España – Poderes de Representación de las Empresas

3 junio 2021

  • España
  • Derecho Societario

A member of the management board or the supervisory board of a Polish LLC or a joint-stock company is liable to the company for damage caused by an act or omission contrary to the law or the articles of association, unless they are not at fault. In the performance of their duties, they are obliged to take the care due to the professional nature of their activities. In other words, the standard of care is high and they cannot release themselves from the liability indicating that they had no sufficient knowledge or experience.

The burden of proof of the damage and the lack of due dilligence of the board member lies with the company. A board member is liable if their conduct is culpable. However, the company does not have to prove this. It is the board member who must demonstrate that the damage caused by their act or omission was not culpable.

When running a business, board members naturally often move within the boundaries of a certain risk and make various business decisions, the consequences of which are often unforeseeable at the time they are made. They can result in both substantial gains and substantial losses for the company. However, with a high standard of due diligence, it is more difficult to demonstrate a lack of culpability.

A recent amendment of the Polish Code of Commercial Companies and Partnerships which enters into force on 13 October 2022 has articulated the so called „business judgement rule” which has already appeared to a limited extent in case law.

This rule assumes that a member of the management board and supervisory board may act within the limits of reasonable business risk. They are not in breach of their duty of professional care as long as they act in loyalty to the company.

The new law indicates that the assessment of the board member may be made on the basis of information, analyses and opinions available to them when making decisions. The new law may contribute to the collection of documentation in defence of the position (so-called defence file). The board members may protect themselves against the liability towards the company by demonstrating that their actions or omissions were based on expert’s opinions and at the time when they were undertaken they did not exceed the limits of the reasonable business jugdement.

Resumen

Una de las cuestiones que más dificulta el comienzo de las actividades al crear una sociedad (filial) en España es la relativa a los poderes: ¿Qué es un poder? ¿Son necesarios? ¿Cómo funcionan? En España esta cuestión tiene importancia práctica y su funcionamiento no siempre coincide con lo que ocurre en otros países. Apuntamos en este comentario alguna idea para comprender cómo actuar al crear una sociedad.

¿Qué es un poder? Un poder permite a la sociedad actuar representada por una persona (apoderado o representante). El apoderado podrá, por ejemplo, firmar un contrato en nombre de la sociedad si ésta le ha dado poder (facultad) para hacerlo. Por ejemplo, pedir un préstamo a un banco.

Para hacerlo la sociedad tendrá dos tipos de representantes: un “representante orgánico” (los administradores) y los “representantes voluntarios” (apoderados).

En primer lugar, una sociedad debe tener, al menos, un administrador

El administrador (o administradores) es el “representante orgánico”. Es decir, es un órgano (órgano de administración) de la sociedad, la representa y puede contratar en su nombre.

Este “órgano” puede ser unipersonal (un único administrador), pueden ser varias personas que actúan de forma individual o conjunta, o puede ser un consejo de administración (“órgano colegiado”). La facultad de representación reside en el “órgano”. Es el órgano quien representa a la sociedad y no necesariamente los miembros que lo componen.

La primera labor, por lo tanto, es decidir la estructura del órgano y se toma al constituir la sociedad, aunque luego puede cambiarse. De esta forma, el administrador único tendrá todas las facultades para representar a la sociedad, los administradores individuales también si son “solidarios”, o tendrán que actuar conjuntamente si fueran administradores “mancomunados”, y el consejo también las tendrá, pero como órgano (no individualmente cada consejero).

Esta última observación (las facultades las tiene el órgano y no necesariamente sus miembros) es importante cuando la sociedad está administrada por un Consejo de Administración. El hecho de que exista un consejo de administración no supone que cada miembro tenga las facultades para representar a la sociedad, sino que las tiene el órgano en su conjunto. El consejo, puede, sin embargo, delegarlas. Cuando el consejo delega las facultades en uno de sus consejeros (es posible, pero no obligatorio nombrar uno), éste se convierte en “consejero delegado”. Entonces sí, ese consejero podrá representar a la sociedad en todo aquello que se le haya delegado.

Los apoderados para

En segundo lugar, además de los administradores, la sociedad puede tener (no es obligatorio) otros “apoderados”. Estos son los “representantes voluntarios”, es decir, nombrados “por voluntad” de la sociedad.

Un apoderado es alguien a quien la sociedad le otorga facultades para representarla. Facultades para realizar determinadas cosas.

Como decíamos al comienzo, en España la actuación mediante poder es bastante rigurosa, de forma que una sociedad no podrá normalmente estar representada por nadie que no tenga ese poder (facultad) para hacerlo. Por ejemplo, si la sociedad autoriza (apodera) a una persona solo para firmar contratos bancarios, no podrá firmar contratos con empleados.

Las facultades que se otorgan a una persona han de ser, por lo tanto, expresas. Si una persona está autorizada para abrir una cuenta corriente, no se supone que pueda pedir un préstamo. Y de esta forma, las facultades sirven como marco de actuación: qué puede hacer el apoderado y cuáles son los límites. Y a veces estos límites vienen de la propia facultad (abrir una cuenta bancaria no autoriza para pedir un préstamo) o pueden ser cuantitativos (pedir préstamos, pero solo hasta 100.000 euros), o temporales (pedir préstamos, pero hasta el 31 de diciembre de 2025) o incluso necesitando la actuación de más de una persona (pedir préstamos, pero firmando juntamente con la persona “Z”). Y, por supuesto, una combinación de todas ellas: el apoderado “X”, puede pedir préstamos firmando con el apoderado “W” hasta 100.000 euros, y con el apoderado “Z” hasta 1.000.000 euros.

A la hora de crear una sociedad en España es, por lo tanto, muy recomendable, pensar cómo se van a otorgar las facultades, especialmente, si el órgano de administración no reside en nuestro país. Según hemos visto por experiencia, no es infrecuente crear una sociedad nombrando a un administrador residente en el extranjero sin designar ningún apoderado en España. Esto es válido jurídicamente, pero, de alguna forma, se está dificultando el funcionamiento de la sociedad: la única persona para firmar contratos y representar a la sociedad reside en el extranjero lo que, desde el punto de vista práctico, supondrá un importante inconveniente.

El procedimiento para apoderar (facultar) a una persona es sencillo. Basta una decisión del órgano de administración, formalizarla ante notario y registrarla en el Registro Mercantil. De esta forma, cualquier persona podrá verificar que la persona nombrada puede representar a la sociedad en ese acto concreto. La cuestión requiere, eso sí, encontrar una persona de confianza (un empleado, un socio residente, un tercero), pero el riesgo puede modularse con las posibilidades de limitación que hemos visto.

En conclusión

A la hora de crear una sociedad en España, si el administrador no residirá en nuestro país, tenga en cuenta cómo organizar los poderes, a quién apoderar y cómo limitar, en su caso, sus facultades.

Y los poderes que más va a necesitar y con más urgencia son:

  • los que permitirán contratar con bancos (abrir y gestionar cuentas bancarias),
  • los relativos a los empleados (contratar, inscribirlos en la seguridad social, pagos de salarios),
  • los que permitan contratar suministros (contratos de electricidad, agua, teléfono) y otros contratos generales (alquiler, vehículos, contratos de distribución), y
  • gestionar la firma electrónica de la sociedad (relaciones con las administraciones públicas, pagos de impuestos).

Si no se toma esa decisión oportunamente se podría retrasar o dificultar la actividad que se inicia.

Y en caso de dudas, mejor consultar con un abogado local.

There were hardly even a few businesses worldwide not affected by the corona pandemic. As lockdown measures were expanding from March 2020, dozens of visitor-dependent (including retail, public transportation, HoReCa, leisure, entertainment & sport) companies’ value dropped astonishingly. This immediately resulted in numerous RFPs coming in and out NPL funds and distress investors being ready as never to pluck those companies ripe enough.

Well, at least that is how the things should have been.

A general picture of M&A demand remains with no great changes. According to the recent DataSite EMEA report first 2021 quarter shown 40 % deal value increase and 14 percent deal volume growth. Some sceptic experts already highlighted that Q1 references are insufficient – as Q1 2020 was painted in an unseen uncertainty and hard-model governmental interference whilst Q1 2021 came in much more predictable conditions with vaccination campaigns being successful and more lockdowns lightened.

The 2020 picture for the distressed part of the global (and particularly EMEA) part of M&A market is quite the same. With hundreds of companies still receiving governmental support and financial institutions still having a wide liquidity, the 2020 data from Bloomberg reports show no Big Bang in distress deals (either arising from pre-pack agreements between debtors and creditors or from formal insolvency processes), at least if compared with 2007-8 recession years.

Nevertheless Bloomberg themselves recognize that 2021 market might become red-hot. Whether this prognosis will materialize soon – here are four basic tips to hold in mind when thinking on insolvency-sed distress M&A deal on either – buyer or seller side:

  1. asset or going-concern purchase. A key business decision is understanding of whether a target business is viable enough and fits in the buyer’s existing\planned portfolio to be bought as a going-concern company. Should there be no certainty – a rule of thumb with almost always be to stick with the asset deal being more secured and the target itself much easier to allocate.
    On the other hand, for a manufacturing target license and related IP rights holding might constitute a large part of the business’ value – without which the desired asset appears to be a no-hand pot.
  1. watch for exclusivity – as asset-based distressed purchase might lack one because of the procedural obligation of going through bidding process.
  2. beware of easy ways. With so-called reverse vesting orders and free-and-clean sales an SP process might look very comfortable for a buyer eager to obtaining the target clean of any burdens (liens, mortgages, tax liabilities). Might look – but rarely be such within FSU and a part of CEE countries where a big chance of facing clawback action exists, especially with a huge state (tax\duty) interest at stake.
  3. do post-deal homework. When purchasing a going concern company it is for the newly-appointed management to be concerned the most: in a number of jurisdictions they might be boomeranged with management-liability claims resulting from previous management\shareholders cadence.
  4. have an insurance company over the seller’s back. In case any post-closing tails appear, this will give a substantial level of calmness for both sides relying on the insurance to cover a part of the purchase price or post-deal liabilities.

With the post-pandemic distress M&A yet to come and investors being ready as never, these rules will certainly be of use. As S&P 500 non-financials, in late 2020 corporate balance sheets reflected more than $2 trillion of cash – guess if there are funds for making your deal as well? Just remember: there is no one-size-fits-all approach in doing the distress deal and there always is a place for bespoke solutions given by true professionals.

El Gobierno español ha aprobado recientemente dos nuevas normas sobre la igualdad retributiva y los planes de igualdad que entrarán en vigor el enero y abril 2021 y que afectan a todas las empresas.

1. Real Decreto 901/2020, de 13 de octubre, por el que se regulan los planes de igualdad y su registro

Se entiende por “plan de igualdad”, aquel conjunto ordenado de medidas adoptadas tras la realización de un diagnóstico de situación, tendentes a alcanzar en la empresa la igualdad de trato y de oportunidades entre mujeres y hombres, y a eliminar la discriminación por razón de sexo.

Están obligadas a elaborar y aplicar un plan de igualdad todas aquellas empresas que cuenten con 50 o más trabajadores, siendo su implantación de carácter voluntario para las demás empresas. En todo caso, los planes de igualdad, incluidos los diagnósticos previos, deben ser objeto de negociación con la representación legal de los trabajadores, de conformidad con el procedimiento legalmente establecido al efecto.

En cuanto al contenido de los planes, deben incluir, entre otros, definición de objetivos cuantitativos y cualitativos, descripción de las medidas concretas a adoptar, identificación de medios y recursos, calendario de actuaciones, sistemas de seguimiento y evaluación, etc. Además, han de ser objeto de inscripción obligatoria en un registro público.

Este nuevo Real Decreto entrará en vigor en fecha 14 de enero de 2021.

2. Real Decreto 902/2020, de 13 de octubre, de igualdad retributiva entre mujeres y hombres

Este nuevo Real Decreto tiene por objeto poner en marcha medidas específicas que permitan hacer efectivo el derecho a la igualdad de trato y a la no discriminación entre mujeres y hombres en materia retributiva.

Para ello, tanto las empresas como los convenios colectivos deben integrar y aplicar el llamado “principio de transparencia retributiva”, que es aquel que, aplicado a los distintos aspectos que determinan la retribución de los trabajadores, permite obtener información suficiente y significativa sobre el valor que se atribuye a dicha retribución.

Para la aplicación del citado principio, el Real Decreto prevé, fundamentalmente, dos instrumentos:

  • Registro retributivo: Todas las empresas deben contar con un registro retributivo accesible para la representación legal de los trabajadores. El mismo debe incluir los valores medios de los salarios, los complementos salariales y las percepciones extrasalariales de la totalidad de la plantilla (incluido personal directivo y altos cargos) disgregados por sexo.
  • Auditoría retributiva: Aquellas empresas que elaboren un plan de igualdad, deben incluir en el mismo una auditoría retributiva. Su finalidad es comprobar si el sistema retributivo de la empresa cumple con la aplicación efectiva del principio de igualdad, definiendo las necesidades para evitar, corregir y prevenir los obstáculos y dificultades que pudieran existir.

Las medidas contenidas en esta nueva norma entrarán en vigor el 14 de abril de 2021.

Under French law, terms of payment of contracts of sale or of services (food excluded) are strictly regulated (art. L441-10.I Commercial code) as follows:

  • Unless otherwise agreed between the parties, the standard time limit for settling the sums due may not exceed 30 days.
  • Parties can agree on a time of payment which cannot exceed 60 days after the date of the invoice.
  • By way of derogation, a maximum period of 45 days from end of the month after the date of the invoice may be agreed between the parties, provided that this period is expressly stipulated by contract and that it does not constitute a blatant abuse with respect to the creditor (e.g. could be in fact up to 75 days after date of issuance).

The types of international contracts concluded with a French party can be:

(a) An international sales contract governed by French law (or to the national law of a country where CISG is in force), and which does not contractually exclude the Vienna Convention of 1980 on the International Sale of Goods (CISG)

In this case the parties may be freed from the domestic mandatory payment time limits, by virtue of the superiority of CISG over French domestic rules, as stated by public authorities,

(b) An international contract (sale, service or otherwise) concluded by a French party with a party established in the European Union and governed by the law of this other European State,

In this case the parties could be freed from the French domestic mandatory payment time limits, by invoking the rules of this member state law, in accordance with the EU directive 2011/7;

(c) Other international contracts not belonging to (a) or (b),

In these cases the parties might be subject to the French domestic mandatory payment maximum ceilings, if one considers that this rule is an OMR (but not that clearly stated).

Can a foreign party (a purchaser) agree with a French party on time limit of payment exceeding the French mandatory maximum ceilings (for instance 90 days)?

This provision is a public policy rule in domestic contracts. Failing to comply with the payment periods provided for in this article L. 441-10, any trader is liable to an administrative fine, up to a maximum amount of € 75,000 for a natural person and € 2,000,000 for a company. In the event of reiteration the maximum of the fine is raised to € 150,000 for a natural person and € 4,000,000 for a legal person.

There is no express legal special derogatory rule for international contracts (except one very limited to specific intra UE import / export trading). This being said, the French administration (that is to say the Government, the French General Competition and Consumer protection authority, “DGCCRF” or the Commission of examination of the commercial practices, “CEPC”) shows a certain embarrassment for the application of this rule in an international context because obviously it is not suitable for international trade (and is even counterproductive for French exporters).

International sales contract can set aside the maximum payment ceilings of article L441-10.I

Indeed, the Government and the CEPC have identified a legal basis authorizing French exporters to get rid of the maximum time limit imposed by the French commercial code: this is the UN Convention on the international sale of goods of 1980 (aka “CISG”) applying to contracts of supply of (standard or tailor-made) goods (but not services). They invoked the fact that CISG is an international treaty which is a higher standard than the internal standards of the Civil Code and the Commercial Code: it is therefore necessary to apply the CISG instead of article L441-10 of the Commercial Code.

  • In the 2013 ministerial response, (supplemented by another one in 2014) the Ministry of Finance was very clear: «the default application of the CISG rules […] therefore already allows French traders to grant their foreign customers payment terms similar to those offered by their international competitors”.
  • In its Statement of 2016 (n°16.12), the CEPC went a little further in the reasoning by specifying that CISG poses as a rule that payment occurs at the time of the delivery of the goods, except otherwise agreed by the parties (art. 58 & 59), but does not give a maximum ceiling. According to this Statement, it would therefore be possible to justify that the maximum limit of the Commercial Code be set aside.

The approach adopted by the Ministry of Finance and by the CEPC (which is a kind of emanation of this Ministry) seems to be a considerable breach in which French exporters and their foreign clients can plunge into. This breach is all the easier to use since CISG applies by default as soon as a sales contract is subject to French law (either by the express choice of the parties, or by application of the conflict of law rules by the judge subsequently seized). In other words, even if controls were to be carried out by the French administration on contracts which do not expressly target the CISG, it would be possible to invoke this “CISG open door”.

This ground seems also to be usable as soon as the international sale contract is governed by the national law of a foreign country … which has also ratified CISG (94 countries). But conversely, if the contract expressly excludes the application of CISG, the solution proposed by the administration will close.

For other international contracts not governed by CISG, is this article L441-10.I an overriding mandatory rule in the international context?

The answer is ambiguous. The issue at stake is: if art. L441-10 is an overriding mandatory rule (“OMR”), as such it would still be applied by a French Judge even if the contract is subject to foreign law.

Again the Government and the CEPC took a stance on this issue, but not that clear.

  • In its 2013 ministerial response, the Ministry of Finance statement was against the OMR qualification when he referred to «foreign internal laws less restrictive than French law [that] already allows French traders to grant their foreign customers payment terms similar to those offered by their international competitors”.
  • The CEPC made another Statement in 2016 (n°1) to know whether or not these ceilings are OMRs in international contracts. A distinction should be made as regards the localization of the foreign party:

– For intra-EU transactions, the CEPC put into perspective these maximum payment terms with the 2011/7 EU directive on the harmonization of payment terms which authorizes other European countries to have terms of payment exceeding 60 days (art 3 §5). Therefore article L441-10.I could not be seen as OMR because it would conflict with other provisions in force in other European countries, also respecting the EU directive which is a higher standard than the French Commercial Code.

– For non intra EU transactions, CEPC seems to consider article L441-10.I as an OMR but the reasoning was not really strong to say straightforwardly that it is per se an OMR.

To conclude on the here above, (except for contracts – sales excluded –  concluded with a non-EU party, where the solution is not yet clear), foreign companies may negotiate terms of payment with their French suppliers which are longer than the maximum ceilings set by article L441 – 10, provided that it is not qualified as an abuse of negotiation (to be anticipated in specific circumstances or terms in the contract to show for instance counterparts, on a case by case basis) and having in mind that, with this respect, French case law is still under construction by French courts.

Summary: Article 44 of Decree Law No. 76 of July 16, 2020 (the so-called «Simplifications Decree«) provides that, until June 30, 2021, capital increases by joint stock companies (società per azioni), limited partnerships by shares (società in accomandita per azioni) and limited liability companies (società a responsabilità limitata) may be approved with the favorable vote of the majority of the share capital represented at the shareholders’ meeting, provided that at least half of the share capital is present, even if the bylaws establish higher majorities.

The rule has a significant impact on the position of minority shareholders (and investors) of unlisted Italian companies, the protection of which is frequently entrusted (also) to bylaws clauses establishing qualified majorities for the approval of capital increases.

After describing the new rule, some considerations will be made on the consequences and possible safeguards for minority shareholders, limited to unlisted companies.

Simplifications Decree: the reduction of majorities for the approval of capital increases in Italian joint stock companies, limited partnerships by shares and limited liability companies

Article 44 of Decree Law No. 76 of July 16, 2020 (the so-called ‘Simplifications Decree‘)[1] temporarily reduced, until 30.6.2021, the majorities for the approval by the extraordinary shareholders’ meeting of certain resolutions to increase the share capital.

The rule applies to all companies, including listed ones. It applies to resolutions of the extraordinary shareholders’ meeting on the following subjects:

  • capital increases through contributions in cash, in kind or in receivables, pursuant to Articles 2439, 2440 and 2441 (regarding joint stock companies and limited partnerships by shares), and to Articles 2480, 2481 and 2481-bis of the Italian Civil Code (regarding limited liability companies);
  • the attribution to the directors of the power to increase the share capital, pursuant to Article 2443 (regarding joint stock companies and limited partnerships by shares) and to Article 2480 of the Italian Civil Code (regarding limited liability companies).

The ordinary rules provide the following mayorities:

(a)       for joint stock companies and limited partnerships by shares: (i) on first call a majority of more than half of the share capital (Art. 2368, second paragraph, Italian Civil Code); (ii) on second call a majority of two thirds of the share capital presented at the meeting (Art. 2369, third paragraph, Italian Civil Code);

(b)       for limited liability companies, a majority of more than half of the share capital (Art. 2479-bis, third paragraph, Italian Civil Code);

(c)       for listed companies, a majority of two thirds of the share capital represents-to in the shareholders’ meeting (Art. 2368, second paragraph and Art. 2369, third paragraph, Italian Civil Code).

Most importantly, the ordinary rules allow for qualified majorities (i.e., higher than those required by law) in the bylaws.

The temporary provisions of Article 44 of the Simplifications Decree provide that resolutions are approved with the favourable vote of the majority of the share capital represented at the shareholders’ meeting, provided that at least half of the share capital is present. This majority also applies if the bylaws provide for higher majorities.

Simplifications Decree: the impact of the decrease in majorities for the approval of capital increases on minority shareholders of unlisted Italian companies

The rule has a significant impact on the position of minority shareholders (and investors) in unlisted Italian companies. It can be strongly criticised, particularly because it allows derogations from the higher majorities established in the bylaws, thus affecting ongoing relationships and the governance agreed between shareholders and reflected in the bylaws.

Qualified majorities, higher than the legal ones, for the approval of capital increases are a fundamental protection for minority shareholders (and investors). They are frequently introduced in the bylaws: when the company is set up with several partners, in the context of aggregation transactions, in investment transactions, private equity and venture capital transactions.

Qualified majorities prevent majority shareholders from carrying out transactions without the consent of minority shareholders (or some of them), which have a significant impact on the company and the position of minority shareholders. In fact, capital increases through contributions of assets reduce the minority shareholder’s shareholding percentage and can significantly change the company’s business (e.g. through the contribution of a business). Capital increases in cash force the minority shareholder to choose between further investing in the company or reducing its shareholding.

The reduction in the percentage of participation may imply the loss of important protections, linked to the possession of a participation above a certain threshold. These are not only certain rights provided for by law in favour of minority shareholders[2], but – with even more serious effects – the protections deriving from the qualified majorities provided for in the bylaws to approve certain decisions. The most striking case is that of the qualified majority for resolutions amending the bylaws, so that the amendments cannot be approved without the consent of the minority shareholders (or some of them). This is a fundamental clause, in order to ensure stability for certain provisions of the bylaws, agreed between the shareholders, that protect the minority shareholders, such as: pre-emption and tag-along rights, list voting for the appointment of the board of directors, qualified majorities for the taking of decisions by the shareholders’ meeting or the board of directors, limits on the powers that can be delegated by the board of directors. Through the capital increase, the majority can obtain a percentage of the shareholding that allows it to amend the bylaws, unilaterally departing from the governance structure agreed with the other shareholders.

The legislator has disregarded all this and has introduced a rule that does not simplify. Rather, it fuels conflicts between the shareholders and undermines legal certainty, thus discouraging investments rather than encouraging them.

Simplifications Decree: checks and safeguards for minority shareholders with respect to the decrease in majorities for the approval of capital increases

In order to assess the situation and the protection of the minority shareholder it is necessary to examine any shareholders’ agreement in force between the shareholders. The existence of a shareholders’ agreement will be almost certain in private equity or venture capital transactions or by other professional investors. But outside of these cases there are many companies, especially among small and medium-sized enterprises, where the relationships between the shareholders are governed exclusively by the bylaws.

In the shareholders’ agreement it will have to be verified whether there are clauses binding the shareholders, as parties to the agreement, to approve capital increases by qualified majority, i.e. higher than those required by law. Or whether the agreement make reference to a text of the bylaws (attached or by specific reference) that provides for such a majority, so that compliance with the qualified majority can be considered as an obligation of the parties to the shareholders’ agreement.

In this case, the shareholders’ agreement will protect the minority shareholder(s), as Article 44 of the Simplifications Decree does not introduce an exception to the clauses of the shareholders’ agreement.

The protection offered by the shareholders’ agreement is strong, but lower than that of the bylaws. The clause in the bylaws requiring a qualified majority binds all shareholders and the company, so the capital increase cannot be validly approved in violation of the bylaws. The shareholders’ agreement, on the other hand, is only binding between the parties to the agreement, so it does not prevent the company from approving the capital increase, even if the shareholder’s vote violates the obligations of the shareholders’ agreement. In this case, the other shareholders will be entitled to compensation for the damage suffered as a result of the breach of the agreement.

In the absence of a shareholders’ agreement that binds the shareholders to respect a qualified majority for the approval of the capital increase, the minority shareholder has only the possibility of challenging the resolution to increase the capital, due to abuse of the majority, if the resolution is not justified in the interest of the company and the majority shareholder’s vote pursues a personal interest that is antithetical to the company’s interest, or if it is the instrument of fraudulent activity by the majority shareholders aimed at infringing the rights of minority shareholders[3]. A narrow escape, and a protection certainly insufficient.

[1] The Simplifications Decree was converted into law by Law no. 120 of September 11, 2020. The conversion law replaced art. 44 of the Simplifications Decree, extending the temporary discipline provided therein to capital increases in cash and to capital increases of limited liability companies.

[2] For example: the percentage of 10% (33% for limited liability companies) for the right of shareholders to obtain the call of the meeting (art. 2367; art. 2479 Italian Civil Code); the percentage of 20% (10% for limited liability companies) to prevent the waiver or settlement of the liability action against the directors (art. 2393, sixth paragraph; art. 2476, fifth paragraph, Italian Civil Code); the percentage of 20% for the exercise by the shareholder of the liability action against the directors (art. 2393-bis, Civil Code).

[3] Cass. Civ., 12 December 2005, no. 27387; Trib. Roma, 31 March 2017, no. 6452.

Summary – While China’s economy bore the brunt of the initial economic impact, the COVID-19 outbreak is bringing both direct and indirect complications for economies around the world. With China’s key role in the supply chain and manufacturing, in combination with lockdowns restricting movement, trade and business – fiscal authorities are implementing new measures to protect and stimulate their respective economies.

The Australian Government has announced a series of new regulatory, legislative and administrative changes that strengthen the country’s position moving through the crisis. The International Monetary Fund and the Organisation for Economic Co-operation and Development forecast Australia’s growth outpacing many comparable countries, including France, Canada, Japan, Germany, and the UK – all without endangering Australia’s debt sustainability.

Australia’s Response

The Australian Federal Government has, in a series of announcements, revealed a consolidated package of $320 billion AUD or $200 billion USD[1] support – equivalent to 16.4% of the country’s nominal GDP. They have made a clear stance that Australia is prepared to protect its national interest and respond to the broad and prolonged impact of the outbreak.

The stimulus measures can be considered in three separate categories, each with an intended purpose:

  • support businesses;
  • support the flow of credit; and
  • support individuals and households.

The measures come with consideration of varying factors, including helping with the management of short-term cash flow, assist severely affected communities and regions, to prop up individuals and households dealing with sudden loss of employment, maintaining employees’ connections with business, and to ensure the continued flow of credit.

The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 and Coronavirus Economic Response Package Omnibus (Measures No. 2) were passed by parliament on 8 April 2020. More legislation is expected to come as Australian authorities continue to study the broader prolonged impacts of COVID-19.

State and local governments within Australia have also announced a wide range of measures in addition to those announced by the Federal Government.

[1] Based on AUD-USD exchange rate 21 April 2020

Support for Businesses

JobKeeper Subsidy

The Australian government has committed $130 billion in ongoing support to business through the JobKeeper subsidy. The payment is available to businesses that are suffering a reduction in turnover to keep Australians employed during the outbreak. The JobKeeper subsidy is a gross fortnightly payment of $1,500 for each eligible employee for a 6-month period. The full $1,500 payment is to be paid to each eligible employee, either as a partial subsidy if their wage is greater than $1,500, or as a full subsidy if their wage was previously less than $1,500. The gross payment will be taxed at normal rates, although employers are not obliged to make additional superannuation contributions.

The scheme includes sole traders as well as businesses and not-for-profits (NFP).

Boosting Cash Flow for Employers

Small and medium businesses, as well as NFP are eligible for cashflow boosts to further assist in retaining employees. Tax-free cash flow boosts of $20,000 to $100,000 will be delivered to eligible businesses and organisations with aggregated annual turnover under $50 million. The Government has specifically acknowledged the increasing demand for NFP services during this crisis.

In a series of two payments, each payment will be equivalent to the business’ withheld salary and wages, with a minimum of $10,000 and maximum of $50,000. The first cashflow boost is set to be available between March and July 2020; the second boost will be made to businesses who received the first and will be of an equal sum,  to be paid between June to September 2020. By splitting the support into two equal payments, the intention is to provide continued cash flow support over a longer period – increasing confidence and assisting businesses to maintain their operations.

Temporary Relief for Financially Distressed Businesses

Recognising the need for a safety net to allow businesses to resume operation post-crisis, this measure provides legislative support to financially distressed businesses. The temporary changes include reducing thresholds for creditors to issue statutory demands and initiate bankruptcy proceedings, increasing time available to respond to statutory demands, relieving directors from personal liability for trading while insolvent, and providing flexibility in the Corporations Act 2001 when dealing with unforeseen circumstances stemming from the COVID-19 crisis.

The Australian Taxation Office is willing to tailor solutions for directors and owners currently suffering. These may include reductions in payments or deferrals and withholding enforcement actions.

Changes to Asset Write-Off and Depreciation Deductions

The threshold for instant asset write-off is increased from $30,000 to $150,000 and access is expanded to businesses with aggregated annual turnover less than $500 million (previously $50 million) until the end of the 2019-20 financial year (i.e. 30 June 2020).

Up until the end of the 2020-21 financial years, depreciation deductions are accelerated for businesses under the same $500 million threshold. Upon installation of assets, 50% can be deduced with existing depreciation deduction rates to the balance. This measure is considered an investment incentive for businesses.

Supporting Apprentices and Trainees

Eligible employers may have 50% of an apprentice’s or trainee’s wage subsidised between 1 January 2020 and 30 September 2020. When businesses are unable to retain their apprentice or trainee, the subsidy can be provided to a new employer. As a part of this program, Australia’s National Apprentice Employment Network will provide further support in coordinating re-employment of workers affected by the COVID-19 crisis.

Support for Affected Regions and Industries

$1 billion of stimulus funds is reserved to support regions that are most impacted by the COVID-19 crisis. The purpose is to provide assistance during both the outbreak and the recovery.  Further, the Australian airline industry is receiving tax and fee relief, with an estimate value of $715 million.

Support Flow of Credit

Immediate Cash Flow Needs for SMEs

The Government is providing guarantees of 50% for SME lenders to encourage new short-term unsecured loans for SMEs. By increasing lender’s willingness to provide credit, Australian businesses will be in a better position to secure loans and increase their cash flow.

Quick and efficient access to credit for small business

Small businesses will have more and faster access to credit as an exemption is provided to ‘responsible lending’ requirements.

Reserve Bank of Australia Measures to Support Credit Flow

The Reserve Bank of Australia (RBA) has made funding available for banks at a fixed interest rate of 0.25%. This measure will reinforce a lower cash rate, helping to reduce interest rates for borrowers. The RBA funding is incentivised to banks who expand their business lending, especially for new loans to SMEs. To complement the interest rate cut, the RBA is taking active steps to achieve a 0.25% yield on Australian Government securities

Support for Non-ADI and smaller ADI lenders in the securitisation market

The Australian Office of Financial Management (AOFM) is receiving $15 billion in funding to invest in structured finance markets. The target of this measure is smaller authorised deposit taking institutions (ADI) and non-ADI lenders.

Australian Prudential Regulatory Authority (APRA) Supporting Lending

APRA is temporarily changing their expectations of a banks’ capital ratios in order to support their lending.

Supporting Individuals and Households

JobSeeker Payment

In response to a sudden and sharp increase in the number of unemployed Australians, a new streamlined processing of JobSeeker claims was introduced. JobSeeker is a pre-existing welfare payment available to eligible Australians while they are unemployed and in the active pursuit of gainful employment.

An employee cannot be in simultaneous receipt of JobKeeper and JobSeeker payments.

Changes to Other Income Support Payments

Recipients of income support payments are eligible for an additional fortnightly payment of $550 for a temporary six-month period. At the same time, eligibility for the payments has been expanded to allow for more Australians to receive the income support, and the supplementary fortnightly payment.

In addition to the ongoing payments, two separate $750 payments may be made to Australian income support recipients. The first payment was made on 31 March 2020, and the second payment is scheduled for 13 July 2020. The second payment is not available to recipients of the $550 fortnightly supplement. These stimulus injections are intended to increase confidence and domestic demand in the economy.

Changes to Superannuation

Australia’s superannuation program mandates wage contributions to a superfund in the purpose of supporting retirees and ensuring they have the financial means to survive and maintain quality of life. With the COVID-19 outbreak, two new measures have been introduced to allow Australian retirees to manage the impact of recent downturn on their superannuation and financial circumstances.

The first measure is allowing individuals to withdraw up to $10,000 from their superannuation in 2019-20 and an additional $10,000 in the following financial year. This withdrawal will not be taxed, nor will it affect income testing for income support payments.

The second measure is a temporary reduction of Superannuation drawdown requirements for retirees with account-base pensions. A reduction of 50% applies in both 2019-20 and 2020-21. This will lower the need to sell investment assets to fund minimum drawdown requirements.

Reduction of Social Security Deeming Rates

Both upper and lower social security rates were dropped by 0.5% on 12 March 2020. Another reduction has been announced, from 1 May 2020 the upper rate will be 2.25% and the lower 0.25%. This measure is in response to lowering interest rates and the reduction of savings income. Practically, this will mean an average increase of $105 in the Age Pension during the first year.

Belgian residents working abroad, e.g. in Luxembourg, may have a company car registered in their country of employment. The Belgian regional tax administrations exercise checks to verify whether the user of the company car complies with regional vehicle tax rules allowing an exemption from registration of the car in Belgium and from Belgian vehicle taxes. Especially in the Walloon Region this has given rise to a lot of litigation in recent years, especially regarding Luxembourg workers residing in Belgium.

Belgian vehicle registration rules stipulate that the user of the car must have on board of the car a copy of his employment contract as well as a document drawn up by the foreign employer showing that the latter had put the vehicle at the employee’s disposal. If the driver cannot produce these documents, he is supposed by the Walloon tax administration to have violated the legal obligation to register the car in Belgium and to pay Belgian vehicle taxes.

The consequences are severe. In addition to the vehicle taxes, the driver must pay a hefty fine. Failing to pay these large amounts (often more than EUR 3,000.-) on site at the time of the road check, the authorities withhold the on-board documents of the car, which results in the immobilization of the car.

The Walloon tax administration, initially, did not pay back the vehicle taxes even if it was proven afterwards that the conditions of the exemptions of registration in Belgium and Belgian vehicle taxes were met. At first, the tax administration claimed that the vehicle taxes remained due if the employee showed the required documents only afterwards to the competent authorities. The position of the Walloon tax administration was that the employee must be able to produce the required documents on the spot during the check to be exempted from registration and vehicle taxes in Belgium.

In a recent reasoned order, the European Court of Justice (‘ECJ’) confirmed that this harsh position by the Walloon tax administration was in violation of the freedom of movement for workers. A reasoned order is issued by the ECJ a.o. where a question referred to the ECJ for a preliminary ruling is identical to a question on which the ECJ has previously ruled or where the answer to the question referred for a preliminary ruling admits of no reasonable doubt.

In other words, the ECJ confirms that the requirement to have the abovementioned documents permanently on board of the vehicle to be exempted from Belgian registration and Belgian vehicle taxes is manifestly disproportionate and thus a violation of the freedom of movement for workers.

From a practical perspective, this ruling confirms that an employee resident in Belgium but working in another member state does not have to pay the Belgian vehicle taxes (or is entitled to be paid back) if he demonstrates after the check that he met the conditions to be exempted from registration and vehicle taxes in Belgium.

Ignacio Alonso

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  • Agencia
  • Derecho Societario
  • Contratos de distribución
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    Distressed M&A: a golden year yet to come?

    31 mayo 2021

    • Ucrania
    • Derecho Societario
    • Derecho Concursal
    • M&A

    A member of the management board or the supervisory board of a Polish LLC or a joint-stock company is liable to the company for damage caused by an act or omission contrary to the law or the articles of association, unless they are not at fault. In the performance of their duties, they are obliged to take the care due to the professional nature of their activities. In other words, the standard of care is high and they cannot release themselves from the liability indicating that they had no sufficient knowledge or experience.

    The burden of proof of the damage and the lack of due dilligence of the board member lies with the company. A board member is liable if their conduct is culpable. However, the company does not have to prove this. It is the board member who must demonstrate that the damage caused by their act or omission was not culpable.

    When running a business, board members naturally often move within the boundaries of a certain risk and make various business decisions, the consequences of which are often unforeseeable at the time they are made. They can result in both substantial gains and substantial losses for the company. However, with a high standard of due diligence, it is more difficult to demonstrate a lack of culpability.

    A recent amendment of the Polish Code of Commercial Companies and Partnerships which enters into force on 13 October 2022 has articulated the so called „business judgement rule” which has already appeared to a limited extent in case law.

    This rule assumes that a member of the management board and supervisory board may act within the limits of reasonable business risk. They are not in breach of their duty of professional care as long as they act in loyalty to the company.

    The new law indicates that the assessment of the board member may be made on the basis of information, analyses and opinions available to them when making decisions. The new law may contribute to the collection of documentation in defence of the position (so-called defence file). The board members may protect themselves against the liability towards the company by demonstrating that their actions or omissions were based on expert’s opinions and at the time when they were undertaken they did not exceed the limits of the reasonable business jugdement.

    Resumen

    Una de las cuestiones que más dificulta el comienzo de las actividades al crear una sociedad (filial) en España es la relativa a los poderes: ¿Qué es un poder? ¿Son necesarios? ¿Cómo funcionan? En España esta cuestión tiene importancia práctica y su funcionamiento no siempre coincide con lo que ocurre en otros países. Apuntamos en este comentario alguna idea para comprender cómo actuar al crear una sociedad.

    ¿Qué es un poder? Un poder permite a la sociedad actuar representada por una persona (apoderado o representante). El apoderado podrá, por ejemplo, firmar un contrato en nombre de la sociedad si ésta le ha dado poder (facultad) para hacerlo. Por ejemplo, pedir un préstamo a un banco.

    Para hacerlo la sociedad tendrá dos tipos de representantes: un “representante orgánico” (los administradores) y los “representantes voluntarios” (apoderados).

    En primer lugar, una sociedad debe tener, al menos, un administrador

    El administrador (o administradores) es el “representante orgánico”. Es decir, es un órgano (órgano de administración) de la sociedad, la representa y puede contratar en su nombre.

    Este “órgano” puede ser unipersonal (un único administrador), pueden ser varias personas que actúan de forma individual o conjunta, o puede ser un consejo de administración (“órgano colegiado”). La facultad de representación reside en el “órgano”. Es el órgano quien representa a la sociedad y no necesariamente los miembros que lo componen.

    La primera labor, por lo tanto, es decidir la estructura del órgano y se toma al constituir la sociedad, aunque luego puede cambiarse. De esta forma, el administrador único tendrá todas las facultades para representar a la sociedad, los administradores individuales también si son “solidarios”, o tendrán que actuar conjuntamente si fueran administradores “mancomunados”, y el consejo también las tendrá, pero como órgano (no individualmente cada consejero).

    Esta última observación (las facultades las tiene el órgano y no necesariamente sus miembros) es importante cuando la sociedad está administrada por un Consejo de Administración. El hecho de que exista un consejo de administración no supone que cada miembro tenga las facultades para representar a la sociedad, sino que las tiene el órgano en su conjunto. El consejo, puede, sin embargo, delegarlas. Cuando el consejo delega las facultades en uno de sus consejeros (es posible, pero no obligatorio nombrar uno), éste se convierte en “consejero delegado”. Entonces sí, ese consejero podrá representar a la sociedad en todo aquello que se le haya delegado.

    Los apoderados para

    En segundo lugar, además de los administradores, la sociedad puede tener (no es obligatorio) otros “apoderados”. Estos son los “representantes voluntarios”, es decir, nombrados “por voluntad” de la sociedad.

    Un apoderado es alguien a quien la sociedad le otorga facultades para representarla. Facultades para realizar determinadas cosas.

    Como decíamos al comienzo, en España la actuación mediante poder es bastante rigurosa, de forma que una sociedad no podrá normalmente estar representada por nadie que no tenga ese poder (facultad) para hacerlo. Por ejemplo, si la sociedad autoriza (apodera) a una persona solo para firmar contratos bancarios, no podrá firmar contratos con empleados.

    Las facultades que se otorgan a una persona han de ser, por lo tanto, expresas. Si una persona está autorizada para abrir una cuenta corriente, no se supone que pueda pedir un préstamo. Y de esta forma, las facultades sirven como marco de actuación: qué puede hacer el apoderado y cuáles son los límites. Y a veces estos límites vienen de la propia facultad (abrir una cuenta bancaria no autoriza para pedir un préstamo) o pueden ser cuantitativos (pedir préstamos, pero solo hasta 100.000 euros), o temporales (pedir préstamos, pero hasta el 31 de diciembre de 2025) o incluso necesitando la actuación de más de una persona (pedir préstamos, pero firmando juntamente con la persona “Z”). Y, por supuesto, una combinación de todas ellas: el apoderado “X”, puede pedir préstamos firmando con el apoderado “W” hasta 100.000 euros, y con el apoderado “Z” hasta 1.000.000 euros.

    A la hora de crear una sociedad en España es, por lo tanto, muy recomendable, pensar cómo se van a otorgar las facultades, especialmente, si el órgano de administración no reside en nuestro país. Según hemos visto por experiencia, no es infrecuente crear una sociedad nombrando a un administrador residente en el extranjero sin designar ningún apoderado en España. Esto es válido jurídicamente, pero, de alguna forma, se está dificultando el funcionamiento de la sociedad: la única persona para firmar contratos y representar a la sociedad reside en el extranjero lo que, desde el punto de vista práctico, supondrá un importante inconveniente.

    El procedimiento para apoderar (facultar) a una persona es sencillo. Basta una decisión del órgano de administración, formalizarla ante notario y registrarla en el Registro Mercantil. De esta forma, cualquier persona podrá verificar que la persona nombrada puede representar a la sociedad en ese acto concreto. La cuestión requiere, eso sí, encontrar una persona de confianza (un empleado, un socio residente, un tercero), pero el riesgo puede modularse con las posibilidades de limitación que hemos visto.

    En conclusión

    A la hora de crear una sociedad en España, si el administrador no residirá en nuestro país, tenga en cuenta cómo organizar los poderes, a quién apoderar y cómo limitar, en su caso, sus facultades.

    Y los poderes que más va a necesitar y con más urgencia son:

    • los que permitirán contratar con bancos (abrir y gestionar cuentas bancarias),
    • los relativos a los empleados (contratar, inscribirlos en la seguridad social, pagos de salarios),
    • los que permitan contratar suministros (contratos de electricidad, agua, teléfono) y otros contratos generales (alquiler, vehículos, contratos de distribución), y
    • gestionar la firma electrónica de la sociedad (relaciones con las administraciones públicas, pagos de impuestos).

    Si no se toma esa decisión oportunamente se podría retrasar o dificultar la actividad que se inicia.

    Y en caso de dudas, mejor consultar con un abogado local.

    There were hardly even a few businesses worldwide not affected by the corona pandemic. As lockdown measures were expanding from March 2020, dozens of visitor-dependent (including retail, public transportation, HoReCa, leisure, entertainment & sport) companies’ value dropped astonishingly. This immediately resulted in numerous RFPs coming in and out NPL funds and distress investors being ready as never to pluck those companies ripe enough.

    Well, at least that is how the things should have been.

    A general picture of M&A demand remains with no great changes. According to the recent DataSite EMEA report first 2021 quarter shown 40 % deal value increase and 14 percent deal volume growth. Some sceptic experts already highlighted that Q1 references are insufficient – as Q1 2020 was painted in an unseen uncertainty and hard-model governmental interference whilst Q1 2021 came in much more predictable conditions with vaccination campaigns being successful and more lockdowns lightened.

    The 2020 picture for the distressed part of the global (and particularly EMEA) part of M&A market is quite the same. With hundreds of companies still receiving governmental support and financial institutions still having a wide liquidity, the 2020 data from Bloomberg reports show no Big Bang in distress deals (either arising from pre-pack agreements between debtors and creditors or from formal insolvency processes), at least if compared with 2007-8 recession years.

    Nevertheless Bloomberg themselves recognize that 2021 market might become red-hot. Whether this prognosis will materialize soon – here are four basic tips to hold in mind when thinking on insolvency-sed distress M&A deal on either – buyer or seller side:

    1. asset or going-concern purchase. A key business decision is understanding of whether a target business is viable enough and fits in the buyer’s existing\planned portfolio to be bought as a going-concern company. Should there be no certainty – a rule of thumb with almost always be to stick with the asset deal being more secured and the target itself much easier to allocate.
      On the other hand, for a manufacturing target license and related IP rights holding might constitute a large part of the business’ value – without which the desired asset appears to be a no-hand pot.
    1. watch for exclusivity – as asset-based distressed purchase might lack one because of the procedural obligation of going through bidding process.
    2. beware of easy ways. With so-called reverse vesting orders and free-and-clean sales an SP process might look very comfortable for a buyer eager to obtaining the target clean of any burdens (liens, mortgages, tax liabilities). Might look – but rarely be such within FSU and a part of CEE countries where a big chance of facing clawback action exists, especially with a huge state (tax\duty) interest at stake.
    3. do post-deal homework. When purchasing a going concern company it is for the newly-appointed management to be concerned the most: in a number of jurisdictions they might be boomeranged with management-liability claims resulting from previous management\shareholders cadence.
    4. have an insurance company over the seller’s back. In case any post-closing tails appear, this will give a substantial level of calmness for both sides relying on the insurance to cover a part of the purchase price or post-deal liabilities.

    With the post-pandemic distress M&A yet to come and investors being ready as never, these rules will certainly be of use. As S&P 500 non-financials, in late 2020 corporate balance sheets reflected more than $2 trillion of cash – guess if there are funds for making your deal as well? Just remember: there is no one-size-fits-all approach in doing the distress deal and there always is a place for bespoke solutions given by true professionals.

    El Gobierno español ha aprobado recientemente dos nuevas normas sobre la igualdad retributiva y los planes de igualdad que entrarán en vigor el enero y abril 2021 y que afectan a todas las empresas.

    1. Real Decreto 901/2020, de 13 de octubre, por el que se regulan los planes de igualdad y su registro

    Se entiende por “plan de igualdad”, aquel conjunto ordenado de medidas adoptadas tras la realización de un diagnóstico de situación, tendentes a alcanzar en la empresa la igualdad de trato y de oportunidades entre mujeres y hombres, y a eliminar la discriminación por razón de sexo.

    Están obligadas a elaborar y aplicar un plan de igualdad todas aquellas empresas que cuenten con 50 o más trabajadores, siendo su implantación de carácter voluntario para las demás empresas. En todo caso, los planes de igualdad, incluidos los diagnósticos previos, deben ser objeto de negociación con la representación legal de los trabajadores, de conformidad con el procedimiento legalmente establecido al efecto.

    En cuanto al contenido de los planes, deben incluir, entre otros, definición de objetivos cuantitativos y cualitativos, descripción de las medidas concretas a adoptar, identificación de medios y recursos, calendario de actuaciones, sistemas de seguimiento y evaluación, etc. Además, han de ser objeto de inscripción obligatoria en un registro público.

    Este nuevo Real Decreto entrará en vigor en fecha 14 de enero de 2021.

    2. Real Decreto 902/2020, de 13 de octubre, de igualdad retributiva entre mujeres y hombres

    Este nuevo Real Decreto tiene por objeto poner en marcha medidas específicas que permitan hacer efectivo el derecho a la igualdad de trato y a la no discriminación entre mujeres y hombres en materia retributiva.

    Para ello, tanto las empresas como los convenios colectivos deben integrar y aplicar el llamado “principio de transparencia retributiva”, que es aquel que, aplicado a los distintos aspectos que determinan la retribución de los trabajadores, permite obtener información suficiente y significativa sobre el valor que se atribuye a dicha retribución.

    Para la aplicación del citado principio, el Real Decreto prevé, fundamentalmente, dos instrumentos:

    • Registro retributivo: Todas las empresas deben contar con un registro retributivo accesible para la representación legal de los trabajadores. El mismo debe incluir los valores medios de los salarios, los complementos salariales y las percepciones extrasalariales de la totalidad de la plantilla (incluido personal directivo y altos cargos) disgregados por sexo.
    • Auditoría retributiva: Aquellas empresas que elaboren un plan de igualdad, deben incluir en el mismo una auditoría retributiva. Su finalidad es comprobar si el sistema retributivo de la empresa cumple con la aplicación efectiva del principio de igualdad, definiendo las necesidades para evitar, corregir y prevenir los obstáculos y dificultades que pudieran existir.

    Las medidas contenidas en esta nueva norma entrarán en vigor el 14 de abril de 2021.

    Under French law, terms of payment of contracts of sale or of services (food excluded) are strictly regulated (art. L441-10.I Commercial code) as follows:

    • Unless otherwise agreed between the parties, the standard time limit for settling the sums due may not exceed 30 days.
    • Parties can agree on a time of payment which cannot exceed 60 days after the date of the invoice.
    • By way of derogation, a maximum period of 45 days from end of the month after the date of the invoice may be agreed between the parties, provided that this period is expressly stipulated by contract and that it does not constitute a blatant abuse with respect to the creditor (e.g. could be in fact up to 75 days after date of issuance).

    The types of international contracts concluded with a French party can be:

    (a) An international sales contract governed by French law (or to the national law of a country where CISG is in force), and which does not contractually exclude the Vienna Convention of 1980 on the International Sale of Goods (CISG)

    In this case the parties may be freed from the domestic mandatory payment time limits, by virtue of the superiority of CISG over French domestic rules, as stated by public authorities,

    (b) An international contract (sale, service or otherwise) concluded by a French party with a party established in the European Union and governed by the law of this other European State,

    In this case the parties could be freed from the French domestic mandatory payment time limits, by invoking the rules of this member state law, in accordance with the EU directive 2011/7;

    (c) Other international contracts not belonging to (a) or (b),

    In these cases the parties might be subject to the French domestic mandatory payment maximum ceilings, if one considers that this rule is an OMR (but not that clearly stated).

    Can a foreign party (a purchaser) agree with a French party on time limit of payment exceeding the French mandatory maximum ceilings (for instance 90 days)?

    This provision is a public policy rule in domestic contracts. Failing to comply with the payment periods provided for in this article L. 441-10, any trader is liable to an administrative fine, up to a maximum amount of € 75,000 for a natural person and € 2,000,000 for a company. In the event of reiteration the maximum of the fine is raised to € 150,000 for a natural person and € 4,000,000 for a legal person.

    There is no express legal special derogatory rule for international contracts (except one very limited to specific intra UE import / export trading). This being said, the French administration (that is to say the Government, the French General Competition and Consumer protection authority, “DGCCRF” or the Commission of examination of the commercial practices, “CEPC”) shows a certain embarrassment for the application of this rule in an international context because obviously it is not suitable for international trade (and is even counterproductive for French exporters).

    International sales contract can set aside the maximum payment ceilings of article L441-10.I

    Indeed, the Government and the CEPC have identified a legal basis authorizing French exporters to get rid of the maximum time limit imposed by the French commercial code: this is the UN Convention on the international sale of goods of 1980 (aka “CISG”) applying to contracts of supply of (standard or tailor-made) goods (but not services). They invoked the fact that CISG is an international treaty which is a higher standard than the internal standards of the Civil Code and the Commercial Code: it is therefore necessary to apply the CISG instead of article L441-10 of the Commercial Code.

    • In the 2013 ministerial response, (supplemented by another one in 2014) the Ministry of Finance was very clear: «the default application of the CISG rules […] therefore already allows French traders to grant their foreign customers payment terms similar to those offered by their international competitors”.
    • In its Statement of 2016 (n°16.12), the CEPC went a little further in the reasoning by specifying that CISG poses as a rule that payment occurs at the time of the delivery of the goods, except otherwise agreed by the parties (art. 58 & 59), but does not give a maximum ceiling. According to this Statement, it would therefore be possible to justify that the maximum limit of the Commercial Code be set aside.

    The approach adopted by the Ministry of Finance and by the CEPC (which is a kind of emanation of this Ministry) seems to be a considerable breach in which French exporters and their foreign clients can plunge into. This breach is all the easier to use since CISG applies by default as soon as a sales contract is subject to French law (either by the express choice of the parties, or by application of the conflict of law rules by the judge subsequently seized). In other words, even if controls were to be carried out by the French administration on contracts which do not expressly target the CISG, it would be possible to invoke this “CISG open door”.

    This ground seems also to be usable as soon as the international sale contract is governed by the national law of a foreign country … which has also ratified CISG (94 countries). But conversely, if the contract expressly excludes the application of CISG, the solution proposed by the administration will close.

    For other international contracts not governed by CISG, is this article L441-10.I an overriding mandatory rule in the international context?

    The answer is ambiguous. The issue at stake is: if art. L441-10 is an overriding mandatory rule (“OMR”), as such it would still be applied by a French Judge even if the contract is subject to foreign law.

    Again the Government and the CEPC took a stance on this issue, but not that clear.

    • In its 2013 ministerial response, the Ministry of Finance statement was against the OMR qualification when he referred to «foreign internal laws less restrictive than French law [that] already allows French traders to grant their foreign customers payment terms similar to those offered by their international competitors”.
    • The CEPC made another Statement in 2016 (n°1) to know whether or not these ceilings are OMRs in international contracts. A distinction should be made as regards the localization of the foreign party:

    – For intra-EU transactions, the CEPC put into perspective these maximum payment terms with the 2011/7 EU directive on the harmonization of payment terms which authorizes other European countries to have terms of payment exceeding 60 days (art 3 §5). Therefore article L441-10.I could not be seen as OMR because it would conflict with other provisions in force in other European countries, also respecting the EU directive which is a higher standard than the French Commercial Code.

    – For non intra EU transactions, CEPC seems to consider article L441-10.I as an OMR but the reasoning was not really strong to say straightforwardly that it is per se an OMR.

    To conclude on the here above, (except for contracts – sales excluded –  concluded with a non-EU party, where the solution is not yet clear), foreign companies may negotiate terms of payment with their French suppliers which are longer than the maximum ceilings set by article L441 – 10, provided that it is not qualified as an abuse of negotiation (to be anticipated in specific circumstances or terms in the contract to show for instance counterparts, on a case by case basis) and having in mind that, with this respect, French case law is still under construction by French courts.

    Summary: Article 44 of Decree Law No. 76 of July 16, 2020 (the so-called «Simplifications Decree«) provides that, until June 30, 2021, capital increases by joint stock companies (società per azioni), limited partnerships by shares (società in accomandita per azioni) and limited liability companies (società a responsabilità limitata) may be approved with the favorable vote of the majority of the share capital represented at the shareholders’ meeting, provided that at least half of the share capital is present, even if the bylaws establish higher majorities.

    The rule has a significant impact on the position of minority shareholders (and investors) of unlisted Italian companies, the protection of which is frequently entrusted (also) to bylaws clauses establishing qualified majorities for the approval of capital increases.

    After describing the new rule, some considerations will be made on the consequences and possible safeguards for minority shareholders, limited to unlisted companies.

    Simplifications Decree: the reduction of majorities for the approval of capital increases in Italian joint stock companies, limited partnerships by shares and limited liability companies

    Article 44 of Decree Law No. 76 of July 16, 2020 (the so-called ‘Simplifications Decree‘)[1] temporarily reduced, until 30.6.2021, the majorities for the approval by the extraordinary shareholders’ meeting of certain resolutions to increase the share capital.

    The rule applies to all companies, including listed ones. It applies to resolutions of the extraordinary shareholders’ meeting on the following subjects:

    • capital increases through contributions in cash, in kind or in receivables, pursuant to Articles 2439, 2440 and 2441 (regarding joint stock companies and limited partnerships by shares), and to Articles 2480, 2481 and 2481-bis of the Italian Civil Code (regarding limited liability companies);
    • the attribution to the directors of the power to increase the share capital, pursuant to Article 2443 (regarding joint stock companies and limited partnerships by shares) and to Article 2480 of the Italian Civil Code (regarding limited liability companies).

    The ordinary rules provide the following mayorities:

    (a)       for joint stock companies and limited partnerships by shares: (i) on first call a majority of more than half of the share capital (Art. 2368, second paragraph, Italian Civil Code); (ii) on second call a majority of two thirds of the share capital presented at the meeting (Art. 2369, third paragraph, Italian Civil Code);

    (b)       for limited liability companies, a majority of more than half of the share capital (Art. 2479-bis, third paragraph, Italian Civil Code);

    (c)       for listed companies, a majority of two thirds of the share capital represents-to in the shareholders’ meeting (Art. 2368, second paragraph and Art. 2369, third paragraph, Italian Civil Code).

    Most importantly, the ordinary rules allow for qualified majorities (i.e., higher than those required by law) in the bylaws.

    The temporary provisions of Article 44 of the Simplifications Decree provide that resolutions are approved with the favourable vote of the majority of the share capital represented at the shareholders’ meeting, provided that at least half of the share capital is present. This majority also applies if the bylaws provide for higher majorities.

    Simplifications Decree: the impact of the decrease in majorities for the approval of capital increases on minority shareholders of unlisted Italian companies

    The rule has a significant impact on the position of minority shareholders (and investors) in unlisted Italian companies. It can be strongly criticised, particularly because it allows derogations from the higher majorities established in the bylaws, thus affecting ongoing relationships and the governance agreed between shareholders and reflected in the bylaws.

    Qualified majorities, higher than the legal ones, for the approval of capital increases are a fundamental protection for minority shareholders (and investors). They are frequently introduced in the bylaws: when the company is set up with several partners, in the context of aggregation transactions, in investment transactions, private equity and venture capital transactions.

    Qualified majorities prevent majority shareholders from carrying out transactions without the consent of minority shareholders (or some of them), which have a significant impact on the company and the position of minority shareholders. In fact, capital increases through contributions of assets reduce the minority shareholder’s shareholding percentage and can significantly change the company’s business (e.g. through the contribution of a business). Capital increases in cash force the minority shareholder to choose between further investing in the company or reducing its shareholding.

    The reduction in the percentage of participation may imply the loss of important protections, linked to the possession of a participation above a certain threshold. These are not only certain rights provided for by law in favour of minority shareholders[2], but – with even more serious effects – the protections deriving from the qualified majorities provided for in the bylaws to approve certain decisions. The most striking case is that of the qualified majority for resolutions amending the bylaws, so that the amendments cannot be approved without the consent of the minority shareholders (or some of them). This is a fundamental clause, in order to ensure stability for certain provisions of the bylaws, agreed between the shareholders, that protect the minority shareholders, such as: pre-emption and tag-along rights, list voting for the appointment of the board of directors, qualified majorities for the taking of decisions by the shareholders’ meeting or the board of directors, limits on the powers that can be delegated by the board of directors. Through the capital increase, the majority can obtain a percentage of the shareholding that allows it to amend the bylaws, unilaterally departing from the governance structure agreed with the other shareholders.

    The legislator has disregarded all this and has introduced a rule that does not simplify. Rather, it fuels conflicts between the shareholders and undermines legal certainty, thus discouraging investments rather than encouraging them.

    Simplifications Decree: checks and safeguards for minority shareholders with respect to the decrease in majorities for the approval of capital increases

    In order to assess the situation and the protection of the minority shareholder it is necessary to examine any shareholders’ agreement in force between the shareholders. The existence of a shareholders’ agreement will be almost certain in private equity or venture capital transactions or by other professional investors. But outside of these cases there are many companies, especially among small and medium-sized enterprises, where the relationships between the shareholders are governed exclusively by the bylaws.

    In the shareholders’ agreement it will have to be verified whether there are clauses binding the shareholders, as parties to the agreement, to approve capital increases by qualified majority, i.e. higher than those required by law. Or whether the agreement make reference to a text of the bylaws (attached or by specific reference) that provides for such a majority, so that compliance with the qualified majority can be considered as an obligation of the parties to the shareholders’ agreement.

    In this case, the shareholders’ agreement will protect the minority shareholder(s), as Article 44 of the Simplifications Decree does not introduce an exception to the clauses of the shareholders’ agreement.

    The protection offered by the shareholders’ agreement is strong, but lower than that of the bylaws. The clause in the bylaws requiring a qualified majority binds all shareholders and the company, so the capital increase cannot be validly approved in violation of the bylaws. The shareholders’ agreement, on the other hand, is only binding between the parties to the agreement, so it does not prevent the company from approving the capital increase, even if the shareholder’s vote violates the obligations of the shareholders’ agreement. In this case, the other shareholders will be entitled to compensation for the damage suffered as a result of the breach of the agreement.

    In the absence of a shareholders’ agreement that binds the shareholders to respect a qualified majority for the approval of the capital increase, the minority shareholder has only the possibility of challenging the resolution to increase the capital, due to abuse of the majority, if the resolution is not justified in the interest of the company and the majority shareholder’s vote pursues a personal interest that is antithetical to the company’s interest, or if it is the instrument of fraudulent activity by the majority shareholders aimed at infringing the rights of minority shareholders[3]. A narrow escape, and a protection certainly insufficient.

    [1] The Simplifications Decree was converted into law by Law no. 120 of September 11, 2020. The conversion law replaced art. 44 of the Simplifications Decree, extending the temporary discipline provided therein to capital increases in cash and to capital increases of limited liability companies.

    [2] For example: the percentage of 10% (33% for limited liability companies) for the right of shareholders to obtain the call of the meeting (art. 2367; art. 2479 Italian Civil Code); the percentage of 20% (10% for limited liability companies) to prevent the waiver or settlement of the liability action against the directors (art. 2393, sixth paragraph; art. 2476, fifth paragraph, Italian Civil Code); the percentage of 20% for the exercise by the shareholder of the liability action against the directors (art. 2393-bis, Civil Code).

    [3] Cass. Civ., 12 December 2005, no. 27387; Trib. Roma, 31 March 2017, no. 6452.

    Summary – While China’s economy bore the brunt of the initial economic impact, the COVID-19 outbreak is bringing both direct and indirect complications for economies around the world. With China’s key role in the supply chain and manufacturing, in combination with lockdowns restricting movement, trade and business – fiscal authorities are implementing new measures to protect and stimulate their respective economies.

    The Australian Government has announced a series of new regulatory, legislative and administrative changes that strengthen the country’s position moving through the crisis. The International Monetary Fund and the Organisation for Economic Co-operation and Development forecast Australia’s growth outpacing many comparable countries, including France, Canada, Japan, Germany, and the UK – all without endangering Australia’s debt sustainability.

    Australia’s Response

    The Australian Federal Government has, in a series of announcements, revealed a consolidated package of $320 billion AUD or $200 billion USD[1] support – equivalent to 16.4% of the country’s nominal GDP. They have made a clear stance that Australia is prepared to protect its national interest and respond to the broad and prolonged impact of the outbreak.

    The stimulus measures can be considered in three separate categories, each with an intended purpose:

    • support businesses;
    • support the flow of credit; and
    • support individuals and households.

    The measures come with consideration of varying factors, including helping with the management of short-term cash flow, assist severely affected communities and regions, to prop up individuals and households dealing with sudden loss of employment, maintaining employees’ connections with business, and to ensure the continued flow of credit.

    The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 and Coronavirus Economic Response Package Omnibus (Measures No. 2) were passed by parliament on 8 April 2020. More legislation is expected to come as Australian authorities continue to study the broader prolonged impacts of COVID-19.

    State and local governments within Australia have also announced a wide range of measures in addition to those announced by the Federal Government.

    [1] Based on AUD-USD exchange rate 21 April 2020

    Support for Businesses

    JobKeeper Subsidy

    The Australian government has committed $130 billion in ongoing support to business through the JobKeeper subsidy. The payment is available to businesses that are suffering a reduction in turnover to keep Australians employed during the outbreak. The JobKeeper subsidy is a gross fortnightly payment of $1,500 for each eligible employee for a 6-month period. The full $1,500 payment is to be paid to each eligible employee, either as a partial subsidy if their wage is greater than $1,500, or as a full subsidy if their wage was previously less than $1,500. The gross payment will be taxed at normal rates, although employers are not obliged to make additional superannuation contributions.

    The scheme includes sole traders as well as businesses and not-for-profits (NFP).

    Boosting Cash Flow for Employers

    Small and medium businesses, as well as NFP are eligible for cashflow boosts to further assist in retaining employees. Tax-free cash flow boosts of $20,000 to $100,000 will be delivered to eligible businesses and organisations with aggregated annual turnover under $50 million. The Government has specifically acknowledged the increasing demand for NFP services during this crisis.

    In a series of two payments, each payment will be equivalent to the business’ withheld salary and wages, with a minimum of $10,000 and maximum of $50,000. The first cashflow boost is set to be available between March and July 2020; the second boost will be made to businesses who received the first and will be of an equal sum,  to be paid between June to September 2020. By splitting the support into two equal payments, the intention is to provide continued cash flow support over a longer period – increasing confidence and assisting businesses to maintain their operations.

    Temporary Relief for Financially Distressed Businesses

    Recognising the need for a safety net to allow businesses to resume operation post-crisis, this measure provides legislative support to financially distressed businesses. The temporary changes include reducing thresholds for creditors to issue statutory demands and initiate bankruptcy proceedings, increasing time available to respond to statutory demands, relieving directors from personal liability for trading while insolvent, and providing flexibility in the Corporations Act 2001 when dealing with unforeseen circumstances stemming from the COVID-19 crisis.

    The Australian Taxation Office is willing to tailor solutions for directors and owners currently suffering. These may include reductions in payments or deferrals and withholding enforcement actions.

    Changes to Asset Write-Off and Depreciation Deductions

    The threshold for instant asset write-off is increased from $30,000 to $150,000 and access is expanded to businesses with aggregated annual turnover less than $500 million (previously $50 million) until the end of the 2019-20 financial year (i.e. 30 June 2020).

    Up until the end of the 2020-21 financial years, depreciation deductions are accelerated for businesses under the same $500 million threshold. Upon installation of assets, 50% can be deduced with existing depreciation deduction rates to the balance. This measure is considered an investment incentive for businesses.

    Supporting Apprentices and Trainees

    Eligible employers may have 50% of an apprentice’s or trainee’s wage subsidised between 1 January 2020 and 30 September 2020. When businesses are unable to retain their apprentice or trainee, the subsidy can be provided to a new employer. As a part of this program, Australia’s National Apprentice Employment Network will provide further support in coordinating re-employment of workers affected by the COVID-19 crisis.

    Support for Affected Regions and Industries

    $1 billion of stimulus funds is reserved to support regions that are most impacted by the COVID-19 crisis. The purpose is to provide assistance during both the outbreak and the recovery.  Further, the Australian airline industry is receiving tax and fee relief, with an estimate value of $715 million.

    Support Flow of Credit

    Immediate Cash Flow Needs for SMEs

    The Government is providing guarantees of 50% for SME lenders to encourage new short-term unsecured loans for SMEs. By increasing lender’s willingness to provide credit, Australian businesses will be in a better position to secure loans and increase their cash flow.

    Quick and efficient access to credit for small business

    Small businesses will have more and faster access to credit as an exemption is provided to ‘responsible lending’ requirements.

    Reserve Bank of Australia Measures to Support Credit Flow

    The Reserve Bank of Australia (RBA) has made funding available for banks at a fixed interest rate of 0.25%. This measure will reinforce a lower cash rate, helping to reduce interest rates for borrowers. The RBA funding is incentivised to banks who expand their business lending, especially for new loans to SMEs. To complement the interest rate cut, the RBA is taking active steps to achieve a 0.25% yield on Australian Government securities

    Support for Non-ADI and smaller ADI lenders in the securitisation market

    The Australian Office of Financial Management (AOFM) is receiving $15 billion in funding to invest in structured finance markets. The target of this measure is smaller authorised deposit taking institutions (ADI) and non-ADI lenders.

    Australian Prudential Regulatory Authority (APRA) Supporting Lending

    APRA is temporarily changing their expectations of a banks’ capital ratios in order to support their lending.

    Supporting Individuals and Households

    JobSeeker Payment

    In response to a sudden and sharp increase in the number of unemployed Australians, a new streamlined processing of JobSeeker claims was introduced. JobSeeker is a pre-existing welfare payment available to eligible Australians while they are unemployed and in the active pursuit of gainful employment.

    An employee cannot be in simultaneous receipt of JobKeeper and JobSeeker payments.

    Changes to Other Income Support Payments

    Recipients of income support payments are eligible for an additional fortnightly payment of $550 for a temporary six-month period. At the same time, eligibility for the payments has been expanded to allow for more Australians to receive the income support, and the supplementary fortnightly payment.

    In addition to the ongoing payments, two separate $750 payments may be made to Australian income support recipients. The first payment was made on 31 March 2020, and the second payment is scheduled for 13 July 2020. The second payment is not available to recipients of the $550 fortnightly supplement. These stimulus injections are intended to increase confidence and domestic demand in the economy.

    Changes to Superannuation

    Australia’s superannuation program mandates wage contributions to a superfund in the purpose of supporting retirees and ensuring they have the financial means to survive and maintain quality of life. With the COVID-19 outbreak, two new measures have been introduced to allow Australian retirees to manage the impact of recent downturn on their superannuation and financial circumstances.

    The first measure is allowing individuals to withdraw up to $10,000 from their superannuation in 2019-20 and an additional $10,000 in the following financial year. This withdrawal will not be taxed, nor will it affect income testing for income support payments.

    The second measure is a temporary reduction of Superannuation drawdown requirements for retirees with account-base pensions. A reduction of 50% applies in both 2019-20 and 2020-21. This will lower the need to sell investment assets to fund minimum drawdown requirements.

    Reduction of Social Security Deeming Rates

    Both upper and lower social security rates were dropped by 0.5% on 12 March 2020. Another reduction has been announced, from 1 May 2020 the upper rate will be 2.25% and the lower 0.25%. This measure is in response to lowering interest rates and the reduction of savings income. Practically, this will mean an average increase of $105 in the Age Pension during the first year.

    Belgian residents working abroad, e.g. in Luxembourg, may have a company car registered in their country of employment. The Belgian regional tax administrations exercise checks to verify whether the user of the company car complies with regional vehicle tax rules allowing an exemption from registration of the car in Belgium and from Belgian vehicle taxes. Especially in the Walloon Region this has given rise to a lot of litigation in recent years, especially regarding Luxembourg workers residing in Belgium.

    Belgian vehicle registration rules stipulate that the user of the car must have on board of the car a copy of his employment contract as well as a document drawn up by the foreign employer showing that the latter had put the vehicle at the employee’s disposal. If the driver cannot produce these documents, he is supposed by the Walloon tax administration to have violated the legal obligation to register the car in Belgium and to pay Belgian vehicle taxes.

    The consequences are severe. In addition to the vehicle taxes, the driver must pay a hefty fine. Failing to pay these large amounts (often more than EUR 3,000.-) on site at the time of the road check, the authorities withhold the on-board documents of the car, which results in the immobilization of the car.

    The Walloon tax administration, initially, did not pay back the vehicle taxes even if it was proven afterwards that the conditions of the exemptions of registration in Belgium and Belgian vehicle taxes were met. At first, the tax administration claimed that the vehicle taxes remained due if the employee showed the required documents only afterwards to the competent authorities. The position of the Walloon tax administration was that the employee must be able to produce the required documents on the spot during the check to be exempted from registration and vehicle taxes in Belgium.

    In a recent reasoned order, the European Court of Justice (‘ECJ’) confirmed that this harsh position by the Walloon tax administration was in violation of the freedom of movement for workers. A reasoned order is issued by the ECJ a.o. where a question referred to the ECJ for a preliminary ruling is identical to a question on which the ECJ has previously ruled or where the answer to the question referred for a preliminary ruling admits of no reasonable doubt.

    In other words, the ECJ confirms that the requirement to have the abovementioned documents permanently on board of the vehicle to be exempted from Belgian registration and Belgian vehicle taxes is manifestly disproportionate and thus a violation of the freedom of movement for workers.

    From a practical perspective, this ruling confirms that an employee resident in Belgium but working in another member state does not have to pay the Belgian vehicle taxes (or is entitled to be paid back) if he demonstrates after the check that he met the conditions to be exempted from registration and vehicle taxes in Belgium.

    Anton Molchanov

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