Last March 18, 2020 the Official State Gazette has published Royal Decree-Law 8/2020 of March 17, 2020 to confront the economic and social impact of COVID-19.
The Royal Decree Law comes into force on its publication date and for a one-month term, and allows this term to be extended.
A. Private law legal entities (i.e.companies, associations or foundations of all types) during the state of emergency period are allowed to:
1. the adoption of resolutions by their governing bodies by written consent without a meeting, if the chairperson so decides or that procedure is requested by two of their members, even if their bylaws do not specifically allow that form of holding meetings.
2. hold meetings of their governing bodies by video or audio conference call, subject to certain requirements, even if their bylaws do not specifically allow that form of holding meetings.
B. Financial Statements
1. The three month period following the fiscal year-end for the preparation of financial statements by legal entities required to do so is suspended during the state of emergency, and will resume for another three months from when the state of emergency ends.
2. In the case of financial statements that had already been prepared on the date of declaration of the state of emergency, the period for their verification by auditors, where they are subject to statutory audit, is extended until two months after the end of the state of emergency.
3. Annual General Meeting (AGM) for approval of financial statements must be held in the three-month period following the end date of the period for preparing the financial statements.
4. For AGM called before publication of the state of emergency and to be held after that publication, the place and date may be changed or the meeting notice may be revoked by placing an announcement on the company’s website, or if the company does not have a website, in the Official State Gazette, 48 hours in advance. If the meeting notice is revoked, the managing body will have to issue a fresh meeting notice in the month following the end of the state of emergency.
C. Withdrawal of shareholders. Reinstatement cooperative members
The rights of withdrawal of shareholders have been suspended, even if there is due cause, until the state of emergency ends.
The reinstatement of any cooperative members who leave the cooperative during the state of emergency is extended, until six months after the end of the state of emergency.
D. Liquidation & Insolvensy
1. If the company’s term envisaged in the bylaws ends while the state of emergency is in place, the winding-up of the company by operation of the law is deferred until two months following the end of the state of emergency.
2. Even if before or during the state of emergency, a statutory or bylaw ground requiring the company to be wound up exists, the period for calling the meeting that must resolve on that winding-up by the managing body is suspended until the state of emergency ends.
3. If the statutory or bylaw ground for winding-up occurs while the state of emergency is in place, the directors will not be liable for the company's debts incurred in that period.
4. While the state of emergency is in place, technically insolvent debtors and debtors that have given notice to the courts of the pre-insolvency negotiations under article 5 bis of the Insolvency Law, even where the time period has ended, will not be required to petition for an insolvency order.
Until the end of two months following the end of the state of emergency, judges will not admit for consideration any petitions for necessary insolvency that have been filed in that state of emergency period or that will be filed in those two months. If a voluntary petition for an insolvency order has been filed, it will be admitted for consideration, on a priority basis, even if it has a later date.
E. Companies House
The expiry period for registry entries is suspended, and will resume at the end of the state of emergency.
F. Special Measures for Listed Companies
1. Annual financial report and the auditor’s report on the financial statements to the CNMV is extended to six months following the fiscal year-end. That time period is lengthened to four months for the publication of interim management statements and six monthly financial reports.
2. AGM may be held in the ten months following the fiscal year-end.
3. The board of directors may set out in the meeting notice for the shareholders’ meeting remote attendance and distance voting, together with the holding of the meeting anywhere in Spain.
If the meeting notice has already been published, any of these scenarios may be set out in an additional announcement which will have to be published at least five calendar days before the scheduled date for holding the meeting.
4. If the measures imposed by public authorities prevent the meeting being held in the place and physical venue set out in the meeting notice and the power described above cannot be used: (i) if the meeting has been validly convened in that place and venue, it may resolve to continue holding the meeting on the same date in another place and venue within the same province, allowing a reasonable period for the attendees to travel there; and (ii) if the meeting cannot be held, the holding of the meeting on a subsequent call may be announced with the same agenda and the same publicity requirements as the meeting that was not held, at least five days before the date scheduled for the meeting. In this case, the managing body may resolve in the additional announcement to hold the meeting remotely only, namely, without physical attendance by shareholders or their representatives, provided the option is provided of participating in the meeting by any of these means: remote assistance, proxy granted to the meeting chairperson on distance media; and advance voting using distance media.
5. Board of Directors´meetings held by video conference or conference call are accepted, even if this is not specifically allowed in the bylaws.
We will continue to keep you informed on any further developments through our web site.
If you have any queries, please do not hesitate to contact us.
Víctor de Cambra Antón