1. INTRODUCTION
The COVID-19 crisis triggered the enactment of a number of measures, in all fields of law, to deal with the effects of the lockdown as well as with the economic crisis related thereto.
From the beginning a number of corporate measures were passed dealing mainly with holding meetings and approving the annual account in the middle of a country-wide lockdown. When the initial lockdown restrictions relaxed only two emergency measures remained in place and are expected to apply until the end of 2021.
2. GENERAL SHAREHOLDERS MEETINGS MAY BE HELD REMOTELY
One of the first emergency measures passed with the onset of the Covid-19 crisis back in March was to allow companies to hold their general shareholder's meetings ("GSM") online, even if their bylaws did not include this option.
Initially, Royal Decree Law ("RDL") 8/2020 limited this option to GSMs but not Board of Director's meetings which were included in later legislation. This option was limited to the duration of the lockdown but the government has chosen to extend this possibility – even if limited to the GSM -for all of 2021.
Royal Decree Law 43/2020 of November 18 states that, for all 2021, even if this is not foreseen in their by-laws:
- Limited liability companies (Sociedades de Responsabilidad Limitada) or Limited Liability Partnerships (Sociedad Comanditaria por acciones) may hold their GSM (i) by videoconference or (ii) multiple telephone conference, provided that all the members of the body have the necessary means, the secretary of the body recognizes their identity, and so states in the minutes, which shall be immediately sent to the e-mail addresses of each one.
- As for stock companies (Sociedades Anónimas) the legal provisions are slightly different: the merely allow their management body to include, in the notice calling the GSM, the possibility to attend by telematic means and vote remotely. The notice shall have to include the delays and means in which the shareholders can exercise their rights.
3. COMPULSORY WINDING UP DUE TO QUALIFIED LOSSES
The Spanish Capital Companies Law ("LSC") sets out that, when losses reduce a company's net equity to an amount of less than half of its share capital ("Qualified Losses") it is obliged to wind up or take action to solve the situation.
Once Qualified Losses appear (and provided the company is solvent since, should it be insolvent the obligation is overridden by the obligation to file for insolvency) the company directors have a period of two months from the time they become aware of the situation to convene the GSM so that it may (i) resolve to wind up the company (ii) take such other resolutions (such as an increase in capital) as may be necessary to remove of the cause for winding-up. If the GSM does neither, then the directors have an additional two month period in which to ask a judge to wind-up the company.
Failure to comply with these obligations will result in the director's being jointly liable for any company's debts which arise after the qualified losses appeared.
Royal Decree Law 8/2020 of 17 March took some measures to make this regime more flexible. Among others, it exonerates the director's liability with respect to any company debts incurred for the duration of the state of alarm (from 14 March to 21 June 2020) so they will not be liable for those debts in any case, even if the Qualified Losses situation arose on or before the state of alarm.
Furthermore, Law 3/2020 states that (i) any losses incurred during 2020 will not be taken into account for the Qualified Losses situation and (ii) in addition, if the results of the financial year 2021 show Qualified Losses, the two month period that directors have to call the GSM will start to run at the end of said financial year.
Note also that Law 3/2020 and Royal Decree Law 34/2020 have suspended the obligation to file for insolvency until March 14, 2021.
