On 13 March, the following was published: Royal Decree-Law 5/2021, of 12 March, on extraordinary measures to support business solvency in response to the COVID-19 pandemic, which introduces two new developments in corporate law:
1) Creation of a Recapitalisation Fund for companies affected by COVID.
A recapitalisation fund with an endowment of 1,000 million euros has been created with the aim of providing temporary public support to strengthen the solvency of companies with registered offices in Spain that were affected by the COVID crisis, the management of which has been entrusted to the state-owned company COFIDES, S.A., S.M.E.
This support takes the form of debt, equity and hybrid equity instruments or a combination of these, based on criteria of profitability, risk and impact on sustainable development, with eligibility criteria to be determined by Agreement of the Council of Ministers.
It is important to note that this aid will under no circumstances be granted to companies that had viability problems before the COVID-19 crisis.
In any case, operations financed by the fund must have the express authorisation of the European Commission.
It should also be noted that, where financial support is provided through an equity stake, a series of special features apply:
- The voting rights and political rights will be exercised by the management company on behalf of the General State Administration without the need for prior authorisation.
- The management company will decide on the advisability of appointing directors to the management bodies of the investee companies, who may be public employees, employees of the management company itself or other individuals or legal entities.
- See exempts from the obligation to make a takeover bid in the event of acquiring equity holdings with funds from the Fund.
- Companies receiving this aid may not distribute dividends during 2021 and 2022.
- The beneficiary company's activity must be maintained until 30 June 2022.
2) Holding virtual General Meetings
On the other hand, Royal Decree-Law 34/2020 has been amended regarding the possibility of holding entirely virtual general meetings of public limited companies, even if their articles of association did not provide for it.
To this end, the new wording establishes that the management body must provide for this in the notice of the meeting and, in addition, it must be accompanied by reasonable guarantees to ensure the identity of the person casting their vote, and the possibility of participating in the meeting must be offered through each and every one of these channels: (i) virtual attendance, (ii) proxy granted to the Chair of the Meeting by remote communication means and (iii) early voting by remote communication means.
