The shareholders’ meeting is a deliberative organ that brings together the corporation’s shareholders to express the company’s will by decision-making and adopting resolutions.
Among the most relevant corporate matters submitted to the deliberation of the shareholders’ meeting are as follows: approval of the company’s annual accounts, approval of capital increases and reductions, changes to the company’s articles of association, designation of administrators, structural modifications.
When and how are they to be convened?
The Capital Companies Act stipulates that an ordinary general meeting must take place within the first six months of the end of each financial year. This meeting must approve at least the following resolutions: The company’s management, the annual accounts for the previous year, a resolution on the allocation of profits.
The administrative body is responsible for convening the shareholders for the meeting. If the meeting has not convened within the corresponding period, the court clerk or the commercial register may convene it at the request of any shareholder.
The minimum period established by law for notifying and convening the shareholders for holding the shareholders’ meeting is 15 calendar days before the scheduled date of the meeting.
The following information must appear in the notice of the meeting:
- Name of the company.
- The date and time of the meeting.
- The agenda containing the business to be transacted.
- The position of the person or persons calling the meeting.
Aspects to bear in mind regarding attendance
In limited companies all partners must attend. In public limited companies, there may be limitations. For example, a minimum number of shares may be required (no more than one per thousand share capital).
In public limited companies, any person can be a representative, whether or not they are shareholders. In limited companies, only the following persons may represent the shareholder:
- Other partner.
- A person with power of attorney to administer all our assets.
Should the holding of meetings be documented, how?
The holding of the meetings must be recorded in the minutes, which the General Meeting itself must approve at the end of the meeting. If this is not possible, the minutes must be approved by the chairman of the general meeting and two shareholders, one representing the majority and the other the minority. If a notarial meeting has taken place, the notary is responsible for drawing up the minutes.
Other points to bear in mind when preparing for a shareholders’ meeting
Finally, let us quickly look at two other important points to bear in mind when preparing a shareholders’ meeting.
A. Shareholders’ right to information
Shareholders have a right to information on the topics to be discussed at the shareholders’ meeting to express their wishes on these topics. For this reason, shareholders have the right to be provided in writing in advance with information on the agenda.
It is also essential that the directors provide the requested information verbally during the meeting. Infringement of this right may result in the challenge of the resolutions adopted at the meeting.
B. Challenging corporate resolutions
The law provides that if company resolutions are contrary to the articles of association or harm the company’s interests to the benefit of one or more shareholders or third parties, they may be challenged. Hence, one of the grounds may be a failure to comply with the formalities required for the convening of the meeting.
Regarding the harm to the company’s interests, examples include increases in share capital without a real need for financing (as this may be aimed at devaluing the shareholding of minority shareholders) or agreements on not destroying dividends despite the existence of profits.