New regulation concerning the holding of virtual board and shareholders meetings, deadlines for the preparation and filing of annual accounts and restrictions on the distribution of dividends

Virtual board and general shareholders' meetings, and deadlines for preparing and approving annual accounts

Article 40 of Royal Decree-Law 8/2020, of March 17, on extraordinary urgent measures to deal with the economic and social impact of COVID-19, relating to the extraordinary measures applicable to legal persons governed by private law, has been amended as follows:

• The sessions of the governing and managing bodies held by videoconference or conference call and the resolutions adopted by written votes and without a meeting will be valid, even if such possibility is not provided for in the articles of association, until 31 December 2020.
• The period for the preparation of annual accounts is suspended until 1 June 2020 and is resumed for a further three months from that date and, therefore, ends on 31 August 2020.
• The annual accounts can also be prepared during the state of alarm and the accounting verification of these accounts can be carried out within the period established by law or extended by two months from the end of the state of alarm.
• The annual accounts shall be approved within a period of two months (instead of three months) from the end of the term established for the preparation of the annual accounts (31 August 2020). Consequently, the deadline for approving annual accounts ends on 31 October 2020.

Restrictions on the distribution of dividends 

Article 5 of Royal Decree-Law 18/2020, of 12 May, on social measures in defence of employment, lays down certain restrictions concerning the distribution of dividends and fiscal transparency. Specifically, it establishes that  companies, which had 50 or more workers, or individuals treated as they were employees, registered for Social Security purposes on 29 February 2020 which implement a temporary layoff procedure ("ERTE") based on article 1 of this royal decree-law and which use the public funds allocated to them, cannot distribute dividends corresponding to the fiscal year in which the ERTE  has been implemented, unless they first pay over an amount equal to the relief from the social security contributions that they claimed.

The fiscal year in which the company does not distribute dividends according to the preceding paragraph will not count for the purposes of exercising the shareholders' right of separation provided for in paragraph 1 of article 348 bis of the consolidated text of the Capital Companies Law, approved by Royal Legislative Decree 1/2010, of 2 July.

Therefore, those companies that have implemented an ERTE due to force majeure and have used the public funds allocated to them will not be able to distribute dividends for the fiscal year in which the ERTE was implemented (dividends for FY2020, if their fiscal year coincide with the calendar year), unless they have first paid over an amount equal to the relief from the social security contributions that they claimed.