The General Meeting in the Companies
What is the General Meeting?
The General Meeting (also named as “shareholders” in the Public Limited Company, and as “partners” in the Limited Company) is the body for the formation and expression of the will of a Company, whose decisions bind the administrators and all the partners of the Company, including those who do not want to present to the General Meeting or those who do not participate directly.
Our mercantile lawyers define the General Meeting as a meeting of partners, which debates on agreements adopted by majorities that affect the entire Company. The General Meeting, in addition, is a convened meeting, since for there to be a General Meeting there must be a notice of convocation in accordance with commercial law.
The listed companies, in addition to respecting the Bylaws and the legal framework, will also have to have a specific internal regulation detailing the operation and operations that must be carried out at the General Meeting.
What are the types of General Meeting?
Both in the Limited Company and in the Public Limited Company there are meetings that must be held on a mandatory basis and periodically, other meetings are optional and therefore may be optionally held by the partners of the Company.
The Capital Companies Law requires both the Limited Company and the Public Limited Company to hold an Ordinary General Meeting within the first six months of each year, in order to censor the corporate management, approve the annual accounts, and solve on the result. However, at this ordinary meeting, agreements may also be adopted on other matters to those already named.
As argued by our mercantile lawyers, optionally the Companies, through their Bylaws can also establish other meetings, are the so-called extraordinary general meetings. These meetings can be called by the Company's own administrators whenever they deem it convenient, both for social interests and to deal with matters of great relevance. They can even be summoned by the administrators to know the opinion of the partners to exercise a certain action.
Members may also convene an extraordinary meeting, provided that they are at least 5% of the share capital,and express in the request the issues (agenda) to be dealt with at the Extraordinary General Meeting.
What agreements can be adopted at the General Meeting?
The decisions and agreements made by the General Board are those established by the legislator of each country. It is important to know that the Bylaws of the Company can optionally regulate the holding of other extraordinary General meetings, which allows the Company to make additional decisions that are the competence of the General Meeting.
The daily decision-making of a company corresponds to the administrators, which is a different body from the General Meeting. However, for decisions that decisively affect society, the approval of the General Meeting is usually required, in addition to that of the administrators.
The Capital Companies Act attributes to the General Meeting exclusive competence on different matters. The main agreements and decisions that members can make to the General Meeting are the following:
- The approval of the annual accounts and the distribution of the result. The General Shareholders' Meeting must approve the annual accounts presented by the administrators and decide on how to distribute the obtained result (reserves or dividends).
- Appointment or removal of the administrators of the company.
- Large-scale corporate operations, such as merger, division, transformation or dissolution. The issuance of simple or convertible bonds is also included in this group.
- Operations in which the Law presumes that the administrators are affected by a conflict of interest. And, therefore, it requires that the shareholders authorize the operation.
Do company administrators have to attend the General Meeting?
According to the Capital Companies Law, it is established that in limited companies all partners have the right to attend the general meeting. Article 180 establishes the duty of attendance of administrators, which is justified in that essential functions are deployed for the proper development of society.
The Capital Companies Law also allows the assistance of third parties under authorization, as long as they have an interest in the running of the Company.
There is no doubt that the attendance of the directors at the General Meeting is obligatory, especially due to the controlling and supervisory function of the board over the directors.
Does the non-attendance of the directors at the General Meeting have legal consequences?
According to consolidated jurisprudence, it has been considered that in the case of non-attendance of the directors at the General Meeting, it is, in effect, decisive for the possible nullity of the Meeting.
If the administrators do not attend the meeting, their presence being necessary for the partners to exercise their right to information, said meeting may be canceled.
As established by the Judgment of the Supreme Court of April 19, 2016, it is established as a general rule that the absence of the administrators must not lead to the annulment of the meeting. This is so, without prejudice to the responsibilities that may arise from the breach of his duty.
In the same Judgment, and as an exception to the general rule, the Supreme Court considered that the General Meeting may be declared null and void due to the lack of attendance by the administrators, and that is that the partners cannot access their right to information.
The best solution in the event that the administrators do not attend the General Meeting, is to record it and write it down. In the event that you attend, the signature must appear in the meeting minutes, especially if you want to avoid that a partner may contest the minutes in the future, alleging that you could not request clarifications or information about the accounts.