Extraordinary measures for legal entities under private law – COVID19

Real Decreto Ley 8/2020, of 17 March, on extraordinary urgent measures to deal with the economic and social impact of COVID-19, adopts a series of measures covering many different areas of business activity. In its articles 40 and following, this Real Decreto Ley establishes a series of measures for Legal Entities of Private Law, applicable to registry entries and the application for insolvency proceedings.

The main measures adopted in relation to the extraordinary measures applicable to Legal Entities of Private Law are summarised below:

  • – Even if it was not set out in the Corporate Bye-laws, meetings of the governing bodies, of civil and commercial companies, of the governing board of cooperative societies and of the board of trustees of administrative foundations, as well as of the delegated commissions and of the voluntary and compulsory commissions by videoconference will be valid.
  • – Even if it is not set out in the Corporate Bye-laws, the vote in writing is valid without a meeting, provided that it is decided by the Chairman and requested by at least two members of the corresponding corporate body.
  • – Suspension of the period of 3 months from the date of closure of the financial year to formulate the annual accounts until the end of the state of alarm, restarting again for another 3 months from that date.
  • – If the annual accounts have already been formulated at the date of the declaration of the alarm state, the period for their audit – if this is obligatory – will be extended by two months once the alarm state has ended.
  • – The Ordinary General Meeting for the approval of the annual accounts of the previous financial year shall necessarily be held within three months from the moment the alarm state is finished.
  • – If the call to the General Meeting has been published before the declaration of the state of alarm but the day of the meeting is later than that declaration, the place and time foreseen for the meeting may be modified or the agreement to call the meeting may be revoked. In the event of revocation of the convening agreement, the administrative body must call the meeting again within the month after the date on which the state of alarm ended.
  • – The Notary required to attend a General Meeting of Shareholders may use real-time remote communication media.
  • – While the state of alarm lasts, the shareholders may not exercise their right of separation.
  • – The reimbursement of contributions to cooperative members who leave during the period of the alarm state is extended until six months after the end of the alarm state.
  • – If, during the validity of the alarm state, the duration of the company expires, the dissolution will not take place until two months after the end of the alarm state.
  • – If during the validity of the state of alert legal or statutory causes for dissolution occur, the administrators will not be responsible for the company’s debts incurred during this period.

Furthermore, Real Decreto Ley 8/2020 of 17 March establishes extraordinary measures applicable to the functioning of the governing bodies of listed companies, establishing the following:

  • – The publication and submission of the annual financial report to the CNMV, as well as the audit report to which they are obliged, may be complied with up to six months after the end of the financial year.
  • – The Ordinary General Meeting of Shareholders may be held within the first ten months of the financial year.
  • – Provision may be made for attendance at the meeting by electronic means and for remote voting.
  • – Resolutions of the Board of Directors and resolutions of the Audit Committee adopted by videoconference or by multiple telephone conference shall be valid, even if it is not set forth in the Corporate Bylaws.

This Real Decreto Ley also establishes the suspension of the expiration period of the registry entries during the validity of Real Decreto  463/2020, of 14 March, which declares the state of alarm for the management of the health crisis situation caused by COVID-19.

And finally, with regard to extraordinary and urgent measures of a corporate nature, Real Decreto Ley 8/2020 of 17 March establishes the interruption of the deadline set by the Insolvency Law so that a debtor who is in a state of insolvency is not obliged to apply for a declaration of insolvency.


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