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Convening a general meeting: a strict procedure

| News | Corporate Law and M&A

José Deusa discusses the certain resolutions adopted by the general meeting of a limited liability company for Expansión Jurídico

Expansión | On February 5, 2019, the Official State Gazette published, among others, the resolution issued on January 9, 2019 by the Directorate General of Registers and Notaries, on the appeal filed by the negative classification of the Mercantile Registrar of Seville to register certain resolutions adopted by the general meeting of a limited liability company.

The general meeting was in the presence of shareholders, present or duly represented, holding shares representing 64,60% of the voting rights and its share capital. At this meeting, the shareholders present unanimously agreed, among other agreements, on the appointment of the company's auditor for the financial years 2018 to 2020, both included.

In the attestation transcribing the resolutions adopted, it is certified, among other things, that the aforementioned session of the general meeting had been "called individually and personally to each and every one of the partners of the entity, by hand delivery of the same, and acknowledgement of receipt signed by each of the partners."

However, the Registrar of Companies resolved not to register the resolutions adopted at that meeting, given that the call for the meeting "has not been made in the statutory form provided (registered letter with acknowledgement of receipt), which is obligatory."

The sole administrator of the company appealed against the classification of the Mercantile Registrar before the General Directorate of Registries and Notaries, alleging mainly that the regulatory modifications regarding the call for collegial bodies tend to reduce such rigid procedural formalities, having respected that the partners take cognizance of the call.

The Directorate General of Registries and Notaries dismissed the appeal, arguing that "since there is a provision in the articles of association regarding the manner in which the meeting is to be convened, this manner must be strictly observed, without the possibility of validly and effectively resorting to any other system, whether or not there is greater publicity (...). "These statements are supported by the fact that, as this Management Centre has highlighted, the Articles of Association are the organic standard to which the corporate life of the company must be subject (...)."

As is well known, the main purpose of regulating the way in which the general meeting is convened is to ensure that the members are aware that a meeting of this body is going to be held and the issues to be dealt with at the same. In this way, the partners will be able to decide whether to attend and, if so, exercise their political rights and, eventually, in what sense.

In the case resolved by the General Directorate of Registries and Notaries, even though the general meeting had not been convened in accordance with the statutes, it is true that all the partners were aware of the holding of the session, informng them in writing. In this way, the partners had the opportunity to choose whether they exercised the political rights they titled, so that the purpose of the call was fulfilled, and the rights of the partners were not violated.

There have been occasions when the Directorate General of Registries and Notaries has resolved that any defects in the call should not prevent the registration of the resolutions adopted in the session called, provided that the rights of the partners have not been violated (by all, its resolution of 26 February 2013). However, the most recent resolutions of this body have been directed in the same direction as the one analysed in this article, as does, among others, that of April 13, 2016.

It should be noted that the rigidity of the way in which general meetings are convened is often a hindrance (and a higher cost) to the operation of capital companies. A relaxation of these call procedures, if the rights of the shareholders are always respected the holding of meetings of the collegial bodies of capital companies could be sped up.

You could read the article in Expansión Jurídico.

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