On 13 April last, Law 5/2021 was published in the Official State Gazette, amending the Capital Companies Act and other financial and mercantile regulatory texts, with the main purpose of harmonising national sectorial regulations with those of the EU.
Following its publication in the Official State Gazette on 13 April, the 20 days provided for in its fifth final provision for the entry into force of Law 5/2021, of 12 April, amending the revised text of the Capital Companies Act, approved by Royal Legislative Decree 1/2010, of 2 July, and other financial regulations, with regard to the promotion of long-term shareholder involvement in listed companies, have now elapsed.
The purpose of this law is to transpose Directive (EU) 2017/828 into Spanish law, without prejudice to the fact that it is not limited to this and has been used to amend in the same act various sectoral laws, such as the Commercial Code, the Securities Market Law and the Law on Collective Investment Institutions, among others, in addition to the Capital Companies Act itself.
This article will limit itself to commenting on the amendments made to the latter law, placing special emphasis on its repercussions on other capital companies, rather than on the novelties affecting listed companies, in the points listed below:
- The first amendment to be considered that is introduced in the Capital Companies Act does not have a direct inheritance from European regulations, but derives from the state of alarm regulations with regard to the holding of meetings exclusively by telematic means. Thus, Article 182 bis provides for the possibility, by means of a provision in the articles of association, of holding meetings exclusively by telematic means, in a way that guarantees the identity and legitimisation of the attendees, as well as effective interaction between them. Article 182 also extends to limited liability companies the possibility of providing in the articles of association for telematic attendance at meetings, which until now was reserved for public limited companies.
- On the other hand, the new wording of article 231 of the Capital Companies Act extends the list of persons who are considered to be related to the director. From now on, the shareholders whom the director represents on the administrative body, i.e. those shareholders who have caused his or her appointment to the administrative body, will also be considered to be related to the director; as well as companies or entities in which the director holds a position on the management or senior management body, even through his parent company, or holds, even indirectly or through an intermediary, a shareholding that gives him significant influence, meaning any shareholding of at least 10% of the share capital or voting rights or any form of representation on the management body.
- Article 231 bis is also added, which is intended to regulate intra-group transactions. In this respect, it is provided that the approval of transactions between a company and its parent company shall be the competence of the general meeting, provided that the value of the transaction or of the set of transactions envisaged exceeds 10% of the total assets of the subsidiary company. The power to approve other intra-group transactions that could give rise to a conflict of interest is reserved for the administrative body, even allowing the directors representing the parent company to vote on such decisions, having to prove, in the event of a challenge to the resolution approving the transaction, that the transaction is in the corporate interest of the subsidiary.
- As a final aspect to be highlighted in this article, and now in relation to listed companies, mention should be made of the introduction in Spanish legislation, regulated in articles 527 ter to 527 undecies of the Capital Companies Act, of additional voting shares for loyalty, which grant double voting value to shares whose holders have held them for a continuous period of at least two years. The legislator incorporated the loyalty shares with the aim of encouraging long-term investments by shareholders, trying to avoid, as far as possible, short-term pressures by shareholders on the management of the company. This mechanism already exists in other European countries, such as Italy and France, and companies must expressly provide for it in their articles of association in order to apply it.
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