Non-attendance of one of the shareholders at a general meeting

The AP Valencia declares that a general meeting held with universal character is null and void as a matter of law, for contravening the public corporate order, when not all the shareholders attend; specifically, the heirs of one of the deceased shareholders do not attend.

In a partnership consisting of two partners, 50% each, one of them dies, and a supposedly universal meeting is held without the attendance of the deceased partner’s heirs.

The heirs challenge the meeting in court, requesting that all the resolutions adopted at the meeting be declared null and void. In the proceedings, the defendant company argues that only those who are registered in the register of shareholders are considered to be shareholders and that, at the date of the meeting, following the death of one of the shareholders, only the other shareholder remained, since the estate of the deceased shareholder was at that time pending division, and furthermore the heirs had no interest in appointing a representative of the community of heirs, which they did two years after the meeting was held. Therefore, it is considered that the meeting was validly constituted with the attendance of the sole surviving partner.

The Commercial Court upheld the claim, declaring the nullity of the meeting and of the resolutions adopted at the meeting, in a ruling that was confirmed by the Provincial Court, which, to this effect, stated that the contested meeting was held in breach of article 178 of the LSC, given that not all of the share capital was present or represented. Summarising the Supreme Court’s doctrine in this respect, the Court indicated that “however restrictive the concept of corporate public order may be as an autonomous cause for challenging corporate resolutions, the case of universal meetings that did not actually meet, or that were not held with all the capital or with all the shareholders, constitutes a breach of corporate public order”.