The administrator of a company may request a notary to take the minutes of a shareholders’ meeting. And he will be obliged to do so if, five days prior to the date on which the meeting is scheduled to be held, shareholders representing at least 5% of the capital of the Limited Company (1% in the case of a Public Limited Company) request it.

An issue to keep in mind and that in many occasions is unknown, is the right that corresponds to the partners to request the presence in the general meeting of partners, of a Notary Public to draw up notarial minutes of the meeting.

Usually, when a notary is required to take the minutes of the meeting it is because there are discrepancies between the partners, and what is intended with the presence of the notary is that he, under the protection of his public faith, accurately relates the facts and gives authenticity and probative force to the declarations of will of the parties.

Notary requirement

Pursuant to Article 203 of the Spanish Corporations Law, the directors may request the presence of a notary public to prepare the minutes of the general meeting and are obliged to do so whenever, at least five days prior to the date scheduled for the meeting, shareholders representing at least 1% of the capital stock of a corporation or 5% of the capital stock of a limited liability company so request. In this case, the resolutions will only be effective if they are recorded in notarial minutes.

The notarized minutes will not be subject to approval, will be considered as minutes of the meeting and the resolutions contained therein may be executed as from the date of its closing.

Notary fees will be paid by the partnership.

The shareholder who has requested the presence of a notary (if he has done so by notarial request) may request the Commercial Registry to record such request. Thus, the resolutions adopted at the meeting that are not recorded in the notarial minutes cannot be recorded in the Register.

A recent decision of October 11, 2023 of the General Directorate of Legal Security and Public Faith (DGSJFP) has confirmed the refusal of a registrar to register the resolutions of a meeting (a shareholder requested notarized minutes, they were recorded in the Register and the notary only made an act of presence to record certain facts that occurred at the meeting).

Attention. When requesting notarial minutes and registering the request, the agreements that do not appear in the minutes are not registered.

Notarial Minutes of the Meeting

The Notary who has been requested by the administrators to attend the celebration of the Meeting and to take the minutes of the meeting, shall judge the capacity of the requesting party and, unless it is a Universal Meeting or Assembly, shall verify whether the meeting has been called with the legal and statutory requirements, otherwise denying the request.

Once the request has been accepted, the Notary shall appear at the place, date and time indicated in the announcement, and shall proceed to ascertain the identity and positions of the Chairman and Secretary of the meeting.

Once the Meeting has been constituted, he will ask the assembly if there are any reservations or protests regarding the Chairman’s statements on the number of members attending and the capital present.

In addition to the general circumstances derived from the notarial and registry legislation, the Notary will attest to the following facts or circumstances:

1. ª The identity of the Chairman and Secretary, stating their positions.
2. ª The Chairman’s declaration that the Meeting is validly constituted and the number of members with voting rights attending in person or by proxy and their participation in the share capital.
3. ª That no reservations or protests have been made by the members regarding the foregoing statements of the Chairman and, if not, of the content of those made, indicating the author thereof.
4. ª Of the proposals submitted to vote and the resolutions adopted, with a literal transcription of both, as well as the statement of the Chairman of the Meeting on the results of the votes, indicating the statements relating thereto whose recording in the minutes has been requested.
5. ª Of the manifestations of opposition to the resolutions and other interventions when so requested, stating the fact of the manifestation, the identification of the author and the general sense of the same or its literal tenor if the Notary is provided with a written text, which shall be attached to the matrix.

The Notary Public may excuse the summary of the interventions which, in his opinion, are not pertinent because they are not related to the matters debated or to the points of the agenda. When he/she appreciates the concurrence of circumstances or facts that could constitute a crime, he/she may interrupt the proceedings and record it in the minutes.

If the sessions last for two or more consecutive days, the meeting of each day shall be recorded as a separate proceeding in the same instrument and in chronological order.

In no case shall the Notary Public qualify the legality of the facts recorded in the instrument.

The minutes of the meeting, drawn up by the Notary in the act itself or, subsequently, in his study with reference to the notes taken on the place, will not need approval, nor will it be necessary to be signed by the Chairman and the Secretary of the Meeting.

The notarial minutes shall be considered as minutes of the Meeting and, as such, shall be transcribed in the Minutes Book of the Company.

In practice, the notarial public faith is useful in order to leave a reliable record of what has actually taken place at the general meeting. Thus, for example, it can be duly accredited by the notary that the administrators have clarified to the shareholders all the questions raised by them or, on the contrary, the minority shareholders can be sure that the contrary will be recorded, in the cases in which this has happened.

In short, the notarial act is a very useful resource that should be used in all those cases in which there is a conflict between the partners of a commercial company.

For further information, please consult with Legal advice

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A shareholder may only be represented at a general meeting by his spouse, ascendant or descendant, by another shareholder or by a person holding a general power of attorney conferred in a public document with powers to administer all the assets that the represented shareholder has in the national territory. The bylaws may extend the representation to other persons. Such representation must be conferred in writing at each meeting unless it is done by means of a public document.

The general meeting of shareholders is one of the decision-making bodies of the company with more powers, both in its ordinary and extraordinary meetings.

Royal Legislative Decree 1/2010, of July 2, 2010, which approves the revised text of the Capital Companies Act, regulates the operation and composition of the general meeting in Title V, Article 159 et seq. of the Act.

The meeting is composed, as its name indicates, of all the partners of the company, and all of them are subject to the resolutions adopted at the meeting (including dissidents and those who have not participated in the meeting).

In the limited liability company, participation in the shareholders’ meeting cannot be restricted to the possession of a minimum amount of capital, as this is prohibited by Article 179 of the Capital Companies Law. 

This is not the case in public limited companies, where such a restriction is permitted if it is provided for in the articles of association.

If a shareholder of a limited liability company wishes to attend the meeting by proxy, he/she will have to comply with the provisions of Article 183 of the Law. This representation is very specific to certain cases to a very reduced group of people; this is so, by the own essence and legal sense of the limited companies, where the idea is that they are mercantile of greater or smaller size, but where the partners are known between if they are not a great quantity of them, being characterized many of these companies by their condition of family members.

Well, the representation in general meeting of a partner can only be made by his spouse, ascendant or descendant, by another partner or by a person who has a general power of attorney conferred in public document with powers to administer all the patrimony that the represented one has in national territory. The bylaws may extend the representation to other persons. Such representation must be conferred in writing at each meeting unless it is done by means of a public document.

With respect to voting, each shareholding entitles the shareholder to cast one vote. The right to vote is limited when there is a conflict of interest between the interests of the company and the personal interests of the shareholder in question. In other words, when the resolution to be adopted at the meeting directly affects the shareholder, he/she cannot exercise this right. Article 290 paragraph 1 of the Law contains a closed list of when such a conflict of interest of the shareholder occurs, i.e. when the decision concerns: authorizing him to transfer shares or holdings subject to a legal or statutory restriction, excluding him from the company, releasing him from an obligation or granting him a right, providing him with any type of financial assistance, including the provision of guarantees in his favor or exempting him from the obligations deriving from the duty of loyalty.

However, there may be other conflicts of interest not included in such list, which as mentioned above is closed, in which the partner concerned may not be deprived of the right to vote. Section 3 of Article 290 establishes other mechanisms for resolving such a situation, when the vote of the shareholder whose interests are affected by the decision adopted is decisive, the burden of proof of the conformity of the resolution to the corporate interest and the existence of the conflict of interest will correspond to the company and, if applicable, to the shareholder or shareholders affected by the conflict, in the event of a challenge.

As we can see, the intervention in the general meeting of shareholders is highly regulated, since it is one of the main sources of conflicts and these rules must be carefully observed to protect the decisions in the event that they are challenged.

For more information, please contact our Legal Department.

We would like to inform you that it is essential to differentiate between the declaration of bankruptcy and the cause of dissolution of a company.

The declaration of insolvency must be made by the administrators within two months from the date on which the insolvency of the company becomes known and insolvency must be understood as the inability to comply with the obligations owed to creditors on a regular basis.

The law specifies that, if there is insolvency and also losses that reduce the net worth to half of the share capital, the administrators will not have to call a meeting to agree the dissolution if, within two months from the cause of dissolution (or, if applicable, from the acceptance of the position), they activate the insolvency mechanisms.

We would like to inform you that it is essential to differentiate between the declaration of insolvency proceedings and the cause for dissolution of a company.

The declaration of insolvency must be made by the administrators within two months from the date on which the insolvency of the company becomes known. Legally, insolvency must be understood as the inability to comply with the obligations owed to creditors on a regular basis.  Thus, when the administrator aware of the insolvency does not request the declaration of the insolvency situation within the two months following the knowledge of the insolvency, this can lead to a guilty insolvency.  

In addition to this declaration of guilty bankruptcy, the administrator is exposed to other consequences such as a possible judicial disqualification or even an eventual condemnation to cover the bankruptcy deficit. This last figure implies that the administrator assumes the responsibility of economic coverage of the existing differences between the value of the active mass of the inventory and the debts recognized in the list of creditors he covers the debts in the amount in which it is not enough to pay with the patrimony of the company.

On the other hand, there is the entry of the company in cause of dissolution. Its causes constitute a legal figure different and separate from insolvency and the declaration of bankruptcy. In the first place, it is not regulated by the Insolvency Law, but by the Capital Companies Law. This regulation establishes several legal causes by virtue of which the administrators of a company must summon the corporate bodies to request the dissolution of the company, the most like insolvency and that could occur simultaneously with it (although it does not have to be so) is the patrimonial imbalance. The equity imbalance occurs when the net worth of the company (the result of the subtraction between assets and liabilities) is less than half the value of the company’s capital stock. This does not always imply insolvency, since a company can be in a situation of net worth imbalance and be up to date with its creditors and vice versa, i.e., lack the liquidity to meet its obligations and, nevertheless, its net worth situation is positive.

When the administrator of the company detects the asset imbalance, he must call a general meeting within two months to adopt a dissolution resolution. If he fails to comply with this legal duty, the consequences are different and more serious than those set forth in the case of the non-declaration of insolvency proceedings. This is so, because the administrator is declared as jointly and severally liable for the debts of the company after the birth of the asset imbalance, consequently, the creditors will be able to claim indistinctly to the creditor or to the company the amounts owed to them by the latter.

As can be seen, these are different situations that do not necessarily coincide. However, it is also possible for this simultaneity to occur since a company whose net worth is so low may well find itself in a situation of insolvency and not be able to meet its obligations. In this case it will be necessary to consider whether there are debts, since if there are debts, it will be necessary to file for insolvency proceedings before dissolution, since dissolution is not possible. However, if dissolution is possible because there are more assets than liabilities, the most appropriate thing to do would be to proceed directly to dissolution.

In short, if insolvency and asset imbalance concur, the administrators must first manage the insolvency, requesting the declaration of insolvency proceedings, even if the liability for the non-dissolution seems more serious.

For further information, please consult Legal advice