Overhaul of the Capital Companies Act Underway

29 July 2011

This draft bill that serves as a step towards modifying the young Corporate Enterprises Act is based on four fundamental pillars:

I. Reduction of costs for corporate enterprises:

Reduces the importance of the publication of corporate agreements in the press, making it voluntary and supplementary, and promotes publicizing on the company website.

II. Unification of the regime for joint stock and limited liability companies:

Unifies the causes for winding-up of Sociedades Anónimas and Sociedades Limitadas (reducing the number of years of inactivity that serves as grounds for winding-up from 3 to 1) and the system for calling board meetings and eliminates the obligation of Sociedades Anónimas to choose specific arrangements for company management.

III. New rules to modernize corporate law:

For the first time, a legal standard covers legal entities as administrators and the individuals representing same and, therefore, acknowledges the power to convene a meeting of the board of directors by the administrators who represent at least one-third of the members of the body, when the president, despite having been formally requested to convene a meeting, has not done so.

IV. Lastly, it transposes Spanish EU Directive 2007/36 on the Spanish rules following on the March 24, 2011 European Court of Justice Judgment which found that Spain had failed to do so in the prescribed time.

For further information, please contact Enrique Marinel-lo