Reform of the Spanish Companies Act — Managing D&O Risks to the Board and Shareholders

Global companies and organizations that do business in Spain continue to face new challenges from modifications to the Spanish Companies Act published in December 2014. Designed to improve corporate governance and transparency, the reform has also brought new liability questions to the forefront.

“The Changing Landscape for Spanish D&O Liability: The Reform of the Spanish Companies Act and the Impact on Board and Shareholder Liability,” prepared by Ann Longmore, a managing director in FINPRO’s D&O Practice, and Fernando Claro-Lopez, PEMA Regional Leader at Marsh, outlines the key discussion points for shareholders and boards of directors regarding regulations, claims, and changes in how boards function.

Shareholders will now have greater control and enhanced participation in the way Spanish companies are run. Minority shareholders, in particular, have better protection under a new regimen for corporate agreements.

Boards, similarly, will be able to act under the guidance of more precise definitions, revisions related to breaches of duty of loyalty, as well as what cannot be delegated. Boards at listed companies will also have more power and direction over the amount of share capital needed to exercise rights of minority shareholders, for example.

“The Changing Landscape for Spanish D&O Liability: The Reform of the Spanish Companies Act and the Impact on Board and Shareholder Liability” highlights the many changes taking place in Spain’s business community.