On 29 May 2024, the Spanish Supreme Court ruled (Judgement 762/2024) on a matter of great importance for the shareholders of limited companies, relating to their right to receive information prior to a General Shareholders Meeting.

In its ruling, the Court discussed the possibility of challenging company resolutions adopted at these Meetings when a shareholder had requested certain information or documentation prior to the Meeting but had not received it, or had received only some of the information or documentation requested.

In its analysis, the Judgement alludes to the application of the general regulations on the right to be informed set out in Article 196 of the Spanish Companies Act (“LSC”), which establishes that:

• “Shareholders may request, either in writing prior to the holding of the General Meeting or verbally during the course of the Meeting itself, any documentation they believe to be appropriate in relation to the items included on the agenda.
• The administrative body will be obliged to provide the information in question, either verbally or in writing, except in cases in which the said body believes that revealing that information will be prejudicial to the company’s interests. In any case, the request may not be denied when it is made by shareholders who represent at least 25% of the company’s share capital.”

This is in turn further supplemented by Article 272 of the LSC, which relates to the approval of the accounts and establishes that:

• “Once a General Meeting has been convened, any shareholder may obtain the documents that are to be submitted for approval of the annual accounts, immediately and free of charge.
• Unless otherwise provided for in the articles of association, during this same period, shareholders who represent at least 5% of the share capital may examine these documents at the company’s registered office, either personally or together with an expert accountant.”

Taking all of the above into account, the Judgement indicates that a challenge to the company resolutions affected would not be justified by just any infringement of these rules, since, under the terms of Article 204.3.b) of the LSC, a challenge would not be admissible when the information provided is incorrect or insufficient, unless the information in question is considered essential for the reasonable exercise of a right to vote or any other right to participate afforded to an ordinary shareholder or partner.

Thus, the Judgement establishes doctrine regarding which information is deemed to be essential, it being understood that this is information that is “indispensable” and that the partner or shareholder would have to know in order to be able to deliberate and vote, as opposed to information that is deemed necessary, i.e. “reasonably useful or relevant”, for the purposes of affecting the shareholder’s behaviour.

As regards the case analysed in this Judgement, this involved the challenging of company resolutions by a shareholder whose shares amounted to 20% of the company’s share capital and who had requested a list of documents, before an Ordinary General Meeting at which the annual accounts were to be approved, having also gone in person to the company’s offices to examine these documents.

Although these documents were not supplied as such (specifically documents relating to the list of sales made during one of the financial years and the salaries of each of the employees for the same financial year), the shareholder was given certain documentation that contained the information that had been requested and was most relevant in this regard, a fact which, in the absence of any evidence to the contrary, the Court had deemed sufficient for the shareholder to be able to exercise his right to vote. It therefore did not find that the failure to provide the specific documents requested amounted to an infringement of the right to essential information that could have provided grounds for a challenge to the company resolutions adopted.

This Supreme Court Judgement reinforces the need for balance between the protection of the right of shareholders to receive information and the stability of a company’s management, consequently ruling that information that is not provided to a shareholder may be considered useful or relevant with regard to the protection of his/her rights but nevertheless not essential for the exercise of his/her right to vote, and thus would not allow a challenge to be made on this basis.