Understanding Company Organs: Shareholders and Administration
Company Organs: Shareholders and Administration
1. Shareholders General Board
Body decisions are taken by the company.
2. Executive Body
Decisions are taken generally by the board.
Definition: A duly convened meeting to deliberate with partners and make agreements within their competence.
Characteristics:
- Changes can be made until the statutes are respected.
- Decisions cannot violate individual rights or the principle of parity among partners.
- Necessary treatment of the body, not a must in any SA.
- Sovereign body; its agreements are binding to all shareholders (or partners).
- It must be called the Meeting (the board).
- Agreements should preferentially be taken by the majority (but not unanimously).
Scope of Action:
Limited to matters within its competence; otherwise, decisions would be invalid. Competencies are established in the statutes.
Classes of Meetings:
- Regular Meeting: Celebrated within the first six months of the economic year, as per the statutes, except to censure management, approve annual accounts, and decide on proposals for the application of results from the previous year.
- Special Meeting: For all other decisions to be adopted.
Calling a Board Meeting:
Administrators are responsible for calling board meetings. They will do so as they deem appropriate for the proper management of the company, such as if the regular meeting is not convened or when required by 5% of shareholders’ equity (could be one or more shareholders). The law provides for an alternative judicial notice if the board is not called when it should be, allowing a judge to intervene. The call must be made by a notice containing the agenda. This is essential to know what agreements will be taken. This announcement will be published in the BORME (Official Gazette of the Mercantile Registry) and in a newspaper of largest circulation in the province where the company is registered, at least one month before the Board meeting.
Constitution of the Board:
The legislature did not want small shareholders with a small capital contribution to make decisions affecting the whole society. Stopping this requires a minimum attendance to be well-constituted board:
- Ordinary Agreements: In the first call, 25% of the equity. At the second call, 0% (any role).
- Extraordinary Agreements: In the first call, 50% of the capital. At the second call, 25%, and there must be a majority (2/3 of the votes to pass something). These affect the structure of the company. The cessation and appointment of Directors is a regular arrangement.
Organs of Administration
2. Administration: Management and Representation of the Company
1. The statutes shall contain the structure of the body entrusted with the administration, determining if attached:
- A single administrator.
- Multiple managers acting jointly.
- Two managers acting jointly.
- A Board of Directors, composed of at least three members.
2. The statutes shall also include what gives administrators the power of representation and its system of action, in accordance with the following rules:
- In the case of a sole director, the power of representation necessarily corresponds to them.
- If several administrators are supportive, the power of representation lies with each administrator, subject to the statutory provisions or agreements of the Board on the distribution of powers, which have a purely domestic scope.
- In the case of two joint lead managers, the power of representation shall be exercised jointly.
- In the case of the board, the power of representation lies with the council itself, which acts collectively. However, the statutes may allocate, in addition, the power of representation to one or more board members individually or together.