The Shareholders General Meeting is one of a capital company’s fundamental governing mechanisms. During the meeting, the shareholders of the company adopt resolutions about matters required by law or by the company’s corporate bylaws. In the case of listed companies, AGMs have a defined structure established by the corporation law.
What matters does a General Shareholders Meeting address?
It is the remit of such as meeting to deliberate and agree on the following subjects, among other things:
- approval of annual accounts, allocation of profits or losses, and approval of corporate management
- appointments to the board of directors
- appointment of external auditors
- changes to corporate bylaws;
- company transformation, mergers, spin-offs, or capital increases
- the dissolution of the company;
- any other topics required by law or the company’s bylaws.
The resolutions made in the meeting are binding for all shareholders, including those who voted against the measures and those who did not attend the meeting.
What kinds of General Meetings are there?
A general meeting can be ordinary or extraordinary. Ordinary meetings are convened once a year, within six months from the close of the previous fiscal year and are the vehicles, where appropriate, for the approval of the corporate management, the previous year’s financial statements, and the allocation of profits or losses. The rest of the meetings are extraordinary in nature.
Additionally, the members of the board of directors are obliged to call a General Meeting when requested to do so by a shareholder or shareholders representing more than 5% of the company’s capital or 3% in the case of a listed company.
Who can attend meetings?
All shareholders have the right to attend the meetings, although in the case of corporations such as limited liability companies, the bylaws can stipulate attendance depends on holding a minimum number of shares, and in the case of listed companies this cannot exceed one thousand shares.
Additionally, in the event a shareholder cannot attend, he/she has the right to designate a representative to attend the general meeting and vote as a proxy on his/her behalf. Assigning a proxy must be conferred in writing or by notification that fulfills legally established requirements related to the right to exercise remote voting and should be done specifically for each meeting.
In the case of limited liability companies, and in accordance with their bylaws, voting on proposals related to the agenda items in any kind of General Meeting can be delegated to a proxy or exercised by the shareholder by mail or any means of remote communication so long as the identity of the shareholder is demonstrated. Shareholders who have cast their vote using remote voting should be considered as present for the purposes of the assembly.
The situation may occur when minority shareholders who are interested in attending the general meeting do not meet the minimum number of shares required by the bylaws for attendance. In these cases, the law allows minority shareholders to group together their shares to meet the minimum required.
Structure of a listed company’s General Meeting
- Notice of Meeting: following legally established procedures, notice is to be published in the Official Gazette of the Commercial Registry and in a daily newspaper with wide circulation as well as the website of National Securities Market Commission (CNMV) in the case of Spain. The notification shall include, among other things, the name of the company, the date and time of the meeting and the agenda items to be addressed. The meeting will take place, as a general rule, in the municipality where the company has its corporate headquarters.
- Officers of the meeting: Unless otherwise specified in the bylaws, the company chairman and board secretary will chair and be responsible for the running of the meeting.
- Attendance list: before addressing the agenda, the number of shareholders present or represented in the meeting is determined, as well as the value of their shareholdings.
- Convening of the meeting: at the first summons, the meeting will be deemed validly convened when shareholders present or represented hold at least 25% of the subscribed capital with voting rights. At the second summons, the meeting will be validly convened regardless of the percentage of capital represented, except in the case that the bylaws establish a set quorum. However, a reinforced quorum will be acquired for the meeting to agree on certain accords such as an increase or decrease in share capital and any other modification of the corporate bylaws (50% at the first call and 25% at the second), as established by the law and the corporate bylaws.
- Conduct of the Meeting: Reading of the agenda and presentations that may be established by the officers.
- Exercising of shareholders right to information: during the course of the meeting shareholders can request information or clarification on items included in the agenda. Once the period of presentations has been concluded, the meeting will proceed to answer shareholders, generally by officers.
- Voting: once interventions have been finalized the meeting will proceed to vote on agreed proposals. Votes will be deemed those of shareholders presented at represented at the meeting. Remote votes previously issued through the channels established by the company will also be counted.
- Adoption of agreements: in limited liability companies, normally a simple majority of votes will be required, although on certain matters established by the law (or if the case may be by the bylaws) bigger majorities may be established.
In the case of BBVA, the rules applied on the procedure and execution of the General Meeting are set down in the Bylaws of the Bank and in the General Meeting Regulations, both of which are available on the corporate web, as well as all of the information relevant to the holding of the next General Meeting for 2018.