A company’s shares confer to shareholders two types of rights: financial rights (i.e. the right to dividends) and political rights such as the right to vote at shareholder meetings. However, the company’s administrative organs determine its daily operations.
Shareholder Meetings in a L.L.C
A general meeting (GA) is held at a venue where the shareholders express their will. The Capital Company Act (LSC) establishes the scope of competence of general meetings. Thus, the following topics are discussed and decided in a GA: annual accounts, allocation of profits, appointment/dismissal of directors, modification of bylaws, the increase/reduction of capital, and transformation of the company in general. The bylaws may provide that certain decisions, other than those specified by law, must be voted by a GA.
There are different types of GAs:
- The Universal Meeting (Juntas Universales): a board meeting is said to be general when all the shareholders are present or represented. The meeting does not have to be convened, but all the shareholders must approve the agenda of the day, which can be stopped the day the meeting is being held. It can take place anywhere in Spain or abroad. These less stringent conditions make this the most common type of meeting amongst small companies.
- The General Meeting (Juntas Generales): they are said to be ordinary (OGA) or special/extraordinary (EGA). It is mandatory that an OGA be held within 6 months of the end of the year, with an agenda that must address the approval of the annual accounts of the previous year, the allocation of profits, and an analysis of management, (other topics may be added to the agenda). The holding of any OGA is included in the company’s bylaws. EGAs are all the GA that are not ordinary. An EGA must be convened whenever a social interest requires it. Note that any meeting that is not ordinary, for which all the shareholders are effectively summoned and gathered, are special or extraordinary meetings with universal properties.
A decision is adopted if it is approved by a majority vote (validly issued). The votes must represent at least 1/3 of the votes corresponding to the capital shares. Empty votes are not computed.
The law indicates that certain decisions should be taken by the qualifying majority as in the case of the reduction/increase of capital, transformation, merger/demerger of the company (2/3 majority in that case). The bylaws may provide an enhanced majority in accordance with that required by law, but may not require that the agreements be unanimous.
The administrative organs of a L.L.C
The Directors are responsible for the management and the internal administration of a company. They represent the company against third parties, hence they assume responsibility of the latter in that respect. The Directors may be natural or legal individuals (who must be physically represented by a person if applicable). A director position is not contingent on being a partner/shareholder. The Director(s) are appointed in the articles of incorporation of the company or during general meetings.
The law provides for three different structures for the managing body of a L.L.C. However, the bylaws may derogate from providing any kind of administrative body for the company:
- A single administrator
- Multiple administrators who are jointly liable (the acts of one triggers the responsibility of the other) or who are required to act jointly.
- A Board of Directors consisting of 3 to 12 members (a President, a Vice-President, and a secretary).
Clément-Henri Girardot & Nicolás Melchior
This article is not considered as legal advice