Corporate Governance: Mastering General Meetings
Organizational Structure: Skill Distribution in Corporate Bodies
The General Board, a sovereign body representing the collective will of the company, operates on a non-permanent basis. It holds ultimate authority within its designated powers and decides on the most crucial matters concerning the company.
The Governing Body, a permanent committee, manages and represents the company. It interacts with external parties through company managers.
The General Board is considered sovereign due to its exclusive power to decide on critical matters such as the continuity, dissolution, or transformation of the company, as well as changes to its name and the termination of administrators.
It can be defined as the assembly of duly convened shareholders or members who deliberate and decide by majority vote on relevant legal or statutory matters within their purview.
General Powers of the Board:
- Approve annual accounts and decide on profit allocation.
- Amend company statutes.
- Increase or decrease capital.
- Transform, merge, or divide the company.
- Appoint and dismiss managers.
- Other responsibilities as defined in the statutes.
Corporation General Board: Competencies, Meeting Types, Convening, Establishment, and Operation
According to Article 161, regarding the competencies and differences between the general meeting of a corporation and a limited partnership, the limited partnership can issue management directives to the board of directors and may require prior authorization for certain management decisions.
One advantage of a limited liability company (LLC) is the simplified meeting convening process. It only requires meeting at the registered office and adhering to the agenda.
Meeting Types:
As mentioned in Article 163 of the LSC, boards can be general or special.
The Annual General Meeting: This mandatory meeting occurs within the first six months of the year, or as otherwise specified in the statutes. Its crucial role involves approving annual accounts, reviewing management performance, and deciding on profit allocation.
The Special Meeting: Any meeting not classified as a regular meeting is considered extraordinary. Administrators can convene these meetings as needed.
Universal Joint Meeting: As outlined in Article 178, this meeting requires no prior notice. It occurs when all members, representing 100% of the share capital, are present and unanimously agree to convene a meeting to discuss specific agenda items determined at that time.
Convening the Meeting:
The collective nature of the board necessitates communicating meeting details to all members within a specific timeframe and with certain guarantees. This ensures all partners are aware of the meeting’s date, time, place, and agenda items. The board’s sovereignty prevents decisions on matters not included in the call.
Administrators must convene the board within the timeframe stipulated in the statutes, typically within the first six months of the year. Extraordinary general meetings are convened as deemed necessary. In exceptional cases, the debenture holders’ union representative may convene a meeting if administrators fail to do so or if there are delays in repayments or interest payments. A judge may also convene a meeting under similar circumstances.
Convening Procedure:
Article 173.1 of the LSC outlines the meeting convening procedure, requiring a notice published in the BORME (Official Bulletin of the Mercantile Registry) and a major newspaper in the province where the registered office is located. There must be at least one month between the announcement and the meeting date.
Unless the bylaws specify otherwise, the meeting will be held in the municipality of the company’s registered office. The announcement must include the company name, date, time, place, and agenda items.
The Act also allows for announcing a second call date, to be held within 24 hours of the first, if the first call fails (Article 177.1 LSC).
Constitution of the Board:
Location and Duration: General meetings are held in the municipality of the company’s registered office on the appointed day. Sessions may extend for one or more consecutive days. Extraordinary general meetings can be held anywhere in the country or abroad.
Attendance Rights: Statutes may specify shareholder attendance requirements, but they cannot prevent attendance by holders of registered shares or book-entry shares registered at least five days before the meeting. They also cannot prevent attendance by holders of bearer shares who have deposited their shares as stipulated by the statutes or law. Statutes may set a minimum shareholding for attendance, not exceeding 1/1000 of the capital.
Quorum:
Board constitution requires a minimum attendance of partners, both present and represented.
The LSC’s minimum attendance requirements vary depending on the situation.
Generally, a first-call meeting is valid with at least 25% of the voting share capital present. Bylaws may stipulate a higher quorum. Second-call meetings are valid regardless of the capital present, unless the bylaws specify a lower quorum than the first call.
For resolutions regarding bond issuance, capital increases or decreases, statute amendments, share issuance, preemptive rights modifications, company transformations, mergers, divisions, or headquarters relocation, at least 50% of the voting share capital must be present for the first call and 25% for the second call. Statutes may set higher quorums, but the second-call quorum cannot exceed the first.
Limited General Meeting: Competencies, Meeting Types, Convening, Constitution, and Operation
Powers and Meeting Types:
Regular Meeting: Held annually to approve company accounts.
Extraordinary General Meeting: Convened at the request of a partner with the right to call a meeting.
Universal Joint Meeting: Held when all partners, representing 100% of the social capital, unanimously agree to convene a meeting to discuss any relevant matters.
Convening, Constitution, and Operation:
Meetings can be convened using any communication method ensuring receipt by all partners, as long as expressly stated in the constitution, with a minimum notice of fifteen days.
The meeting location is the municipality of the company’s registered office, unless otherwise specified in the bylaws.
Members have the right to attend the general meeting with a single share, and statutes cannot impose higher shareholding requirements.
Members can delegate their representation in writing, valid for multiple or even indefinite meetings.
The Limited Liability Companies Law doesn’t require a specific quorum, only the majority needed for resolution approval.
Board officers consist of a President and Secretary, unless otherwise stated in the articles of association.
Agreement Adoption:
The General Board expresses its will through majority votes, resulting in social agreements. The statutes define the resolution adoption process. As a collective body, the board operates through majority agreements. Resolutions are adopted by majority vote, representing at least one-third of the votes corresponding to the shares comprising the capital.
Meeting Minutes:
Meeting deliberations and resolutions must be recorded in the minutes, which can be notarized according to the Limited Liability Companies Law.