Part 4 of Chapter 4

Question 1

Legal framework in regard to Public limited companies or share companies

Answer 1

Title 1 1-174 + Title 4 Articles 271 to 464

Question 2

Law in regard to company name for Public limited companies or share companies

Answer 2

Article 275
Formed with or without initials, by the name or company name of one o more of the partners or by a particular expression, or by the merging of both, ending with “Sociedade anonima”, SA

Question 3

Law in regard to the number of partners for Public limited companies or share companies

Answer 3

Article 273
5 partners (shareholders)
1. Except when state directly or indirectly holds majority of capital, in that case, it can be two partners.
2. Companies incorporated by a single company holding the entire share capital within the context of a relationship of control.

Question 4

Law in regard to the share capital of a Public limited companies or share companies

Answer 4

Article 276
1. Divvied into shares, partners’ liability limited to value of shares subscribed.
2. Share values can be expressed in par value or not. Cannot have both, only one type.
3. Minimum par value is 1 cent per share. All shares represent the same fraction of the share capital.

Question 5

What is the minimum share capital in Public limited companies or share companies

Answer 5

50000$

Question 6

Law in regard to the mandatory content o the articles of association

Answer 6

Article 272

Question 7

Law in regard to the obligations of the partners, initial contributions in Public limited companies or share companies

Answer 7

Articles 277 and 285
No services, subscription of 70% of the par value of shares can be deferred for max of 5 years. Shareholder’s obligation shall only be considered overdue after the company has demanded payment

Question 8

Law in regard to obligation for additional contributions for Public limited companies or share companies

Answer 8

Article 287
Articles of association can do this to all or some of the partners in the instance that it fixes essential elements of this obligation and specifies whether the action must be paid for a charge or free of charge

Question 9

Law in regard to the rights of partners in Public limited companies or share companies (1/2)

Answer 9

Article 288
Any shareholder holding at least 1% of shares, with just cause can consult the following at the head office:
a) Annual report and financial statements, from the previous three years. Opinions from supervisory board, audit committee, general and supervisory council or committee for financial matters and reports from the statutory auditor which are subject to publication.

Question 10

Law in regard to the rights of partners in Public limited companies or share companies (2/2)

Answer 10

Article 288
b) Notice of meeting, minutes, attendance lists of general and special meetings of shareholders and meetings of bondholders carries out in the past three years.
c) Total value of remuneration paid in relation to each of the previous three years to members of the corporate bodies.
d) Total amount paid in relation to each of the previous three years to the 10 employees of the company who received highest remuneration (if workforce exceeds 200) or the 5 employees of the company who received highest remuneration, if the workforce is 200 or less.
e) Share registration document.

Question 11

Law in regard to information in preparation of the general meeting

Answer 11

1. 30 days prior to meeting
2. Documents listed in Art 289 for partners at headquarters
3. Partners request truthful, complete and clarifying info that would allow them to have learned opinion on the matters that are to be decided (art 290)
4. Unjustified refusal may constitute legal bases for the annulment of the decisions.

Question 12

Law in regard to the collective right to information in Public limited companies or share companies (1/2)

Answer 12

Article 291
1. Shareholders >= 10% share capital may request in writing, from board of directors or executive board of directors that they be given information relating to corporate matter, also in writing.
2. BOD or EBOD may not refuse to give information if in the request it is mentioned that the purpose is to establish the responsibilities of the members of that body, of the supervisory board or the general and supervisory board, unless, due to the content of the information or other circumstances, it is patently clear that this is not the intention envisaged by the request for information.

Question 13

Law in regard to the collective right to information in Public limited companies or share companies (2/2)

Answer 13

Art 291
Apart from case mentioned in paragraph 2, info requested can be refused if in general terms:
a) feared that shareholder may use it for purposes extraneous to company and causing loss to the company or to any shareholder
b) When publication, although not for the purposes referred to in previous paragraph, could cause significant loss to the company or to the shareholders
c) Causes violation of secrecy which is imposed by law.

Question 14

Law in regard to the right of partners to share in profits in Public limited companies or share companies

Answer 14

Art 294
Distribute at least 50% of distributable profits, unless otherwise provided for in the articles of association or a decision not to distribute is adopted by a majority of three quarters of the votes corresponding to the company’s capital, at a general meeting called for this purpose.
Credits of the shareholders are due within 30 days from the date of the decision to distribute profits.

Question 15

Law in regard to Statutory reserves for Public limited companies or share companies

Answer 15

Art 295-296
Percentage not less than 1/20 of profits must be sent to the reserve until it accumulates to 1/5 of the shared capital.
Minimum can be increased through the articles of association.

Question 16

Law in regard to the uses of the reserve in Public limited companies or share companies

Answer 16

Art 297
Cover that part of the loss recorded for the financial year which cannot be covered by the use of other reserves
b) Cover losses brought forward from the previous financial year which cannot be covered by the profit of the financial year nor by the use of other reserves.
c) Incorporation into the company’s capital

Question 17

Law in regard to shares in Public limited companies or share companies

Answer 17

Art 298
Cannot be issued below par value, if there is no par value, below issue value.
Art 299
Shares must be registered shares, bearer shares are not allowed.

Question 18

Law in regard to the assignment of shares in Public limited companies or share companies

Answer 18

Art 328
Articles of association cannot exclude the transferability of share nor limit it beyond what is permitted by law. However, it is possible to:
1. Art 329 (1) Assign registered shares dependent upon consent of the company, granted in general meeting, unless otherwise stipulated in AOA
2. Establish right of preference for other shareholders and conditions for exercise of this right, in the case of disposal of registered shares
3. Make transfer of share dependent upon compliance with certain requirements, in accordance with the company’s interests.

Question 19

Law in regard to the shareholders resolutions in Public limited companies or share companies

Answer 19

Art 373
Can be adopted pursuant to the provisions of article 54 or at regularly convened general meetings. There are matters specially assigned to the shareholders (by law or in the AOA); therefore only shareholder can adopt decisions on those matters. Deliberate on matters relating to the management of the company at the request of the BOD.

Question 20

Law in regard to the shareholder’s general meeting in Public limited companies or share companies

Answer 20

Art 374-375
Conducted by board of the shareholders meetings, elected for a maximum period of 4 years, which includes, at least, a chairman and a secretary.

Question 21

When shall shareholder’s general meetings be convened in Public limited companies or share companies

Answer 21

Art 375
1. Whenever stipulated by law or when the BOD, the audit committee, EBOD, the supervisory board or the general and supervisory council deem it appropriate.
2. Request of one or more shareholders holding shares corresponding to at least 5% of the share capital.
Request must be:
1. In writing
2. Addressed to the chairman of the board of the general meeting
3. Indicate exactly the matters to be include in the order of business
4. Indicate the reason that justify the need for the meeting
Chairman of the board must ensure the publication of the notice for the meeting within 30 days from the date of the receipt of the request and the meeting must take place within the next 60 days.

Question 22

Law in regard to Annual meeting of shareholders in Public limited companies or share companies

Answer 22

Art 65 and 376
1. Shareholders annual meeting must take place within the 3 months following the close of the financial year (or 5 months, in case of companies that have to submit consolidated accounts or that apply the equity method of accounting).
2. Thus, after competing the annual report, accounts for the financial year and the remaining required documents, the BOD must request the convening of the annual general meeting and submit the proposals and any documentation required for resolutions to be adopted.

Question 23

Purpose of the meeting shall be in Public limited companies or share companies

Answer 23

a) Discuss the annual report and accounts of the financial year
b) Discuss proposed application of the company’s results
c) Assess the management and supervision of the company in general and, as the case may be, although such matters might not appear on the order of business, to proceed with the dismissal of directors, within the scope of the meeting’s power, or to table a vote of no confidence in a manager.
d) Proceed with any appointments which fall within the powers of the meeting.

Question 24

Law in regard to the notice of the meeting and means of holding the meeting

Answer 24

Art 377

Question 24

Law in regard to the inclusion of matters in the order of business Public limited companies or share companies

Answer 24

Art 378

Question 25

Law in regard to the participation in the meeting in Public limited companies or share companies

Answer 25

Art 379

Question 26

Law in regard to the representation of shareholders in Public limited companies or share companies

Answer 26

Art 380
Can send representative with voluntary representation instrument, unless otherwise provided for in the articles of association. Instrument of voluntary representation, is a written document, addressed to the chairman of the board at general meeting, signed by the shareholder (or its legal representatives if the shareholder is a legal entity)

Question 27

Law in regard to attendance list in Public limited companies or share companies

Answer 27

Art 382

Question 28

Law in regard to Quorum in Public limited companies or share companies

Answer 28

Art 383

Question 29

Law in relation to majorities in Public limited companies or share companies

Answer 29

Art 386

Question 30

Law in regard to the management and supervision of a Public limited companies or share companies

Answer 30

Art 278
BOD exclusive and full powers to represent the company

Question 31

Specifications in regard to whether a shared company requires different management depending on the share capital it has

Answer 31

If it does not exceed 200000$ there can be one sole director.
If shared capital exceeds that, there needs to be a BOD.

Question 32

Who can be a Director in a shared company

Answer 32

A Shareholder, or an external third party, provided they are individuals with full legal capacity, if a company is elected director, it must elect an individual to perform its term of office

Question 33

Different models of management for shared companies (1/3)

Answer 33

Traditional model: BOD, Sole supervisor (Statutory auditor or a company of statutory auditor) or a supervisory board
Mandatory supervision by board or statutory auditor if 2 of the three requirements are met for 2 consecutive years:
1. Total financial statement: 100,000,000$
2. Net sales and other profits: $150,000,000
3. Average number of employees during the financial year: 150

Question 34

Different models of management for shared companies (2/3)

Answer 34

Anglo-Saxon Model:
BOD with an audit committee and a statutory auditor.
Supervision carried out by an audit committee that is part of the BOD/composed of members of the board of directors and a statutory auditor.

Question 35

Different models of management for shared companies (3/3)

Answer 35

German Model: Made up of BOED, General and Supervisory board, and a statutory auditor (which, in the cases provided for by the law article 444) must include a committee for financial matters).
General and Supervisory board, inter alia, can have the powers to appoint members of the board and its chairman (If such powers are not granted to the general meeting), supervise activities of the BOED; issue an opinion on the management report and accounts.
General and Supervisory board does not hold management powers, but the law or the AOA may establish that the EBOD must obtain the consent of the general and supervisory board in order to carry out certain categories of acts.

Question 36

Law in regard to the appointment of Directors in Public limited companies or share companies

Answer 36

Art 391
Appointed for the period established in the articles of association, which shall not exceed 4 calendar years. The year in which the directors were appointed counts as a full calendar year. Unless otherwise provided for in the AOA, the full appointment shall be for 4 calendar years; re-election is permitted.

Question 37

Law in regard to the security

Answer 37

Art 396
Liability of each director must be guaranteed by one or other of the means permitted by law, to the value fixed in the AOA, which must however, never fall below 250000 $ for companies issuing securities which are admitted to trading on a regulated market, or for companies meeting the criteria of article 413 (2) (a) and 50000 $ for all other companies.