Questions and answers of the business owner in the mercantile field against Covid-19

No one doubts that the coronavirus is the greatest health crisis, unprecedented in modern history. That the situation is very serious from all areas, economic, financial, political and social, either; but that the management of the situation has been carried out in such a calamitous way is the responsibility, only and exclusively, of one of the most fatal governments that is remembered. In the event of such a magnitude, it is always complex to take a straight path, considering the thousand and one vicissitudes that will occur throughout the process, but what is unquestionable is that there must be a plan, a tactic on which to lay the foundations of the trust and credibility of citizens.

In the business field, and during the last 15 days, only doubts have arisen regarding how to face the crisis, not because of the virus itself, but because of the hesitation of the rulers, who have dedicated themselves to issuing Royal Decree after Royal Decree, each one modifying or clarifying the previous one; to celebrate tedious and endless councils of ministers and to broadcast monotonous and insipid insubstantial meetings that only generate suspicion for the business world.

A crisis situation requires quick, clear and forceful responses, in order to mitigate the damage and maintain activity to face the foreseeable recession; From a technical point of view, professionals in the legal world only ask the executive for two things, CRITERIA and of course LEGAL SECURITY.

In order to try to clarify some issues, we have come to ask several questions and answers in the commercial field:

1)     An ordinary or extraordinary general meeting may be called and held pursuant to RD 463/2020?

If, of course, nothing indicates the contrary, in fact, for the moment it is still mandatory to call and hold the Ordinary General Meeting to approve accounts in accordance with article 179 LSC.

2)     What happens if the company had planned to hold the ordinary General Meeting within the period of declaration of the state of alarm?

The RD determines 3 options, to hold the meeting, to postpone it or to call it off; this can be done through BORME publication and announcement on the company's website, with a minimum period of 48h before the scheduled date.

If the governing body chooses to call off the meeting, it must convene it again within 30 days after the termination of the state of alarm.

3)     Can Board of Directors be held during the alarm state?

Yes, it would be enough if the president called it or was requested by two directors. It could be held electronically or in writing and without a session.

Given the impossibility of doing it in person, two ways are enabled: (i) either through videoconference in real time with image and sound or (ii) the celebration without holding a session and by voting in writing. In both cases, although it is not foreseen in the bylaws, it is considered that the meeting is held at the registered office.

If the company does not have the means to hold it electronically, it could be done by phone provided that all present authorise it and sign the minutes without opposition.

4)     What possibilities are recognised in the state of alarm for decision-making by the board of directors? 

Given the impossibility of doing it in person, two ways are enabled: (i) either through videoconference in real-time with image and sound or (ii) the celebration without holding a session and by voting in writing. In both cases, although it is not foreseen in the bylaws, it is considered that the meeting is held at the registered office.
If the company does not have the means to hold it electronically, it could be done by phone provided that all present authorise it and sign the minutes without opposition.

5)     What happens if the appointment of administrators regulated in article 222 of the Capital Companies Law expires? 

We consider that, except when an extraordinary meeting is called and held, the administrators with expired positions will continue in the exercise of their powers until the following three months have elapsed, from the end of the period to prepare the annual accounts to the holding of the meeting to be resolved on the approval of the financial year 2019. 

6)     What period does the company have for the preparation of the annual accounts?

With the entry into force of the RD that decrees the state of alarm, the period of 3 months to formulate accounts is suspended, with another 3 months from the end of the state of alarm.

7)     How long does a company have to approve its annual accounts?

The ordinary general meeting must be held within three months after the end of the term to prepare the annual accounts. Consequently, the annual accounts must be approved, if applicable, within this period of three months from the formulation thereof.

8)     What is the deadline for depositing the annual accounts with the Mercantile Registry?

The Royal Decree-law does not affect the terms established for the deposit of the annual accounts in the Mercantile Registry (article 279 LSC); although, article 42 of the Royal Decree-law itself establishes the suspension, during the period of duration of the state of alarm, of the expiration period of filing entries, preventive notes, mentions, marginal notes, etc.

9)     What happens if a company becomes a cause of dissolution or liquidation during the term of the RD?

First, the rule suspends the two-month period available to the administrative body to call the general meeting in order for the dissolution agreement to be adopted or to enervate the cause.

The administrators are exonerated from the responsibility for all the social debts contracted during the validity of the state of alarm, as long as the cause had occurred within this period (article 367 Capital Companies Law).