On December 24, 2014, Law 31/2014 came into force, amending the Capital Companies Law that affects all types of companies.
In essence, with this legislative amendment what is proposed is a series of measures aimed at modernizing and improving the Corporate Governance of capital companies.
The three main blocks in which this reform revolves are the General Meeting of Shareholders, the Administration of the Company and the Remuneration of the directors.
Regarding the General Meeting, The law mainly seeks to strengthen its role in general and to encourage shareholder participation. For this, the Board will have competence, among others:
- to agree on the acquisition, sale or contribution to another company of essential assets (it will be essential when their value exceeds 25% of the assets that appear in the last approved balance sheet).
- in the conflict of interests between partners, prohibiting the vote to shareholders who may benefit from it.
- If the request for information from a partner does not consider it necessary or has extra-social purposes, it will grant the Administrator the power not to respond to such request.
It is important to note that the deadline for challenging agreements adopted at the Board, it is extended from 40 days to one year.
On administration of the company, the amendments to the law are more focused on listed companies, insisting on transparency in the governing bodies, independence, participation and professionalization of the directors.
- In the field of Administrator, the duty of care and duty of loyalty . Also expanding, the responsibility, not only of the administrator of law, but also of the administrator in fact.
- with respect to Council powers, it is compulsory to meet once every three months. The powers of the council that cannot be delegated are also listed in the law.
Finally, and with regard to directors' remuneration,what is mainly intended to achieve is greater transparency, remunerations in accordance with the market amounts and that are a true image of the evolution of the company.
These are roughly the three most important aspects that the new Law deals with. In subsequent posts we will have the opportunity to delve into more specific aspects. The significance of the reform deserves it because it will affect all Spanish commercial companies. (Photo: Pixabay)Author of this post
Manuel Pomares, is a lawyer and managing partner of the firm Pomares Abogados. Specialist in commercial-corporate, bankruptcy and banking law ...