The articles of association of capital companies are the rules governing the life of the company, its functioning and its structure. The approval of these articles is necessary when incorporating a company in Spain. They are an annexe to the incorporation public deed and are registered in the Commercial Registry.
Article 23 of the Capital Companies Act establishes the mandatory content of the articles of association:
- The company’s name
- The corporate purpose, specifying the activities that comprise it
- The registered office
- The share capital, the shares into which it is divided; their nominal value and sequential numbering; the classes of shares and the rights attaching to the members; where appropriate, the amount or extent of such rights.
- The company management structure; the number of directors and the maximum and minimum number; the term of the appointments and the remuneration system, if any.
- The rules for the company’s government bodies deliberate and adopt their resolutions.
Any changes concerning the above matters or any other aspect included in the articles of association by the will of the shareholders must be:
- Approved by the General Shareholders’ Meeting of the Company (except for the exception foreseen for the change of registered office)
- Formalised in a public deed
- Registered in the Commercial Registry.
When to recast the articles of association?
In practice, the articles of association of companies are often outdated or obsolete due to the age of the company or the continuous updates of commercial legislation. This is the case of companies incorporated under the Limited Liability Companies Act or the Companies Act (1995 and 1989, respectively).
In such cases, it is advisable for the general shareholders’ meeting of the company to approve an update of the articles of association, a new version aimed at their general updating, by agreeing to replace the previous wording with a new version under the current law.
Alternatively, the wording of the articles may be in different deeds due to the successive amendments. In these cases, it is advisable to approve the recasting and group all the articles in the same notarial deed for the convenience of shareholders, directors and third parties who need to consult them.
For the approval of this type of resolution, the provisions of article 197.bis of the Capital Companies Act establish that, although they appear in the same item on the agenda, each article or group of articles must be voted on separately.
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This article is not considered legal advice