The latest amendment to article 285.2 of the Companies Act (“CA”) by means of Royal Decree Act 15/2017, of 6 October, on urgent measures concerning the mobility of economic operators within the national territory (“RDA 15/2017”) aims to end any conflicts in the interpretation of the application of said article, as well as to clarify when there is “a provision to the contrary in the bylaws” that removes from the managing body the authority to change the registered address of a company within the national territory.
As a general rule, the General Shareholders’ Meeting has the authority to amend the bylaws. However, since 1956, the Regulations of the Commercial Registry set out that the relocation of the company’s registered address within the same municipality would not be considered an amendment to the bylaws; thus, the managing body would be able to approve the relocation of the registered address in that case. From a practical point of view, the main modification related to the relocation of the registered address was introduced in 2015 with the amendment of article 285.2 of the CA, executed by Law 9/2015, of 25 May, on urgent measures related to insolvency matters, which allowed the company’s managing body, unless otherwise provided in the bylaws, to change the company’s registered address within the national territory (which is an area of competence that was exclusively limited to a relocation within the same municipality, as seen above).
The main aim of RDA 15/2017, which entered into force on 7 October 2017, is to clarify what is considered a “provision to the contrary in the bylaws”, in order to put an end to existing disagreements over the interpretation of such provision. RDA 15/2017 sets out that it will be deemed that there is a provision to the contrary in the bylaws only when they expressly provide that the managing body does not hold the authority to change the registered address within the national territory. Additionally, and to dispel any doubts, a single transitory provision of RDA 15/2017 governs the interpretation of the bylaws that have been approved before the entry into force of RDA 15/2017, specifying that “a provision to the contrary in the bylaws shall be understood to exist only when an amendment to the bylaws has been expressly approved after the entry into force of this royal decree-act stating that the managing body does not have the authority to change the registered address within the national territory”.
Therefore, once RDA 15/2017 has come into force, the managing body shall always have the authority to change the registered address within national territory, regardless of any provisions set out in the company’s bylaws. As a result, any provision set out in the bylaws when RDA 15/2017 came into force will be ineffective if it excludes or limits said authority. That is, any provisions in the bylaws shall be deemed ineffective if they limit the areas of competence of the managing body to change the registered address within a municipality, expressly set out that the general shareholders’ meeting has the authority to change the registered address or require a reinforced majority in the general shareholders’ meeting to adopt said resolution. Consequently, all those companies that want the General Shareholders’ Meeting to retain the authority to change the company’s registered address within the national territory must approve, after RDA 15/2017 has entered into force, an amendment to the bylaws expressly stating that the managing body does not have such authority. Failure to do so will mean that the managing body shall retain the authority to change the registered address within the national territory.
What are the practical implications of changing the registered offices of a company to one place or another?
Section 1 of article 9 of the CA sets out that “companies shall establish their registered address within Spanish territory at the place the company has its central management and control, or its head office or main operations”. The CA also sets out that if a discrepancy exists between the registered offices (as specified in the a company’s bylaws) and the real seat where the company has its central management and control, or its head office or main operations, any third party may consider both as the company’s registered address. In addition, the location of the registered address has many significant implications that affect the shareholders since, for example, it is where they must exercise their right to information or where they will be able to access any documentation related to the annual accounts, amendment to the bylaws and an increase or a reduction in share capital. Also, unless otherwise provided in the bylaws, general shareholders’ meetings are held at the company’s registered address. Therefore, the board of directors must protect the company’s interests and observe the provisions set out in the CA when it resolves the change of the company’s registered address. Otherwise, if the resolution has a negative impact on the company’s interests, in addition to entailing a fictitious dislocation between the registered address and the effective real seat, the resolution to change the address will infringe a mandatory provision set out in the CA. In case of such infringement, any director, shareholder, or even a third party that can prove a legitimate interest, may challenge the resolution.
After RDA 15/2017 entered into force, one should question if all the changes of registered address that this royal decree-act has enabled will be followed by actual relocations of the effective real seat, in order to comply with the provisions of the CA, or if we are facing an increase of corporate conflicts arising from any potential challenges to resolutions approving changes of registered addresses.
For further information please refer to our briefing note.