Flashcards in 2nd test Deck (46)
Main company structures
- Public limited liability company "S.A"
- Private limited liability company "S.L"
- Limited Partnership
Key gerneral concepts
- Importance of the share capital
- Liability of the shareholders is limited to their share capital contribution
- Commercial entities
The share capital:
- Reflects total nominal value of shares
- Included in bylaws
- Rights of shareholders will be set in accordance to shares they hold.
- Only modified my modifying bylaws
- Equivalent to valid economic contributions
- Relationship between capitan and equity
- Goods and rights with economic values
- Contribution in cash: evidence of contribution
- Contribution in kind: external valuation for "S.A", joint and several liability of shareholders in "S.L".
- Shares cannot be issued at discount
- Disbursement: Full disbursement for "S.L", 25% nominal value for disbursement in "S.A"
Shares in "S.L" Companies
- Can't be represented by certificates nor book entities
- Registration at the shareholders Registry Book.
- General Principle: not freely transferable
Incorporation of a Company
- Deed of incorporation: agreement by founding shareholders to establish the company.
- Registration of the deed of incorporation at the COMMERCIAL REGISTRY.
Main content of Incorporation Deed
- Founders ID.
- Declaration to incorporate company.
- # of shares.
- Company's bylaws.
- Management body.
- Company name.
- Corporate purpose.
- Registered office.
- Share capital.
- Details on shares.
- Structures of the management body.
- Decision making process.
- Managing bodies.
Non- registered companies
- Company in incorporation process.
- Irregular company: when registration at the CR has not been filed within one year since incorporation took place.
- Shareholders general meeting: shareholders gathered in a meeting will adopt the relevant resolutions in accordance to bylaws and the law.
- Management Body: will decide about day a day business decisions.
Matters adopted by SGM
- Review management's conduct, approve financial statements and distribution of prior years' earnings.
- Appointment and dismissal of directors, liquidators and auditors.
- Correction of bylaws.
- Removal of limitation of preferential rights.
- Conversion, merger, global assignment of assets and liabilities.
- Liquidation of the company and approval of financial liquidation balance sheet.
- Proportional, invisible and cumulative part of the share capital with nominal value.
- Grant shareholders with status with rights:
* Right to receive earnings and liquidation quota.
* Preferential right in the issuance of new shares.
* Right to attend and vote at SGM.
* Right to receive information.
Types of shares
- Preferred shares.
- Shares with ancillary obligations.
- Non- voting shares.
- Common shares.
- Preferential dividend.
- Not permitted :
* When remuneration comes as interest.
* If they alter the proportionality between nominal value and voting right.
Shares with ancillary obligations
- Additional commitments by the shareholders.
- Possibility to include penalty clauses in the case of breach of the ancillary obligations.
- Any transfer requires the authorisation of the company.
Non- voting shares
- Total par value can't exceed 50% of total pain in share capital.
- Special rights:
* Minimum annual dividends.
* Preferential rights in liquidations.
* Capital reduction.
Types of SGM
- Ordinary: held within first 6 months since company closed annual accounts.
* Will decide on: Financial statements, distribution results, management performance.
- Extraordinary: any other meeting different than the ordinary.
- Universal: all members attending without having made a formal call.
- Call to be published in corporate website, Official Gazette and newspaper.
- Minimum term of call: "S.L" 15 days, "S.A" 1 month.
- Content of the notice: identify specifics of the SGM + meetings agenda.
- Chairman and secretary chairing the SGM.
- Attendance List:
* Right of attendance: "S.L" all shareholders are entitled to attend, "S.A" minimum # of shares bylaws may allow attendance by electronic methods.
* Voting rights: "SL" share/ 1 vote, "S.A" proportional to nominal value of shares and voting shares.
Adopting resolutions in "S.L"
- General matters: majority of values provided = represents at least 1/3 total.
- Increase/ reduce of share capital and bylaw = over 50% votes.
- Special matters: 2/3 of total share capital.
- Bylaws may call for larger quorums and majorities.
Adopting resolutions in "S.A"
- General matters: attendance quorum: 1st call- 25%, 2nd call- no minimum required.
* Passing resolutions: simple majority of votes.
- Special matters: 1st call- 50% subscribed capital with voting rights, 2nd call- 25%.
* Passing resolutions: absolute majority of votes in 1st call, 2nd call- 2/3 of the votes.
- Bylaws may call for larger quorums and majorities.
- Resolutions which can be challenged:
* Contrary to law.
* Contrary to bylaws.
* Against corporate interest.
- Parties who can start actions:
* Third parties with legit interest.
- Term of action:
* 1 year
- Sole director.
- Joint and several directors.
- Board of directors.
- MB: appoint attorneys with specific faculties.
MB directors duties
- Directors held a faithful defense of the company's interest, loyalty and secrecy.
* Diligent management: informed about running of the business.
* Loyalty: carry out tasks in the interest of the company complying with duties established in bylaws.
* Prohibition to use the company name or invoke directorship in own account.
* Prohibition to notify conflict of interest.
* Prohibition of competition.
* Secrecy: in relation to confidential information, unless authorized.
MB Director's liabilities
- Directors are jointly and severally liable to the company.
- Need of willful misconduct or negligence.
- Liability presumed when the action is against the law/ bylaws.
- Exoneration if can be proved director did not participate in decision making.
- Action to request for liability:
* Corporate action: damages caused direct to the company.
* Individual action: damages caused directly to interest of shareholders.
MB: The board of directors
- Body which adopts decisions by majority of its members.
- # of members: "S.L" min 3/ max 12, "S.A" min 3/ no max.
- Meetings convened by chairman.
- Quorum of attendance: majority of members.
- Quorum for voting: absolute majority of members.
- SGM needs to approve them within first 6 months since the close of fiscal year.
- MB: responsible for the Annual Account within the first 3 months.
- Must be signed by all directors.
* Balance sheet: assets, liabilities and equity.
* Income statement: summary of revenues and expenses.
* Statement of changes in net worth: Changes in amount by which assets exceed liabilities.
* Cash flow statements: inflow and outflows of cash during fiscal year.
* Notes to the financial statement: comment on the content of other document that from financial statement.
Increase and reduction of Capital
- Implies a bylaws amendment by the SGM.
- Mandatory requirement: notice of general meeting shall contain reference of points to be amended.
* Right of shareholders to examine and request copies.
- Decisions to amend the bylaws: subjected to special quorum and request copies.
- After SGM makes a decision = registered in CR.
Types of capital increase
- According to the method: by issuing new shares.
* By increasing the par value of existing shares.
- According to the source of contribution: cash contribution.
* Non- cash contribution.
* Offset loans.
* Charged to reserves.
Pre- emptive rights
- Anti- dilution measure: when increasing capital by issuing new shares, shareholders entitled to subscribe a # of shares proportional to the ones before.
- Term: no less than 1 month from publication.