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Shareholder rights in Spain

Spanish law dictates that share capital is at least €60000 for a public company and €3000 for a limited company. Capital that companies can issue ordinary shares, privileged shares or stock. Ordinary shares provide general rights and obligations to the shareholder whilst privileged shares create additional rights, excluding voting and pre-emption rights. Issuing shares that give a right to receive interest is prohibited.

The issuing on convertible bonds is permitted which can be converted into shares within stated time periods. A company can have a sole shareholder who must assume personal, limited and several liability for any company debt incurred if these circumstances are not recorded in the Commercial Registry within six months.

Spanish commercial law bestows certain rights on shareholders, including a share of company profits, capital resulting from a liquidation process, pre-emption rights over the issue of new shares, voting and information rights, the right to attend meetings and to challenge corporate resolutions. Owners of non-voting shares and stock usually have the rights to profit dividends, liquidation rights, and the right to be unaffected by capital reductions. Redeemable shares can only be issued by listed companies for no more than one quarter of the share capital.

Minority shareholders in a public company, representing 1% of the share capital, are entitled to request a judge to suspend corporate resolutions that have been challenged, and to challenge resolutions themselves that have been adopted by the board. Minority shareholders in limited companies, representing 5% of the share capital, can require directors or a judge to convene an EGM, require the appointment of an auditor in a company subject to external control, and the right to object to the decision in a liability action against the company directors.

Companies are legally obliged to hold an annual shareholders’ meeting at which the management of the company, annual accounts and allocation of profit and loss must be discussed. The meeting is also the appropriate vehicle for the adoption of resolutions enabling the company to acquire goods or shares in the controlling company. At the meeting, shareholders must approve the gross amount for the annual remuneration of the directors.

Shareholders can request reports on any general meeting agenda items and, in listed companies, they can request reports on information produced by the company since the last meeting. Following each general meeting, shareholders can request the management report, audit report and other documents that were approved by it.

Shareholder agreements deal with shareholder relations that cover the allocation of profits, share and stock acquisition rights, or restrictions on share transfers. Alternatively, they can deal with advantages that shareholders can provide to the company, such as finance they can provide in certain circumstances, contractual commitments and non-competition agreements. They can also relate to annual meetings and governing bodies, in terms of board competition and role allocation and voting arrangements. There is no obligation to publish shareholder agreements except in the case of listed companies.