Below, we summarize some of the main measures laid down by Royal Decree 46.3/2020 of 14 March and Royal Decree-Act 8/2020, published on 22 March in the Official State Gazette:
Suspension of administrative and bankruptcy terms: There has been a mandatory suspension of administrative terms and suspension of limitation and prescription terms.
Suspension of the obligation to file for voluntary bankruptcy: The obligation to file for bankruptcy is suspended while the state of emergency remains in force (including whether the debtor has previously notified a situation of pre-bankruptcy). The term of 2 months for filing voluntary insolvency proceedings shall begin as from the end of the state of emergency.
Non-admission of necessary bankruptcy filings and preference for voluntary filings: During the above-mentioned period, necessary bankruptcy filings, by creditors, shall not be accepted. If a voluntary filing, by debtor, has been presented, it shall be held as preferential to a necessary filing, even when the voluntary filing were presented at a later date.
Board of Directors: During the state of emergency, Boards of Directors’ Meetings and General Meetings of unlisted trading companies may be held, by videoconference that guarantees real-time authenticity and bilateral or multilateral connection with remote image and audio of those in attendance, such meetings being understood as held at the corporate headquarters.
Furthermore, the decisions of such bodies may be adopted by written vote without a meeting, if so decided by the Chairperson or at the request of at least two of the body’s members.
General Meetings: Ordinary General Meetings responsible for approving the company’s annual accounts, which must be held within the first six months of each year, shall have a further three months as from the end of the period for drawing up the annual accounts by the management body,(which term of 3 months is also extended) in order to approve them.
As the case may be, if the call for the aforementioned general meeting were published before the state of emergency, and the day of the meeting were later than the declaration itself, said call may be modified, by agreement of the management body, or revoked.
Drawing up of accounts: The term of three months as from the end of the financial year for drawing up accounts by the Board of Directors is suspended (interrupted) until the end of the state of emergency, resuming again for a further three months as from that date.
Obligatory audit: In the event that, on the date of declaring the state of emergency, the management or administration body of legal person had already drawn up the accounts for the foregoing financial year, the period for auditing such accounts, if the audit were compulsory, shall be understood to be extended by two months as from the end of the state of emergency.
Right of separation: Even if there existed legal or statutory cause, in capital companies, partners may not exercise the right of separation until the end of the state of emergency and the extensions thereof that may be agreed, as the case may be.
Joint and several liability for debts: The administrators are exonerated from adopting any of the following measures: calling a general meeting to adopt resolutions for dissolution if necessary; requesting judicial dissolution or arrangements with creditors.
Term for filing taxes: The standard calendar id maintained for filing taxes.
Deferral of tax liabilities: Deferral has been granted for payment of tax liabilities corresponding to the liquidations and self-assessments whose deadline for presentation and payment stands as from 13 March 2020 to 30 May 2020.
Suspension of proceedings:
- Terms initiated prior to 18 March 2020 are extended to 30 April 2020.
- Terms commencing after 18 March 2020 are extended until 20 May 2020.
- The term from 18 March 2020 to 30 April 2020 shall not be counted for the purposes of the maximum duration of proceedings or limitation terms or their expiry.
4.- FINANCIAL MEASURES:
Tax debts: aimed at financing from credit institutions, financial credit establishments, electronic money institutions and institutions for payment to businesses and self-employed workers, to meet their basic needs (payment of invoices, requirements for working capital or financial obligations due)
Extraordinary loans for winding up of activities of self-employed workers: For self-employed workers whose activity has been suspended or whose income has fallen by 75%.
Right to adapt and reduce working hours. Workers may request, on a temporary basis, adaptation of their working hours and/or reduction of their working hours to take care of family members.
Vacations: Vacations may be agreed between employer and employee.
Temporary lay-offs owing to force majeure means the suspension or reduction of working hours due to force majeure, and therefore, means incorporating the workers when such cause ends, with the same conditions as previously. It has the following characteristics:
- Suspension of contracts and reduction of working hours (E.R.T.E.) due to force majeure
- It shall be framed through application by the company to the Labour Authorities, with a report and support documentation.
- Exemption from employer’s social security contributions for those with fewer than 50 workers and 75% for those with 50 or more workers.
- Unemployment benefit arising from application of an E.R.T.E. shall not require a prior minimum term of contribution from the worker, and the period it is received shall not be counted for the purposes of future benefits.
Temporary lay-offs owing to economic, technical, organizational or productivity reasons: If the company cannot or is not granted the temporary lay-off due to force majeure, there exists the option of suspending contracts or reducing working hours (between 10% and 70%) for economic, technical, organizational and productivity reasons relating to COVID-19.
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