Effective from March 18, Royal Decree-Law 8/2020 on urgent extraordinary measures to address the economic and social impact of COVID-19 includes a series of corporate and commercial measures aimed at making the constitution of management bodies and the adoption of agreements more flexible, as well as annual accounts, separation of partners, dissolution of companies or liability of directors, and insolvency and registry measures, among others.
Effective from March 18, Royal Decree-Law 8/2020 on urgent extraordinary measures to address the economic and social impact of COVID-19 includes a series of corporate and commercial measures aimed at making the constitution of management bodies and the adoption of agreements more flexible, as well as annual accounts, separation of partners, dissolution of companies or liability of directors, among other measures, which came into force on the same day as its publication and extends its validity for one month, providing for the possibility of extension.
Below we summarize the main commercial and corporate measures that you should take into account.
CORPORATE MEASURES
1. Holding Governing Body Meetings by Videoconference.
During the state of emergency, all types of companies, associations, and foundations are permitted to hold meetings of their governing bodies by videoconference with video and audio, subject to certain requirements, even if their bylaws do not provide for this form of meeting.
Specifically, the videoconference must ensure authenticity, be bilateral or multilateral, in real time, and include video and audio for remote attendees. This provision also applies to delegated committees and other mandatory or voluntary committees.
2. Voting on Resolutions in Writing and Without a Meeting.
During the state of emergency, the voting on resolutions by the governing and administrative bodies of civil and commercial companies and associations, as well as by the governing boards of cooperative societies and the board of trustees of foundations, may be carried out in writing and without a meeting, even if the bylaws do not provide for it, provided that the chairperson so agrees and at least two members of the relevant corporate body so request.
The resolutions thus adopted must be recorded in minutes, stating the procedure used to determine the will of the relevant corporate body, the names of the members or, where applicable, the directors, and indicating the vote cast by each of them. As with the previous section, this provision also applies to delegated committees and other mandatory or voluntary committees.
3. Annual Accounts.
The three-month period following the close of the financial year for the preparation of annual accounts by legal entities required to do so is suspended during the state of emergency, resuming for another three months after the state of emergency ends.
In the case of annual accounts already prepared as of the date the state of emergency was declared, the deadline for their verification by auditors, where this is mandatory, is extended until two months after the end of the state of emergency.
Ordinary general meetings for the approval of accounts must be held within three months following the date on which the deadline for preparing the accounts expires.
4. General Meetings Convened Before the State of Emergency and Held Afterward.
In the case of general meetings convened before the declaration of the state of emergency and whose date is after its declaration, the place and time may be changed or the meeting may be cancelled by means of an announcement on the company's website or, if it does not have one, in the Official State Gazette (BOE), 48 hours in advance. If the meeting is cancelled, the board of directors must proceed to convene a new meeting within the month following the end of the state of emergency.
5. Notarial deed
The Notary who has been required to attend a meeting and draw up a notarial deed of the same, is authorized to attend it electronically.
6. Right of withdrawal of partners
The exercise of the rights of withdrawal of partners is suspended, even if there is cause, until the state of alarm ends.
7. Reimbursement of contributions to cooperative members
The reimbursement to cooperative members who leave the cooperative during said state is extended, until six months after the end of the state of alarm.
8. Dissolution of the company.
The duration of companies whose term of duration, as established in their articles of association, expires during the state of emergency is extended by two months, starting from the end of the state of emergency. Furthermore, the deadline for the board of directors to convene a meeting to either dissolve the company or to remedy the grounds for dissolution is suspended until the state of emergency ends.
9. Liability of the directors
It is expected that the directors will not be liable for debts incurred by the company during the state of alarm.
10. Listed Companies
• The obligation to publish and submit the annual financial report and the audit report of the annual accounts to the CNMV (Spanish National Securities Market Commission) is extended to six months from the close of the financial year. This period is extended to four months for the publication of the interim management statement and the half-yearly financial report.
• The ordinary general meeting may be held within ten months from the end of the financial year.
• The board of directors may provide in the notice of the general meeting for attendance by electronic means and remote voting, as well as for holding the meeting anywhere in Spain, even if these provisions are not included in the articles of association. If the notice has already been published, any of these provisions may be included in a supplementary announcement, which must be published at least five calendar days before the date scheduled for the meeting.
• In the event that measures imposed by public authorities prevent the general meeting from being held at the place and physical location specified in the notice of meeting, and the option provided for in the preceding point cannot be exercised:
(i) if the meeting was validly constituted at said place and location, it may be agreed to continue the meeting on the same day at another place and location within the same province, establishing a reasonable timeframe for the attendees to travel; and
(ii) if the meeting cannot be held, its holding at a subsequent meeting may be announced with the same agenda and the same publicity requirements as the meeting that was not held, at least five days in advance of the date set for the meeting.
In this case, the board of directors may agree in the supplementary announcement to hold the meeting exclusively electronically, that is, without the physical attendance of the shareholders or their representatives, provided that the possibility of participating in the meeting is offered through each and every one of these means: electronic attendance; Representation conferred upon the Chairman of the Board by remote means of communication; and advance voting via remote means of communication. Directors may attend the meeting, which shall be deemed to have taken place at the company's registered office regardless of the Chairman's location, by audio or video conference.
• Meetings of the Board of Directors held by video conference or telephone conference are valid, even if not provided for in the articles of association.
INSOLVENCY MEASURES
1. Temporary Suspension of the Obligation to File for Voluntary Insolvency Proceedings During the State of Emergency.
It is established that natural or legal persons who are insolvent will not have the obligation to file for voluntary insolvency proceedings during the state of emergency. If the insolvency affecting a person occurs:
(i) before the state of emergency: the legally established two-month period for filing for insolvency proceedings will be suspended and will resume once the state of emergency has ended;
(ii) during the state of emergency: the insolvency petition must be filed within two months following the end of the state of emergency; or
(iii) after the end of the state of emergency: the insolvency petition must be filed within two months following the date on which the person knew or should have known of their insolvency.
2. Filing of an involuntary insolvency petition by a third party.
If, during the state of emergency and for two months after its termination, a creditor files an involuntary insolvency petition, the courts will reject it. Furthermore, once this two-month period has elapsed, the courts will, in all cases, give preference to the voluntary insolvency petition filed by the debtor, even if it is filed after the date of the involuntary insolvency petition filed by a creditor.
3. Expiration during the State of Emergency of the One-Month Period Provided for insolvency Proceedings under the Insolvency Law.
If, during the state of emergency, the one-month period provided for in Article 5 bis of the Insolvency Law for filing for insolvency proceedings expires (this obligation would exist if the debtor has not been able to reach a refinancing agreement, an out-of-court payment agreement, or the necessary support for the admission of a pre-packaged insolvency proposal within three months from the date of notification to the court that negotiations have begun to reach one of the aforementioned agreements or to obtain support for a pre-packaged insolvency proposal), the debtor will not be obligated to file for insolvency proceedings.
This obligation would be activated once the state of emergency has ended, and the remaining period for the debtor to file for insolvency proceedings at the time the state of emergency came into effect would resume.
MEASURES ON EXPIRY PERIODS OF REGISTER ENTRIES
During the state of alarm and its corresponding extensions:
• the expiry period of the presentation entries, preventive annotations, mentions, marginal notes and any other registry entries susceptible to cancellation due to the passage of time is suspended; and
• the calculation of the period will resume the day after the end of the state of alarm and its extensions.
You can contact this professional office with any questions or for further clarification you may have.
Best regards,
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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