| Partner rights | SA | SL | LSC | Comments | |
| CONTESTATION OF AGREEMENTS | Contest corporate agreements | 1% | 1% | Article 206 LSC | Unless the agreement is contrary to public policy, it will be challenged by any partner |
| Contesting resolutions of the Board of Directors | 1% | 1% | Article 251 LSC | ||
| Request the summon of the Board by minority | 5% | 5% | Article 168 LSC | ||
| SUMMONS | Request a supplement to the call of the Board, including one or more items on the agenda | 5% | – | Article 172 LSC | It must be done by notification to be received at the registered office within five days after the publication of the call |
| BOARD | Notarial act of the General Meeting. Request for the presence of a Notary to draw up the Minutes | 1% | 5% | Article 203 LSC | The agreements will only be effective if they are recorded in the notarial minutes |
| LIABILITY | Limited liability iability action for non-monetary contributions towards the contributors | – | 5% | Article 74 LSC | Standing to sue: Director, creditors and partners, provided that the partner had voted against the agreement |
| ADMINISTRATOR | Corporate liability action against directors | – | – | Article 238 LSC | At the request of any partner, with prior agreement by the Board. The articles of association may not establish a majority other than the ordinary by this agreement. |
| Liability action against Director when they do not convene the General Meeting requested within one month, or there is an infringement of the duty of loyalty | 5% | 5% | Article 239 LSC | Direct exercise when there is a breach of the duty of loyalty, without having to submit the decision to the General Meeting | |
| Opposition to the renunciation of the liability action against the directors when the company did not initiate it | 5% | 5% | Article 238 LSC | The General Meeting may refuse the exercise of the action, provided that 5% of partners do not oppose it | |
| AUDITORS | Request appointment of an Auditor in companies not required to verify accounts to the Mercantile Registry | 5% | 5% | Article 265 LSC | Provided that three months have not elapsed since the date of year-end |
| Request revocation of the Auditor to the Commercial Court in public interest companies | 5% | 5% | Article 266 LSC | ||
| GENERAL MEETING | Constitution of the General Shareholders’ Meeting | 1st Call 25%. | No ordinary majority quorum 1/3 of the capital representation | Article 193 LSC-SA. Article 179 LSC-SL | “The Articles of Association may raise the Quorum of 1st Call” |
| 2nd Call that establishes the statutes less than the first | |||||
| RIGHT TO INFORMATION |
Request for information – Prior to the General Meeting – Subsequent to the General Meeting | Prior to the General Meeting: Appeal + Cancellation. | Any partner. Required information: 25% of the Capital Stock | Article 197-204 LSC-SA | “The information cannot be denied when partners represent 25% of the capital” |
| Subsequent to the Meeting: Require the Tribunal the compliance + compensation for damages. | Article 196 LSC-SL | ||||
| -General rule: Partners 1% | |||||
| – Contrary or public agreement: Any partner | |||||
| -Required information: 25% of the Capital Stock | |||||
| RIGHT TO VOTE |
Adoption of ordinary agreements | Simple majority | Ordinary majority 1/3 of the votes | Article 201 LSC-SA | |
| Article 198 LSC-SL | |||||
| Statutory amendments and/or structural modifications. Special agreements | Reinforced quorum*: | Reinforced majority, more than 50% of votes** | Article 194 LSC-SA | “The articles of association may increase the Quorum** Increase or reduction of capital and any other modification of the articles of association (+50% of votes). Authorisation to the directors to exercise corporate objective activities. Suppression/limitation of the right of first refusal in an increase of capital. Transformation, merger, spin-off, global assignment of assets and liabilities. Transfer of domicile abroad and exclusion of members (2/3 of the votes) | |
| 1st Call -50% | Reinforced statuary majority: Without reaching unanimity | Article 199 LSC-SL | |||
| 2nd Call -25% | |||||
| BOARD OF DIRECTORS |
Adoption of Board agreements | Absolute majority of directors attending the meeting to adopt resolutions of the Board of Directors | Majority of votes required in the articles of association to adopt resolutions of the Board of Directors | Article 248 LSC-SA | |
| Article 245 LSC-SL | |||||
| Delegation of powers to the Executive Committee or Chief Executive Officer | Majority of votes of members of the Board of Directors for delegation of powers. | Majority of votes of members of the Board of Directors for delegation of powers. | Article 249 LSC |
The rights of members and shareholders are regulated in the Capital Companies Act (including amendments introduced with Law 31/2014, of December 3). The representation of the partner or shareholder will be proportional to the amount of share capital it owns. We distinguish two types of rights:
- Partner Political Rights: right to obtain information; right to convene the General Meeting; right to attend, voice and vote at the General Meetings; right to challenge corporate agreements; right to exercise liability actions.
- Economic Rights: right to receive dividends; preferential subscription right and transfer of shares; right to liquidation fee; right of separation of partners.
Percentages of representation that legitimise the exercise of rights of the partner or shareholder.
1. Exercise the right to information
The reform introduced by Law 31/2014 limits the right to information. It is no longer conceived as an absolute right and the causes by which corporate agreements can be challenged are limited.
1.1 Challenging agreements for denial of information requested prior to the Meeting.
The partners or shareholders can only proceed to challenge the agreements for violation of the right to information, ex art. 204.3 LSC, when:
1.The request for information is prior to the General Meeting.
- The information is essential. I.e.:
– It is relevant in order to decide the meaning of your vote.
– The knowledge of such information could have changed the meaning of the agreement.
It will be decided whether or not it is essential through a prior ruling incident (arts. 387 to 393 LEC), which the defendant will raise after the answer to the application by other means. In any case, the incident of prior pronouncement must always be considered before opening the trial (art 393.1 LEC).
The Judge will decide on the essential nature of the information, either ordering the filing of the proceedings by means of an order or that the judicial proceeding continues, if the essential nature of said information is declared.
The information will not be considered essential and therefore, the challenge ex art. 204.3 LSC is ignored, when:
– There is incorrect or insufficient information.
– There is an infraction of procedural requirements, unless they refer to the form and term to carry out the call.
– Illegitimate persons participate in the meeting.
– Votes (one or more) are invalid or the count is wrong of those issued.
1.2 Information requested during the Meeting.
There is no procedure to challenge corporate agreements, but it allows the partner or shareholder to bring another proceeding, ex art. 197 LSC.
The partner may demand compliance with the information obligation plus the action for compensation of damages before the Courts, but will not be grounds for challenge of the Board.
Regarding active legitimacy, a general rule is established for members who have a 1% shareholding, unless the agreements are contrary to public order, which may be challenged by any partner. If the information damages corporate interest, it may be denied, unless they have a 25% representation in the share capital, in which case, it cannot be denied (Article 196 LSC).
2. 1% representation in share capital.
2.1 Corporation [Sociedad Anónima]
– Enforce corporate agreements (Article 206 LSC).
– Implement the agreements of the Board of Directors, administrators and partners (Article 251 LSC).
– Partners may make a request from a Notary to draw up Minutes of the General Meeting. In this case, the agreements will only be effective if they are recorded in the Minutes (article 203 LSC).
2.2 Limited Partnership [Sociedad Limitada]
– Enforce corporate agreements (Article 206 LSC).
– Implement the agreements of the Board of Directors, administrators and partners (Article 251 LSC).
3. 5% representation in share capital.
3.1 Corporation [Sociedad Anónima]
– Request the call of the General Meeting by the minority (article 168 LSC).
– Minority shareholders may request a supplement to the call of the General Meeting, including one or more points of the day (article 172 LSC).
– Right to oppose the resignation of liability action against the directors. The General Meeting may waive the exercise of liability action against the directors, provided that shareholders representing 5% of the share capital are not opposed (article 238 LSC).
– Limited liability action in defence of corporate interest against Directors when they do not convene the General Meeting requested within one month, or there is an infringement of the duty of loyalty. An infringement of the duty of loyalty shall be dealt with through direct action. The rest are requested from the General Meeting (article 239 LSC).
– Effect Notary’s request to draw up the Minutes of the General Meeting. In this case, the agreements will only be effective if they are recorded in the Minutes (article 203 LSC).
– Request the appointment of an auditor by the Mercantile Registry in companies not required to submit annual accounts for verification, provided that three months have not elapsed since the closing date of the fiscal year (article 265 LSC).
– Request auditor revocation in companies of public interest to the Mercantile Court (article 266 LSC).
3.2 Limited Partnership [Sociedad Limitada]
– Request the call of the General Meeting by the minority (article 168 LSC).
– Effect Notary’s request to draw up the Minutes of the General Meeting. In this case, the agreements will only be effective if they are recorded in the Minutes (article 203 LSC).
– Limited liability action for non-monetary contributions to the contributors when they had voted against the matter. Active legitimisation belongs to the directors, liquidators, creditors and partners that represent 5% in the share capital, except if for the non-monetary contribution they resort to the valuation option by an independent expert (article 74 LSC).
– Liability action in defence of corporate interest against Directors when they do not convene the General Meeting requested within one month, or there is an infringement of the duty of loyalty. An infringement of the duty of loyalty shall be dealt with through direct action. The rest shall request exercise of the action to the General Meeting (Article 239 LSC).
– Right to oppose the resignation of limited liability action against the directors, when the company does not oppose. The General Meeting may waive the exercise of action against the directors, provided that shareholders representing 5% of the share capital are not opposed (article 238 LSC).
– Request the appointment of an auditor on behalf of the Mercantile Registry in companies not required to submit annual accounts for verification, provided that three months have not elapsed since the closing date of the fiscal year (article 265 LSC).
– Request auditor revocation in companies of public interest to the Mercantile Court (article 266 LSC).
4. 25% representation in share capital.
Exercise the right to information. The information requested cannot be denied when partners represent at least 25% of the capital share. The articles of association may provide for a lower percentage, provided that it is not less than 5% of the share capital (Article 196 and 197 LSC).
In public limited companies, the quorum of minimum constitution required in the first call for the General Meeting of shareholders (present or represented) is 25%. The articles of association may increase this percentage.
For the second call, the constitution of the General Meeting will be established by the statutes, which will be less than in the first call (article 193 LSC).
5. Special and reinforced quorums
5.1 Ordinary agreements
Corporations [Sociedades Anónimas]: Adoption of agreements by simple majority (art. 201 LSC).
Limited liability: Adoption of agreements by ordinary majority, 1/3 of the votes (art.198 LSC).
5.2 Special agreements Reinforced quorum
The statutory and/or structural changes are extraordinary agreements that affect the structure or articles of association of the company. They must be adopted by a clear majority, reinforcing the decision-making power of the partners or shareholders, giving a higher value to the decisions.
5.2.1 Corporations [Sociedades Anónimas]
Adoption of agreement:
– First call quorum is 50%.
– Second call quorum is 25%.
– The articles of association may raise the quorum (article 194 LSC).
5.2.2 Limited Companies [Sociedades Limitadas]
Limited Companies establish the reinforced legal majority for agreements that affecting structure (article 199 LSC).
Agreements that require more than fifty percent of the votes (+ 50%):
– Increase or reduction of capital.
– Any other modification of the articles of association.
Agreements requiring two thirds of the votes (66%):
– Authorisation to the directors to exercise corporate objective activities.
– Suppression or limitation of the right of first refusal in an increase of capital.
– Transformation, merger, spin-off, global assignment of assets and liabilities.
– Transfer of domicile abroad and exclusion of members.
Lastly, it should be noted that the reinforced statutory majority may be established by the members’agreement, without reaching unanimity.
6. Board of Directors
6.1 Adoption of Governing Body Agreements
– Corporation [Sociedad Anónima]: Absolute majority of directors attending the meeting to adopt resolutions of the Board of Directors. (art. 248 LSC).
– Limited liability: Majority of votes required in the articles of association to adopt agreements of Board of Directors (art. 245 LSC).
6.2 Delegation of powers to the Executive Committee or Chief Executive Officer
For both SA and the SL, a majority vote of members of the Board are required for the delegation of powers (article 249 LSC).
