March 18 saw the publication in the Official State Gazette of Royal Decree-law 8/2020, of March 17, on urgent measures to tackle the economic and social effects of COVID-19, which is effective from the date of publication. We summarise the most relevant Commercial measures affecting legal entities governed by private law of this Royal Decree-Law.
- Sessions and/or meetings of governing bodies and boards of directors Holding meetings: Although not provided for in the statutes, the meetings of the governing bodies and boards of directors of associations, social enterprises, commercial companies, cooperatives, and the board of trustees of foundations may be held via videoconference. In this way authenticity can be ensured, with a two-way connection with image and sound of those attending remotely. The session will be considered to have been held at the legal entity’s registered office.Voting: Resolutions may be voted on in writing provided that the chairman so decides, and must be adopted when requested by at least two of the members of the body. The meeting will be considered to have been held at the registered office.
- Changes in the preparation and approval of commercial entities’ Annual Accounts
Preparation: The period of three months from the close of the financial year for a legal entity’s governing body or board of directors to prepare the Annual Accounts has been suspended until the end of the state of alarm. A new three-month period will commence from the date on which the state of alarm ends. This suspension affects ordinary, abridged, individual, and consolidated Annual Accounts, and also the management report, if legally required.
In the event that the Annual Accounts had already been prepared as of the date of the declaration of the state of alarm, the period for the accounting verification of these Accounts, in the case of an obligatory audit, will be extended by two months from the end of the state of alarm.Approval: The general meeting must be held within three months of the deadline for preparing the Annual Accounts.
If notice of the general meeting was given before the declaration of the state of alarm, but the date of the meeting is after that declaration, the board of directors may change the place and time, or revoke the decision to convene the meeting, by means of a notice published, at least 48 hours in advance, on the company’s website, or, failing that, in the Official State Gazette.
In the event of the meeting being cancelled, the board of directors must convene it again within one month of the end of the state of alarm.With the corresponding changes in the annual accounts that these two points may entail.
- Attendance of a notary at the general meeting: Should a notary be required to attend a general meeting and take the minutes of the meeting, they may do so by means of real-time remote communication, to ensure that their duties are performed properly.
- Shareholders’ right of separation from commercial entities: Even if there is a legal or statutory cause, the right of separation may not be exercised until the end of the state of alarm and any extensions thereof that may be agreed.
- Reimbursement of members’ contributions in cooperatives: The reimbursement of contributions to cooperative members who leave during the state of alarm has been extended until six months after the end of the state of alarm.
- Dissolution of a company:
Due to the completion of the duration established in the company’s articles of association: the company will not be automatically dissolved until two months have elapsed from the end of the state of alarm.
For legal or statutory cause of dissolution: if, before the declaration of the state of alarm and during the term of this state, there is legal or statutory cause for the dissolution of the company, the legal period for the board of directors to convene the general meeting of shareholders in order to adopt the dissolution agreement is suspended until the end of the state of alarm.
If the legal or statutory cause for dissolution occurs during the state of alarm, the directors will not be liable for the company’s debts incurred during the state of alarm.
- Suspension of the limitation period for registrations: During the state of alarm, and any extensions that may be agreed, the limitation period has been suspended. This applies to registrations, provisional registrations, mentions, marginal notes, and any other registration entries that may be cancelled due to the passage of time. The calculation of periods shall be resumed on the day following the end of the state of alarm or its extension.
- Deadline to file for bankruptcy
As long as the state of alert is in force, a debtor who is in a state of insolvency is not obliged to file for bankruptcy. During and up until two months after the end of the state of alarm, judges will not admit applications for bankruptcy proceedings.
If an application for a voluntary bankruptcy has been filed, it will be admitted with preference, even if it was submitted at a later date.
A debtor will not be obliged to file for bankruptcy during the state of alarm, even if the period referred to in Article 5b of the Bankruptcy Law (Ley Concursal) has expired, as long as the competent court is notified of:
- The initiation of negotiations with creditors to reach a refinancing agreement.
- An out-of-court settlement.
- To obtain support for an advance proposal for composition.
The team at Bové Montero y Asociados continues to work remotely and is at your service to clarify any doubts you may have in this regard, or support you in any way necessary.