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Questions and Answers
What are the consequences of failing to meet the legal requirements for amending the bylaws of a company?
What are the consequences of failing to meet the legal requirements for amending the bylaws of a company?
What is the essential difference between the right of withdrawal in unlisted and listed companies?
What is the essential difference between the right of withdrawal in unlisted and listed companies?
What is the minimum amount of annual profits that must be deducted to create a reserve?
What is the minimum amount of annual profits that must be deducted to create a reserve?
What is the purpose of the explanatory notes in financial statements?
What is the purpose of the explanatory notes in financial statements?
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What is the role of the notary in amending a company's bylaws?
What is the role of the notary in amending a company's bylaws?
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What is the maximum duration for shareholders to exercise their pre-emption rights?
What is the maximum duration for shareholders to exercise their pre-emption rights?
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Under which condition can the right of pre-emption be excluded according to the provisions?
Under which condition can the right of pre-emption be excluded according to the provisions?
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What must be published in the national gazette regarding pre-emption rights?
What must be published in the national gazette regarding pre-emption rights?
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Who can decide to restrict or withdraw the right of pre-emption according to the directive?
Who can decide to restrict or withdraw the right of pre-emption according to the directive?
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In which document must the reasons for restricting or withdrawing the right of pre-emption be indicated?
In which document must the reasons for restricting or withdrawing the right of pre-emption be indicated?
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Study Notes
Financial Statements
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Types of documents: balance sheet, income statement, explanatory notes, cash flow statement, reports of directors, statutory auditors, and auditors
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Actions to declare void or invalid: financial statements not conforming to the law are considered null (limitation art. 2434-bis)
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Reserves and Dividends: not all profits are distributable as dividends; 5% of annual profits are set aside for previous losses, deducted until the reserve reaches 20% of the share capital.
Amendments to Bylaws
- These refer to all changes in the bylaws or incorporation document.
- Procedure (art. 2346 c.c.):
- Extraordinary shareholders' meeting resolution. (This may delegate amendment competence to an administrative body per art 2365, c.c.).
- Non-listed companies require higher deliberative quorums for the second call of shareholder meetings.
- Notary checks (art. 2346, par. 1, c.c.): notaries check the conditions, with an eventual judicial control if needed – minutes are compiled by a notary.
- Recording in the Business Register: notary applies for registration within 30 days; the notary must promptly notify directors if the conditions aren't met; directors have options:
- convene a shareholders' meeting to take action.
- petition a court to verify the conditions.
- Effectiveness: the bylaws are not effective until legally recorded in the Business register.
- Legal Publicity: Updated bylaws are filed alongside the amendment resolution.
- Amendments: The removal or modification of clauses contained in the bylaws, or the introduction of new clauses, are considered amendments.
Right of Withdrawal
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The shareholder's right to withdraw from the company and receive the value of their shares.
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Grounds:
- Mandatory: cannot be changed by the bylaws (e.g., amending the company’s purpose, transforming the company, revoking the liquidation status, etc.).
- Derogable by bylaws
- Provided for by bylaws (closed companies)
- Indefinite Term Companies (art. 2437, par. 3, c.c., non-listed companies)
- Delisting (listed companies, art. 2437-quinquies, c.c.)
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Terms and Procedure:
- Registered letter
- Within 15 days from the recording of the resolution in the Business register
- If the withdrawal doesn't refer to a resolution, within 30 days from the day the shareholder became aware of the fact.
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Non-transferability & Deposit of shares: the right of withdrawal can't be exercised according to art. 2437-bis, par 3, c.c.
Criteria for Share Value
- Criteria to determine share value (art. 2347-ter, c.c.):
- Unlisted companies limited by shares: directors determine the value.
- Listed companies limited by shares: calculated mathematically.
- Shareholders' opposition: court expert may calculate the value.
Procedure to Liquidate Shares
- Offer to other shareholders (non-listed companies); or offer on regulated markets (listed companies)
- Reimbursement through purchase of own shares
- Capital reduction (with creditors' opposition) or dissolution of the company
Share Capital Amendments
- Increase and Decrease: the civil code has specific regulations for changes in share capital, including transformations, mergers, and divisions.
- Increase types: material (paid) increase, nominal (free) increase
- Decrease types: material, nominal (reduction for losses), cases other than losses where the reduction is mandatory
- Increase Procedure:
- New financial resources / new contributions
- Issuance of new shares
- Payment conditions (previous contributions paid in full)
- Time limits for subscriptions (maximun 5 years)
- Delegated capital increase allowed
- Non-divisible and divisible increase (if bylaws allow)
- Reduction Procedure:
- Causes and Conditions
- Ways of execution
- Recording, execution and creditors' opposition
Additional Directives (EU)
- Directives regarding decisions on increases and decreases of capital (including limits, periods, and provisions regarding creditors).
- Directives regarding payment up, issues arising from pre-emptive rights and safeguards for creditors in case of reduction affecting their claims.
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Description
This quiz covers essential concepts related to financial statements, including types of documents like balance sheets and income statements, as well as procedures for amending bylaws. Test your understanding of legal requirements and the actions required to maintain compliance. Delve into the complexities of dividends and reserves while exploring corporate governance.
