To answer this question, we should refer to the rules on voluntary representation at the general meeting of SL established in the LSC and, more specifically, in Article 183, which reads as follows: “The shareholder may only be represented at the general meeting by his/her spouse, ascendant or descendant, by another shareholder or by a person holding a general power of attorney conferred in a public document with powers to administer all the assets that the represented party has in national territory.”
According to this provision, in SL, unlike the case of public limited companies (SA), the LSC limits the circle of persons who may represent the shareholder at the general meeting, without prejudice to the possibility of the bylaws extending this list.
Consequently, according to the provisions of the aforementioned Article 183 LSC, a shareholder may be represented at a general meeting of a SL by his/her lawyer, unless the articles of association provide otherwise, by granting him/her a general power of attorney, in a public document, with powers to administer all the shareholder’s assets in Spain.
Notwithstanding the above, it is usual in practice that when a shareholder does not wish/cannot attend a general meeting, and his/her intention is to be represented at the meeting by a third party not included in the group of persons set forth in the aforementioned provision or, as the case may be, in the bylaws (e.g. his/her lawyer), such representation is made by means of a special power of attorney executed in a private document to attend the general meeting in question, for reasons of speed, cost and/or reluctance of the shareholder to grant the lawyer a general power of attorney with powers to administer all his/her assets in national territory.
Despite the proxy being granted in a form other than that stipulated in the LSC, could the proxy granted be valid?
The answer, as is usual in the legal world, will depend on the specific case.
In general, the rules contained in Article 183 LSC on the representation of the shareholder at the general meeting of the limited liability company are mandatory, with the exception of the possibility of increasing the number of persons who may represent the shareholder by means of a provision in the bylaws. In this regard, the Spanish Supreme Court in its sentence 191/2014 of 15 April 2014 has ruled as follows:
“If the company’s bylaws merely reproduce the content of the Law or do not regulate anything with regard to the voluntary representation of shareholders at the general meeting, representation by a stranger, even a professional, with a special power of attorney limited to the meeting in question, is not possible.”
However, in cases such as that dealt with in Spanish Supreme Court 2774/2022 of 5 July 2022, where in previous shareholders’ meetings of two different companies, the respective chairmen had admitted representation in favour of a third party in a private document despite the fact that the bylaws, in one case, merely reproduced literally the content of Article 183 LSC and, in another case, added that “it may also be represented by any other person, provided that the representation is recorded in a public document and is conferred specifically for each meeting”, applying the principle of good faith and the doctrine of actos propios, the representation in favour of a third party granted in a private document has been considered valid under the circumstances of the specific case, where in previous shareholders’ meetings such representation had been admitted and the change of criterion was made clear at the time of holding the general meeting and not before, thereby generating confidence in the shareholders that this type of representation was acceptable, despite contravening the provisions of the LSC or, where appropriate, the company’s bylaws.
In summary, the relevant provisions of the bylaws, if any, and also the practice followed by the company concerned at previous general meetings, must be considered and, accordingly:
- Despite not fulfilling the requirements set forth in the aforementioned Article 183 LSC, the chairman of the general meeting – who, assisted by the secretary, is responsible for drawing up the attendance list for the meeting and, therefore, for allowing or denying the attendance of the representatives based on the powers of attorney they hold – may accept the proxy granted in favour of a lawyer in a private document and, if the rest of the shareholders do not object, that said proxy be deemed as valid.
- Or, on the contrary, the chairman may refuse the proxy’s attendance at the general meeting because the proxy granted in his/her favour does not comply with the legal and bylaws provisions, although in this case it will be necessary to evaluate whether the chairman is acting in accordance with the principle of good faith and is not going against his/her own actions under the circumstances of the specific case.