On March 18, 2020, The Official State Gazette published Royal Decree-Law 8/2020, of March 17, 2020, on urgent, extraordinary measures to deal with the economic and social impact of COVID-19 was published. Below we briefly explain the extraordinary measures applicable to companies and other legal persons in private law (associations, cooperatives and foundations).
These measures can be broken down into three categories depending on their scope of application: (i) measures relative to the adoption of resolutions, (ii) measures relative to the annual accounts and (iii) other measures.
i. Measures relative to the adoption of resolutions:
Although no specific regulation exists in the bylaws, during the state of alarm the following is permitted:
- The holding of meetings by videoconference of:
- The General Shareholders’ Meeting and the governing body of mercantile companies;
- The General Assembly and the Governing Board (Junta Directiva) of associations;
- The Governing Council (Consejo Rector) of cooperatives;
- The Governing Council (Patronato) of foundations;
- The delegate committees, whether obligatory or voluntary, that the above bodies have established.
The videoconference must be carried out by some means that ensures the authenticity and the real-time connection with image and sound of those in attendance.
- The adoption of resolutions by the above-mentioned bodies by written vote and without a meeting, if so decided by the President or when requested by at least two of the members of the body.
ii. Measures relative to the annual accounts:
- The term for the governing or management body to prepare the annual accounts is suspended. From the date on which the state of alarm ends, a new term of three months is granted for their preparation.
- If the annual accounts have already been prepared and when the audit of said accounts is mandatory, entities will have two months from the end of the state of alarm to audit the accounts.
- The meeting of the Ordinary General Shareholders’ Meeting to approve the annual accounts shall be held obligatorily within three months of the end of the period in which to prepare the accounts. Consequently, the General Shareholders’ Meeting must meet within six months of the end of the state of alarm to approve the annual accounts.
- If the call to a meeting of the General Shareholders’ Meeting was published prior to the declaration of the state of alarm, and the meeting should be held after said declaration, the governing body may choose between the following two options (i) change the place and time of the meeting or (ii) revoke the resolution to call the meeting; in either case, it must be done at least 48 hours before the meeting is held. Furthermore, if the call to a meeting is revoked, a new call must be made within a month of the end of the state of alarm.
iii. Other measures:
- The notary public who may have been requested to attend a meeting of the General Shareholders’ Meeting to draw up the minutes may use an electronic/telematic means of communication in real time which must guarantee the correct fulfillment of his/her duty.
- Shareholders may not exercise their right to separation from the company in capital companies, even if there is a legal or statutory reason for dissolution, until the end the state of alarm or its extensions.
- In cooperatives, the term to reimburse the contributions of the shareholders when they leave during the state of alarm shall be six months following the end of said state.
- In companies incorporated for a finite term, if said term ends during the state of alarm, the dissolution shall not take place until two months have passed from the end of the state of alarm.
- If, prior to the declaration of the state of alarm or during its term, there is a cause for dissolution of the company, the term of two months is suspended for the governing body to call a meeting of the General Shareholders’ Meeting to adopt the resolution of dissolution or the resolution to correct said cause until the end of the state of alarm.
- If the cause for dissolution occurs during the term of the state of alarm, the directors shall not respond for the debts that the company may have contracted during such period.
- Expiry periods are suspended for the presentation, preventive annotations, mentions, margin notes and any other registry entries susceptible of cancellation due to the passage of time. The calculation of the period shall resume the day following the end of the state of alarm or its extensions, if any.