The Royal Decree Law 8/2020, 17th March, of extraordinary urgent measures to address the economic and social impact of COVID-19, has altered the deadlines and usual ways of maintaining meetings of social bodies, the annual accounts, the ordinary shareholders’ meeting, the right to dividends, and the contractual relations.
Here some relevant questions in order to inform you about these modifications.
1.How can I hold the sessions of the company’s management bodies?
BY VIDEOCONFERENCE. They may be held by video conference and held at the registered office of the entity. The RDL 8/2020 allows to hold the sessions of administrative bodies through remote communication mechanisms, or directly in writing and without session, even if it was not provided for in the Company’s Statutes. The new Decree Law 11/2020 also allows multiple conference meetings to be held.
2.When does the deadline for formulating the Annual Accounts end?
THE TERM IS SUSPENDED. The RDL 8/2020 suspends the three-month period from the end of the previous financial year to formulate the annual accounts. The 3-month period from the end of the financial year is suspended until the end of the alarm status, and it will be resumed again for another 3 months from that date.In addition, the Registrars, taking the previous information into account, interpret that the period for legalization of books in the Commercial Register is also suspended until the end of the month following the deadline for the formulation of accounts.
Finally, the RD Law 11/2020 clarifies that annual accounts can be formulated during the alarm status.
3. Can I modify the proposal for the application of the finantial result?
The RD Law 11/2020 regulates the proposal for the implementation of results as follows: The companies that had formulated their accounts before the start of the alarm state CAN amend the proposal and submitt another one to the general meeting, accompanying the new proposal with a letter from the auditor indicating that their opinion would not have changed had previously been known to the new proposal. It allows the proposal for the application of the result of companies whose board Meeting has already been announced to be withdrawn and to defer that point to a later meeting with similar requirements to those indicated.
4.What happens if the company is obliged to audit its accounts?
THE TERM IS SUSPENDED. In the event that, at the date of declaration of the alarm state, the governing body or administration of a required legal person has already drawn up the accounts for the previous financial year, the period for the accounting verification of those accounts, if the audit is mandatory, shall be deemed to be extended by two months from the end of the alarm state.Specifically, the RD Law 11/2020 clarifies that the extension of the audit period to 2 months after the termination of the alarm status applies to the case of accounts made before the beginning of the alarm state.
5.And regarding the General Meeting of Shareholders, when can it be held?
IT WILL CONTINUE TO BE THREE MONTHS FROM THE END OF THE ACCOUNT FORMULATION PERIOD. The general meeting (or the sole shareholder’s resolution if it’s the case) for approving the annual accounts of the previous financial year shall necessarily meet within three months from the end of the period to draft the annual accounts. Furthermore, the RD Law 11/2020 allows video call or conference call to hold the Shareholders’ Meeting.
6.The company has to notarize some documents. Can I do it during the State of Alarm? he company has to notarize some documents. Can I do it during the State of Alarm?
THE NOTARY WILL ONLY DEAL WITH URGENT SITUATIONS. The Notary’s Directorate (Dirección General de Registros del Notariado) has issued Instruction settling that given the restrictions on wandering freedom it will only be mandatory to attend to those actions of an urgent nature, as well as those determined by the Government.
7.What happens if I have agreements of the Company that have been notarized but not registered in the Commercial Register yet?
THE DEADLINES FOR REGISTRATION HAVE BEEN SUSPENDED. All periods during the duration of the alarm state and, where appropriate, extensions thereof, have been suspended, including the validity of the filing seat, the expiration period of the preventive notes, the period of calculation of any registration seat likely to be canceled for the short time, and the term of validity of the reservation certifications of name of the Central Commercial Registry. The calculation of the time limits shall be renewed on the day after the end of the alarm state or its extension.
If you have further doubts regarding the exceptional measures because of Covid-10, please contact us.