Doing Business in Spain – VI. Shareholders’ rights: attendance and voting at shareholders’ meetings.

What are the shareholders’ rights in a company?

In any company, all types of shareholders are entitled to a series of rights. Article 93 of the Royal Legislative Decree 1/2010, dated July 2nd, approving the amended and restated text of the Capital Companies Act ("TRLSC"), contains a list of rights of significant relevance in the corporate world. However, for the purposes of this article we will focus on the right to attend and vote in shareholders’ meetings.

What are the shareholders’ rights in an S.L. and an S.A.?

The conditions under which the right to attend and vote is exercised differs depending on whether dealing with Limited Liability Companies (S.L.) or Public Limited Companies (S.A.). The characteristics of each regime are analysed below.

Shareholders’ rights in an S.L.

For Limited Liability Companies (S.L.), Article 198 of the TRLSC contains the general rule, stating that resolutions require a majority of the votes validly cast to be adopted. Partners, in their capacity as such, can attend the meetings. It is indicated that these must represent at least one-third of the total shares into which the share capital is divided.

However, certain cases require a qualified majority for the resolution to be validly adopted:

• Simply majority: capital increases and/or reductions, as well as amendments to the Articles of Association; and 
• Two thirds (66 2/3): authorization of directors’ specific activities, suppression or limitation of pre-emptive rights in capital increases, transformations, mergers, spin-offs, significant transfer of assets and liabilities, as well as the exclusion of shareholders.

Shareholders’ rights in an S.A.

For Public Limited Companies (S.A.), Article 193 of the TRLSC stipulates that a certain percentage of the share capital must be present at the meeting for it to be validly constituted. Every shareholder has the right to attend meetings. 

Regarding quorum requirements, the TRLSC establishes:

• on the first call, shareholders holding at least 25% of the subscribed share capital with voting rights, or the percentage determined for this purpose in the articles of association if different, are required to be present; and 
• on the second call, the meeting shall be constituted with the percentage of the share capital that has actually attended the meeting, or when the figure specified in the articles of association is reached, provided that this figure is lower than those established for the first call.

However, like Limited Liability Companies (S.L.), for a Public Limited Company (S.A.) to validly adopt resolutions on certain matters, a higher or "reinforced" quorum is required, as referred to and regulated by Article 194 of the TRLSC. Specifically, these matters include:

• capital increases and/or reductions; 
• articles of association amendments; 
• bond issuances;
• suppression or limitation of the right of pre-emptive acquisition of new shares; and,
• transformations, mergers, spin-offs, or significant transfer of assets and liabilities.

Resolutions related to any of the aforementioned matters shall require, at the first call, the attendance of shareholders holding at least 50% of the subscribed and voting share capital, or at least a percentage equivalent to 25% of the share capital in the event that the meeting is held at the second call. It is important to note that these percentages may be increased by the articles of association.

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