We offer below a summary and a brief analysis of the main measures adopted by the government as a result of COVID-19 relating to the business and markets sector, which are set out in the Royal Decree Law 8/2020 of 17th March which adopts extraordinary measures to deal with the economic and social impact of COVID-19.
The main extraordinary measures for businesses and other legal entities (public and private limited companies and other commercial companies, associations, civil societies, cooperative societies and foundations) have entered into force with effect from 18 March 2020 and will be in force: (a) generally for one month, unless extended by the Government if the State of Alert persists; or (b) those measures which have a fixed duration, for that period. The measures are as follows:
During the period of the state of alert, societies, cooperatives, associations or foundations may hold the sessions of their governing bodies by videoconference even if their statutes do not provide for such a form of meeting. This measure includes the Board of Directors and the General Meeting of Shareholders or Partners, or equivalent bodies in other entities, as well as the delegated commissions and other obligatory or voluntary commissions that the entity may have set up. Bilateral or plurilateral connection in real time with image and sound of the remote attendees must be ensured. Although no indication is given as to how to accredit that the indicated requirements have been met, it is understood that it will be sufficient that whoever issues the minutes and, if applicable, certification of the session states that they have been met. The meeting will be understood to have been held at the registered office.
During the period of the state of alarm, societies, cooperatives, associations or foundations may adopt the resolutions of their governing bodies in writing and without a meeting, provided that the president decides to do so or that two of their members request it, even though their statutes do not provide for this form of meeting. It is important to note that the requirements set forth in Article 100 of the Commercial Registry Regulations must be complied with, which includes that this form of adopting resolutions may only be used if no member of the governing body has opposed this procedure.
The period of three months from the close of the financial year for the formulation of the Annual Accounts of the legal entities that are obliged to do so during the state of alert is suspended, and the period will be extended by three months from the end of the state of alert.
As for the annual accounts already prepared at the date of the declaration of the alarm state, the period for their verification by auditors is extended, when this is obligatory, until two months after the end of the alarm state.
The Ordinary General Meetings for the approval of the Annual Accounts must be held within three months of the date on which the deadline for the preparation of the Annual Accounts expires.
In the case of General Meetings that have been called before the publication of the state of alert and whose date of holding is later than the publication of the state of alert, the administrative body may modify the place and time of the meeting, or may revoke the call, in both cases by means of a notice on the company’s website and, if it does not have one, in the BOE, 48 hours in advance. If the call is revoked, the board of directors must issue the new call within one month of the end of the alarm condition. This rule raises doubts as to how to proceed with the modification or revocation in those cases (relatively numerous among limited companies, for example) in which the entity does not have a website and its articles of association allow for the call of the meeting by means of written communication to each partner, since it seems that such a system would not be valid and there would only be the publication of the notice in the BOE.
The exercising of the rights of separation of the partners is suspended, even if there is legal cause, until the end of the state of alarm (including its extensions).
The deadline for the reinstatement of cooperative members who leave the cooperative during the alarm state is extended to six months after the end of the alarm state.
If the statutory period of duration of the company expires while the state of alert is in force, the full dissolution of the company is deferred until two months after the end of the state of alarm.
Even if, before or during the state of alarm, there is a legal or statutory cause for the dissolution of the company or entity, the period for the administrative body to call the Meeting that must decide on said dissolution is suspended until the end of the state of alarm, at which time said period will be resumed.
If the legal or statutory cause for dissolution of the company or entity occurs during the period of the state of alert, the directors will not be liable for the corporate debts incurred during that period (but, logically, they will be liable for those incurred subsequently).
The period of expiry of registry entries (although not expressly indicated, it is understood that it refers to those of the Commercial Registry) of presentation entries, precautionary notes, mentions, marginal notes and any other registry entries that may be cancelled due to the passage of time is suspended; the periods will resume at the end of the state of alarm.
While the state of alert is in force, neither the debtor who is in a state of insolvency nor the one who has notified the court of the negotiation provided for in Article 5 Bis of the Bankruptcy Law, even if the deadline has expired, will have the duty to request the declaration of bankruptcy.
Until two months after the end of the state of alert, the judges will not admit for consideration the applications for the necessary competition that were submitted during that state or that are submitted during those two months. If an application for voluntary competition has been submitted, it will be admitted for processing, with preference, even if it is submitted at a later date.
The Royal Decree also establishes certain measures applicable only to listed companies.
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