The modification of bylaws is due to the economic, financial and legal requirements that arise throughout the life of the businesses and allow companies to adapt to the changing circumstances.
The bylaws of a company constitute the basic rule that governs the structure, organisation and operation of said company, both in its internal aspect and, indirectly, in its relationships with third parties. The bylaws are binding on the part of the partners/shareholders and the administrative body, all of whom are obliged to respect its provisions.
The modification of the bylaws of capital companies in Spain is a subject that is regulated in articles 285 and ss. of Capital Companies Law.
The power to introduce amendments to the bylaws corresponds with the General Partners and Shareholders Meeting (as the highest corporate body). This power is exclusive to the Board and cannot be delegated.
As an exception to the above, it is worth mentioning that the administrative body also can change the company´s registered office within the entire national territory, unless stated otherwise in the company´s bylaws.
Majorities required for the modification of bylaws
The resolution to amend the bylaws must be adopted by the General Council and meet a series of legally established majorities, which must be legally reinforced given the importance and implications of a statutory amendment for a company.
- In limited liability companies (llcs), the resolution to modify the bylaws must be adopted with the favourable vote of more than half of the share capital.
- In public limited companies (plcs), a majority of more than 50% or, alternatively, 2/3 of the share capital will be required, depending on the level of attendance at the meeting (depending on whether it reaches 50% of the share capital).
In public limited companies, when carrying out a statutory amendment, the administrative body must prepare a report justifying the specific modification and make the report available to the shareholders at the time of the board’s call for proposals. The purpose is to enable the shareholders to have sufficient and detailed information regarding the proposed changes, prior to the vote.
This is thus another example of the widespread right to information that governs the corporate sphere and is a specific guarantee in favour of the shareholder.
This report is mandatory and therefore constitutes an essential element of any proposed amendment to the bylaws. If it is not produced, then it would nullify the adopted agreement and consequently the statutory amendment would not be registered in the Business Registry.
The report of the administrative body is only unnecessary in the case that the General Meeting, in which the modification was agreed, is held without prior notice and in the presence of every shareholder of the company. This is inferred, among other reasons, from article 158 of the Commercial Registry’s Regulation.
Lara Gutiérrez & José María Mesa
This article is not considered as legal advice