Quorum and legal majorities in General Meeting and Board of Directors

Both the Board of Directors and the General Meeting must constantly make decisions. Strict formalities must be fulfilled before agreements are adopted.

These formalities are intended to encourage agreements to be adopted by a sufficiently representative fraction of the share capital.

The following are the most common questions asked by the shareholders partners and directors of a company.

What is the quorum of assistance necessary for the General Meeting to be validly constituted? And for a Board of Directors? How many votes are needed for a decision to be adopted at the General Meeting? And on the Board of Directors?

Let’s start, quorum and legal majorities in General Meeting and Board of Directors in the SL and SA.

Quorum and Majorities in SL

A) General Meeting

The Law does not establish a minimum attendance quorum for the constitution of the Board of Directors of the SL. Only those shareholders required to adopt the decision in question are required to be present at the time of the vote.

The voting majorities for the valid adoption of agreements are shown below:

B) Board of Directors

In order to constitute a valid quorum for the Board of Directors, at least a majority of the members must attend.

With regard to the majorities required for the adoption of agreements, the table below shows these requirements:

Quorum and Majorities in SA

A) General Meeting

B) Board of Directors

In order to constitute a valid quorum for the Board of Directors, at least a majority of the members must attend.

As for the majorities:

How are Quorums and Majorities calculated when the result of the calculation does not give a whole number?

It could happen in the Board of Directors’ premises that the applicable majority for decision making results in an inaccurate number.

As a general rule, the rounding is done by excess. In any case, a provision to this effect should be included in the Articles of Association to avoid any interpretation.

By way of example:

Conclusion

It is essential to know the requirements demanded for the constitution and adoption of resolutions in the General Meeting and Board of Directors. The Law requires compliance with these formalities in order to validate the decision-making of corporate bodies.

Therefore, the above mentioned tables serve as a basic and indispensable outline for any shareholder, manager, lawyer, advisor…

As an enrichment, we propose the following reading on the calculation of the value of a company. It can be used in advance of a General Meeting or Board of Directors decision. In today’s business world, they need to know how much their company is worth.