General Meetings in Companies: A Detailed Analysis
General Meetings: A Deep Dive
Definition
A general meeting is where partners or shareholders convene to decide or express the company’s will. Decisions are made by majority rule, as defined by law or bylaws, on matters reserved for the meeting’s competence. These decisions affect all partners or shareholders, regardless of dissent or absence.
Competences (Art. 160.1)
- Approval of financial statements, earnings distribution, and corporate governance.
- Appointment and dismissal of directors, liquidators, and auditors, and initiating liability actions against them.
- Bylaw amendments (e.g., changing company objectives, capital increases or reductions).
- Structural modifications (e.g., transformations, mergers, splits).
- Company dissolution.
- Acquisition, disposal, or contribution of essential assets to another company.
Types of General Meetings
- Ordinary General Meeting: Convened within the first six months of each financial year. The agenda typically includes approving corporate governance, financial statements of the preceding year, and determining earnings distribution.
- Extraordinary General Meeting: Any shareholder or stakeholder meeting not held as an ordinary meeting.
- Universal General Meeting: Common in small or family-owned LLCs. Occurs when all capital is present or represented, and attendees unanimously agree to hold the meeting.
Convening, Attendance, Representation, and Voting
Convening the General Meeting
The general meeting is convened by company directors or liquidators. It’s convened when deemed in the company’s interest, on dates or within terms established by law and bylaws, or at the request of partners/shareholders representing 5% of the capital.
Convening Methods
- Announcement on the company’s website.
- If no website or if not duly registered, announcement in the BORME and a major daily newspaper in the registered office’s province.
- Bylaws may allow for written, individual notices guaranteeing receipt by all partners/shareholders.
Convening occurs at least one month in advance for JSCs and fifteen days in advance for LLCs.
Representation
Partners/shareholders may be represented by another person. Regulations differ depending on the company type.
In JSCs, if directors, custodian institutions, or ledger entry parties request proxy status, the power of attorney document must include the agenda, voting instructions request, and information on the proxy’s voting in the absence of instructions.
Constitution, Decision Adoption, and Challenges
Constitution (Quorum)
- Ordinary (First Call): Shareholders present/represented must own at least 25% of subscribed capital with voting rights, unless bylaws specify a higher percentage.
- Ordinary (Second Call): No quorum unless specified in bylaws.
- Stricter Cases (e.g., bylaw amendments, bond/debenture issuance, structural changes): 50% in the first call and 25% in the second, though bylaws may require larger majorities.
Quorum requirements don’t apply to LLCs.
Adoption of Decisions
In LLCs, decisions are adopted by a majority of votes cast, representing at least one-third of the votes (Art. 198).
Stricter majorities are needed for certain decisions:
- Capital increase/reduction and bylaw amendments: Over half of the votes.
- Authorizing directors to engage in activities similar or complementary to the company’s purpose, structural changes, etc.: Two-thirds of the votes.
Challenging Decisions
The LSC allows challenges to corporate decisions in LLCs and JSCs in three cases:
- Contrary to law.
- Contrary to bylaws.
- Detrimental to corporate interest, benefiting specific partners/shareholders or third parties.