannot exercise this right. Article 290 paragraph 1 of the Law contains a closed list of when such a conflict of interest of the shareholder occurs, i.e. when the decision concerns: authorizing him to transfer shares or holdings subject to a legal or statutory restriction, excluding him from the company, releasing him from an obligation or granting him a right, providing him with any type of financial assistance, including the provision of guarantees in his favor or exempting him from the obligations deriving from the duty of loyalty.
However, there may be other conflicts of interest not included in such list, which as mentioned above is closed, in which the partner concerned may not be deprived of the right to vote. Section 3 of Article 290 establishes other mechanisms for resolving such a situation, when the vote of the shareholder whose interests are affected by the decision adopted is decisive, the burden of proof of the conformity of the resolution to the corporate interest and the existence of the conflict of interest will correspond to the company and, if applicable, to the shareholder or shareholders affected by the conflict, in the event of a challenge.
As we can see, the intervention in the general meeting of shareholders is highly regulated, since it is one of the main sources of conflicts and these rules must be carefully observed to protect the decisions in the event that they are challenged.
For more information, please contact our Legal Department.
