Shareholder Meetings: Quorum, Attendance & SA vs. SL

Posted on Mar 18, 2025 in Philosophy and ethics

Minimum Number of Shareholders for a Valid Board Meeting

The minimum number of shareholders required for a validly constituted board meeting varies depending on the type of topics to be addressed:

Quorum for Ordinary Matters

For ordinary matters, the standard quorum requirements apply:

  • First Call: At least 25% of the share capital with voting rights must be present or represented.
  • Second Call: If the 25% quorum is reached on the first call, a second call can be made (at least 24 hours later). On the second call, there is no minimum capital requirement for the meeting to be valid.

Note: A company (SA) may establish different quorums in its bylaws, but these can only increase the percentages, never decrease them. The percentage established for the second call can never be higher than the first call. For example, if the first call requires 30%, the second call could require 20%.

Quorum for Special Matters

For specific and important agreements (e.g., amendment of bylaws, merger agreements), a higher or special quorum is required:

  • First Call: 50% of share capital with voting rights.
  • Second Call: 25% of share capital with voting rights.

Similar to ordinary quorums, the bylaws can stipulate a higher percentage for both the first and second calls, but the second call percentage cannot exceed the first. Furthermore, if a meeting is held on the second call to make these types of agreements, the approval requires a two-thirds majority of those present (not just a simple majority).

Attendance at the Annual General Meeting

To attend the Annual General Meeting (AGM), the following requirements must be met:

  • Be a shareholder (and be credited as such).
  • Hold a minimum number of shares (as stated in the bylaws).
  • If a shareholder does not hold the minimum number of shares, they can group with other shareholders and appoint a representative to attend the meeting.
  • Shares must typically be deposited at the registered office.

In addition to shareholders, managers, directors, technical staff, and others as specified in the company rules may also attend (though they typically do not have voting rights). The chairman of the board may authorize the attendance of anyone deemed to have a relevant interest, but this authorization can be revoked by the shareholders.

A list of attendees is created to verify that the required quorum is met.

Key Differences Between SA and SL Companies

Here’s a comparison of Sociedad Anónima (SA) and Sociedad Limitada (SL) companies, primarily focusing on Spanish corporate law:

  1. Minimum Share Capital:
    • SL: Minimum of €3,006 (formerly 500,000 pesetas).
    • SA: Minimum of €60,102 (formerly 10,000,000 pesetas).
  2. SL Share Subscription: In an SL, all shares must be fully subscribed and paid for. There are no unpaid dividends.
  3. Nominal Value: The nominal value is the sum of the shares (SA) or equity participations (SL).
  4. Foundation: In an SL, the company can only be founded simultaneously (one way). In an SA, both simultaneous and subsequent foundation (two-way) are possible.
  5. Bond Issuance: SLs cannot issue bonds.
  6. Constitutional Documents: The founding documents for an SL consist of:
    • Constitutional contract
    • Bylaws
  7. Management Body: The structure of the management body in an SA must be defined in the statutes, while in an SL, it is optional.
  8. SL Administration Options: The bylaws of an SL can specify two types of administration:
    • Sole Director
    • Board of Directors
    This allows for flexibility without requiring bylaw changes. The first option listed will typically take precedence.
  9. Social Contributions: The same rules for social contributions apply to both SA and SL companies.
  10. Partner Liability (SL): Individuals with the status of *partners* in an SL (rather than shareholders in an SA) who acquire any participation or make non-monetary contributions during a capital increase are jointly and severally liable for the value of the contribution. The valuation is performed on the contributed property.
  11. Deed and Bylaws Content: The content of the deed and bylaws is similar for both SA and SL, but in an SL, all share capital must be fully paid.

Accordion Operation

An “accordion operation” is an agreement made at the General Meeting of Shareholders to modify the share capital. It involves a simultaneous reduction and increase in capital. First, the share capital is reduced (often due to losses), and then it is immediately increased through new contributions (issuing new shares). These two actions are inseparable; one cannot be executed without the other.