Five Common Scenarios of Dispute in Shareholders’ Meetings with a Notary, Resolved by Case Law (2/5)

Can a General Shareholders’ Meeting be held without a Notary if a minority shareholder duly requested one?

No. If the meeting is held on the grounds that it was allegedly impossible to secure a notary, the meeting shall be deemed invalid and considered not to have taken place. This is governed by Article 203 of the Spanish Companies Act (LSC), which extends the nullifying effect of the absence of a notary to both public limited companies (sociedades anónimas) and private limited liability companies (sociedades de responsabilidad limitada), as established by the Provincial Court of Madrid, Section 28, in its judgment dated 25 February 2013.
Accordingly, the resolutions adopted at such meeting must be declared ineffective due to defects in its constitution, as the meeting was held without the presence of a notary, despite the timely request made by the claimant and his objection raised at the outset of the meeting.

Here is the video collaboration in case you prefer this format:

How should the Notary proceed at the beginning of the Meeting?

Pursuant to the Mercantile Registry Regulations and the Notarial Regulations, the notary must verify that the meeting has been duly convened. Otherwise, the notary must decline to act (Articles 101.1 of the Mercantile Registry Regulations and 145 of the Notarial Regulations). Once the meeting is duly constituted, the notary must inquire whether any objections or reservations exist regarding the number of shareholders present or the share capital represented, thereby preventing future challenges to the resolutions based on non-compliance with legal or statutory quorum requirements.

Is it the Notary’s responsibility to draw up the list of attendees?

No. It is the responsibility of the chairman of the meeting, assisted by the secretary, to prepare the list of attendees and verify any powers of representation submitted. It is also the chairman, not the notary, who must declare the meeting to be validly constituted. The notary’s role, in this regard, is limited to recording in the minutes the chairman’s statements regarding these matters, including the number of shareholders with voting rights present or represented and their shareholding in the capital. The notary must also record whether shareholders raised any objections or reservations regarding the chairman’s declarations and, where applicable, include the content of such statements.

What role, if any, does the Secretary play in a Meeting with a Notary present?

The secretary’s principal function is to draft and sign the minutes of the meeting (Article 99 of the Mercantile Registry Regulations). However, in meetings attended by a notary, this function is replaced by the notary (Article 203 of the Companies Act). The law is silent, however, regarding other “assistance” duties attributed to the secretary under corporate regulations, and likewise does not address the preparation of the list of attendees—Article 98 of the Mercantile Registry Regulations refers solely to the secretary for this purpose, while Articles 101 and 102 do not regulate the matter.

What should a Notary do if a shareholder alleges that a resolution is illegal or even unlawful (a scenario which is, in fact, quite common and uncomfortable)?

The notary does not have the authority to assess the legality of the actions of the board of the meeting or the validity and lawfulness of the resolutions adopted.
Nor is it the notary’s duty to evaluate the sufficiency of the powers of attorney presented by persons appearing on behalf of shareholders. Corporate and notarial regulations require the notary, upon being requested by the directors to attend and draft the minutes of the meeting, only to assess the capacity of the requesting party and, unless the meeting is a Universal Meeting, to verify that the meeting has been convened in accordance with legal and statutory requirements. Otherwise, the notary must decline to act (Article 101.1 of the Mercantile Registry Regulations).

In the first video of the “Meeting Times” series, we discussed questions related to convening the meeting. In the next video—the third in the series—we will address another major source of conflict in General Meetings: The Right to Information.

Corporate advice on these matters is part of ILP’s day-to-day work.

Don’t be left in doubt, get in touch. We’ll be happy to help and offer you solutions.

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Don’t be left in doubt, get in touch. We’ll be happy to help and offer you solutions.