Public Limited Company & Cooperative Society Essentials

Public Limited Company (Corporation)

A Public Limited Company (PLC), often referred to as a Corporation, is a legal entity where capital is divided into shares, which can be registered or bearer.

Articles of Association and Capital Requirements

Its written Articles of Association (or Bylaws) govern the company's operations, covering aspects not explicitly mandated by law. The minimum capital, unless otherwise specified by law, is 60,000 euros. Of this, 25% must be disbursed at the time of the company's constitution, with the remaining amounts payable within a maximum period of five years.

Shareholder Rights

Shares represent an aliquot part of the company's capital and confer a series of fundamental rights upon their holders:

• Right to vote in General Meetings.
• Right to receive dividends.
• Pre-emptive rights (for new share issues).
• Right to participate in liquidation proceeds.
• Right to information.

Governing Bodies of the Company

The primary governing bodies of a Public Limited Company are:

The General Meeting of Shareholders

This is the supreme assembly where shareholders deliberate and decide on company affairs. For it to be validly constituted, it must be duly convened and achieve the required quorum of attendance.

Types of General Shareholder Meetings:

• Ordinary General Meeting (OGM): Convened within the first six months of the financial year to discuss agenda items, review and approve the previous year's accounts, assess management, and decide on the allocation of profits or losses.
• Extraordinary General Meeting (EGM): Any meeting that does not meet the criteria of an Ordinary General Meeting. Several EGMs may be held per year as needed for specific, urgent matters.
• Universal General Meeting: Validly constituted when the entire share capital is present or represented, and all attendees unanimously agree to its celebration and the agenda items to be discussed.

Administrators (Directors)

These individuals perform the functions of management and representation of the company. They are elected by the General Meeting of Shareholders. This body can take several forms:

• Sole Administrator: A single manager.
• Joint Administrators: Two or more administrators acting jointly.
• Board of Directors: Composed of three or more members, elected by the General Meeting by majority vote. Minority shareholders typically have the right to proportional representation.

Causes for Dissolution and Liquidation

The legal causes for the dissolution and subsequent liquidation of a corporation are established by law and include:

• By agreement of the General Meeting, requiring the same quorum as for capital increases, decreases, or other amendments to the Articles of Association.
• Expiration of the term established in the Articles of Association.
• Achievement of the company's purpose, manifest inability to achieve it, or cessation of corporate bodies making its operation impossible.
• Reduction of net worth to less than half of the share capital, unless the capital is increased or reduced to a sufficient amount.
• Due to a full merger or division of the company.
• By reducing the capital below the legal minimum.
• Any other cause established in the Articles of Association.

Cooperative Societies

Cooperative societies are autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Capital Structure and Requirements

The cooperative's Articles of Association (Bylaws) establish the minimum capital required for its formation and operation. For instance, in the Community of Madrid, the Cooperatives Act sets a minimum capital of 150,000 euros.

Capital is divided into contributions from named members and, where applicable, other categories of partners. While the capital must be fully subscribed at the time of constitution, in the Community of Madrid, at least 25% must be paid up.

Member Contribution Limits (Community of Madrid)

• Generally, a member's contribution is limited to 1/3 of the total equity.
• In the Community of Madrid, the limit per member is set at 45% of total contributions to social capital.
• Furthermore, the sum of contributions from any single partner, or other specified membership categories, shall not exceed 50% of the total social capital contributions.

Reserve Funds

Cooperative societies have an obligation to establish various Reserve Funds to ensure financial stability and support their long-term objectives.