• By Daniel ORGUÉ
• 03-04-2020

Terms and other commercial questions due to COVID-19

If a few days ago we published an article regarding the modifications of the terms in insolvency due to the State of Alarm decreed as a result of the Covid-19 Pandemic, this time, and due to the repeated consultations of our clients in relation to this topic , we have considered necessary the publication of this article based on the modification of the Commercial Law terms in general.

In this sense, and by chronological order, the first of the obligations of the administrators and the governing bodies of the capital companies is the Formulation of the Annual Accounts that according to the Capital Companies Law must be carried out within the first three months since the end of the fiscal/tax year. Consequently, for companies whose closing of the fiscal year is December 31, the maximum formulation date is March 31, 2020, in full force of the State of Alarm.

Therefore, based on Royal Decree-Law 8/20 of March 17, on extraordinary urgent measures to face the economic and social impact of COVID-19, the abovementioned period has been suspended until the end of the State of Alarm, resuming again for another three months from that date, that is, three months from the end of the Alarm State; even though we still do not know when this is going to end.

Likewise, the second of the obligations, which is the approval of accounts that, as you already know, must be carried out within the three months following the Formulation thereof, has also been extended and the ordinary General Meeting must be held for their approval, within three months of the final date of its formulation.

According to this, we understand that, exceptionally, the approval of the annual accounts of the capital companies may be carried out by Ordinary General Meeting within the following six months from the end of the State of Alarm in which we are, and not from the closing of the fiscal year.

And beyond the deadlines, the Royal Decree-Law has established a series of exceptional measures both for the governing and administrative bodies of Capital Companies and their General Meetings, which are basically summarized as follows:

-    That the sessions of the governing or administrative bodies, even when the Statutes do not expressly include it, may be held by videoconference that ensures the authenticity and the bilateral or plurilateral connection in real time with image and sound of the remote seats.

-    That the agreements of the governing or administrative bodies may be adopted by means of a written vote and without a session whenever the President so decides and must be so adopted when requested by at least two members of the body.

-    That the call for a General Meeting made by the governing or administrative bodies prior to the declaration of the State of Alarm, may be modified as regards to the place and time provided for holding it or revoke the call agreement by An announcement on the company's website, or failing that, in the Official State Gazette, with a minimum notice of 48 hours.

-    And if a Notary had been required to hold a General Meeting, he may use remote means of communication in real time that adequately guarantee the fulfilment of the notarial function.

Finally, other of the matters regulated through the aforementioned Royal Decree-Law and that we consider especially relevant is that in the event that before or during the term of the Alarm State there is a legal or statutory cause for the dissolution of the Company, the legal term for the summons by the administrative body of the general meeting of partners in order to adopt the dissolution agreement of the company or the agreements that are intended to avoid the cause, is suspended until the end of said Alarm State, and will continue counting (that not restart) at the end of said Alarm State; and if that cause of dissolution had occurred during the validity of the Alarm State, the administrators will not be liable for the social debts contracted in that period.

In short, some deadlines have been modified, measures have been adopted to streamline all these situations and make the bodies of capital companies more flexible accordingly, as well as the administrators have been exempted from liability in some very specific cases. We will see if these measures are actually sufficient.