Bill amending the capital companies law

What do the changes you propose mean?

On September 7 of last year, the Bill of Law amending the consolidated text of the Capital Companies Law was published in the Official Gazette of the Cortes Generales, approved in turn by Royal Legislative Decree 1/2010, of July 2, and other financial regulations regarding the promotion of long-term involvement of shareholders in listed companies. On March 3, this project was approved by Congress and sent to the Senate.

The main objective of this Bill is to transpose the content of European Directive 828/2017 of the European Parliament and of the Council, of May 17, 2017, which establishes requirements whose purpose includes, among other things, greater fluidity in the transmission of information in listed companies, as well as ease in identifying shareholders and their rights; intensify the control and transparency of the remuneration of administrators, as well as reinforce transparency regarding the activity of institutional investors and proxy advisors, in addition to the supervision of transactions with related parties.

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Main points that would be modified

Thus, the main points that would be modified with the Bill would be the following:

1. The scope of application of the title that refers to listed companies is limited, considering listed companies only those public limited companies whose shares are negotiable on a Spanish regulated market, understanding, in the case of admitted shares to trading exclusively on a regulated market of another Member State or a similar one of a third State, that they will be subject to the regulation rules of said foreign market, assuming that the specific company rules of listed by correspondence with those of the State in which market is quoted when said standards are related.
2. Listed companies are granted the right to know the identity of the ultimate beneficiary of the entity’s shares and partners (within certain margins) are also given access to the identity of the other partners in order to facilitate the collective exercise of their rights. The shareholder will also have the right to have the valid receipt of their votes and their registration and accounting confirmed. All with the objective, as mentioned above, that the communication and transmission of information between the company, shareholders and intermediaries is more fluid.
3. A new system of management, publicity and approval of operations with related parties is introduced.
4. One of the main objectives of this Project, as has already been said, is to encourage shareholders to maintain their investment in the long term, and for this reason some articles have been incorporated in which the feasibility of changing statutorily the proportion between the nominal value of the share and the right to vote. There is the possibility of assigning double the number of votes corresponding to each share held by the same shareholder for two consecutive years without interruption, and it may be more if so established in the bylaws, also including the shares granted free of charge. In the event that the latter have been granted within the scope of a capital increase, the double voting right will be directly assigned to them.
   If you are the holder of double voting shares, you must request their registration in a special registry book created by the company expressly for this purpose. At the same time, the company must permanently publish on its website information about the number of shares with double vote, with exceptions being mortis causa succession, donations between spouses, ascendants, descendants or persons linked by a similar emotional relationship, transfers between companies of the same group or modifications of the structure. Finally, the general meeting of the company may agree at any time to eliminate the statutory clause of double voting, requiring a simple majority.

7. Regarding corporate governance, there are also new developments in aspects such as the composition of the administrative body, which must be made up of individuals with the exception of representative directors from the public sector; As regards administrator remuneration, it is recognized that temporary exceptions to the remuneration policy may be applied (most of the requirements established in the Directive were already met in our regulation) and there is a significant modification of the Remuneration Report, expanding its content and changing its publication regime.
8. In order to stimulate and synthesize the capital raising processes of listed companies, measures such as the reduction to ten calendar days of the term to exercise the pre-emptive subscription right are incorporated; The report of an independent expert other than the accounts auditor is no longer mandatory, except when the market value is not sufficiently representative of the fair value and when the corporate interest requires that the new shares be issued at a price less than fair value.
   Delegation to the administrative body at the time of increasing the capital will be limited, excluding the preferential subscription right to 25% of the share capital at the time of authorization; The delivery and transmission of the new shares will also be allowed once the deed executing the increase will be granted and before the registration, and at the same time the requirement to state in the issuance agreement the possibility of incomplete subscription is suppressed. as a premise for the increase to be effective.
9. Lastly, mention should be made of the updating of the list of guidelines considered regulations and discipline of the stock market, the supervision of which corresponds to the CNMV.

It is worth mentioning that the Bill at hand also partially modifies the Consolidated Text of the Securities Market Law, approved by Royal Legislative Decree 4/2015 , of October 23, as well as the Account Audit Act and the Collective Investment Institutions Act.

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