Among the exceptional measures approved by the Government during the State of Alarm, we find the Royal Decree – law 8/2020 that, in articles 40 and 41, establishes the framework of action for the companies in relation to the shareholders’ meetings. In this publication we explain you what the legislation says and which tools EADTrust offers to guarantee a correct application of it.
Firstly, article 40 of the Royal Decree – law indicates that, during the duration of the State of Alarm and although it is not foreseen in the statutes, civil, commercial and cooperative societies will be able to carry out the sessions of their governing and administrative bodies by means of video or multiple telephone conference. Similarly, meetings or assemblies of members may be held.
Regulations demand a series of requirements in order to hold these meetings: they will be held by videoconference or telephone conference; all the participants must have the necessary means to connect; the secretary will have recognized their identity which, finally, will be recorded in the minutes and sent by e-mail to the participants.
During the State of Alarm, the regulations allow General Meetings to be held by videoconference
Therefore, the identification of the participants remains in the hands of the secretary. However, through the telephone conference, additional difficulties arise that could lead to identity theft, since the voter cannot be identified unequivocally. The videoconference, however, implies the connection through a computer or mobile phone with camera and allows an identification of the participant through the image.
EADTrust has developed a platform that optimizes and simplifies these processes: Innovoto. Our system facilitates the authentication of the voters with the use of simple, advanced or recognized signature, with their ID or using other methods like their mobile number or e-mail. In this way, Innovoto minimizes the intervention of unauthorized third parties and, consequently, the leak of reserved information.
In addition, with regard to listed companies, Article 245 of the Companies Act requires boards of directors to meet at least once a quarter. Compliance with this regulation at times when mobility is restricted requires the development of more flexible legislative principles.
Consequently, article 41 of the Royal Decree – law allows the boards of directors of listed companies to hold general meetings by electronic means following the guidelines set out in articles 182, 189 and 521 of the Law on Capital Companies, even though this is not provided for in the articles of association. Similarly, the holding of meetings will be subject to the possibility of members or their representatives participating telematically, with representation conferred on the Chairman of the Meeting and advance voting through remote communication means.
Likewise, in accordance with the Law on Corporations, adequate mechanisms must be established in order to comply with some or all of these requirements:
- Real-time transmission of the General Meeting.
- Two-way communication in real time so that shareholders can address the general meeting from a different location.
- A mechanism for casting votes before or during the general meeting without the need to appoint a proxy holder who is physically present at the meeting
Article 41 allows electronic voting in the General Meetings even if it is not included in the statutes of the company
Likewise, Article 41 of the Royal Decree – law also gives validity to the resolutions adopted by the Board of Directors and the Audit Committee when they are adopted by videoconference or multiple telephone conference. Therefore, once again the problem of identification with guarantees appears, which is only ensured by videoconferencing.
Furthermore, this legislation allows the use of electronic voting when the identity of the person participating is confirmed, as well as the security of communications. Innovoto allows the implementation of electronic voting and the delegation of electronic representation in General Shareholders’ Meetings and in other participation bodies (universities, trade unions, professional associations…).
Our platform allows the registration of participants and, subsequently, the exercise of vote during the Assembly, either through a smartphone or a computer. The voting system, with an open structure, allows all the existing variants, adapting to the needs of each organization.
To sum up, the Royal Decree – law 8/2020 has established a temporary legislative framework that allows to carry out the meetings of the governing bodies and the boards of partners. Although the norm still leaves issues in the air, it opens the door to the telematic tools for voting and for the celebration of meetings that can be maintained after the end of the State of Alarm.