General Shareholders’ Meeting

1. The shareholders acting at a General Shareholders’ Meeting constitute the

sovereign
Decision-making body of the Company in those matters within their power

2. Pursuant to the provisions of the Bylaws, the shareholders at a General

Shareholders’ meeting may adopt resolutions on any matter pertaining to
the Company

Following powers being specifically reserved to them:

I. Approval of Rules and Regulations for the General Shareholders’ Meeting

that,
Subject to the provisions of Law and the Bylaws, shall govern the call,
organization,
Information about, attendance at and holding of the General Shareholders’
Meeting, as well as the exercise of voting rights on the occasion of the call
and
holding of such Meetings.

II. Appointment and removal of Members of the Board of Directors, as well as

ratification or revocation of interim appointments of such Directors by the
Board itself, and examination and approval of their performance and
exemption of the Directors from the legal prohibitions regarding conflicts of
interest when the Law Necessarily assigns such power to the shareholders at
the General Shareholders’ meeting.
III. Appointment and removal of the External Auditor and Liquidators.
IV. Commencement of claims for liability against Members of the Board of
Directors,
Liquidators or the External Auditor.

V. Approval, if appropriate, of the annual accounts and the corporate

management and of resolutions on the allocation of earnings, as well as
approval, also if Appropriate, of the consolidated annual accounts.

VI. Resolutions on the issuance of debentures or other fixed-income

securities that are Convertible into shares of the Company, any capital
increase or decrease, the Transformation, merger or split-off, the overall
assignment of assets and liabilities, the relocation of the registered office
abroad and the dissolution of the Company and, in general, any amendment
to the Company’s Bylaws, unless the Law assigns power to the directors
regarding any of the foregoing matters.

VII. Authorizing the Board of Directors to increase the capital stock, pursuant
to the Provisions of the Spanish Capital Corporations Law.

VIII. Conferral upon the Board of Directors of such powers as they may deem
advisable For unforeseen events.

IX. Authorizing the acquisition of the Company’s own stock.

X. Deciding on the exclusion or limitation of pre-emptive rights, without

prejudice to the possibility of delegating this power to the directors as
provided by law.

XI. Deciding upon matters submitted to the shareholders at the General

Shareholders’ meeting by resolution of the Board of Directors.

XII. Approving the director remuneration policy as provided by Law and

deciding on the Application of consistent compensation systems for the
delivery of shares or rights Thereto, as well as any other compensation
system referencing the value of the Shares, when the beneficiaries of such
compensation systems are directors of the Bank.

XIII. Approving the transfer to subsidiaries of essential activities until that

time carried out by the Company itself, though it may retain full ownership
thereof.

XIV. Approving the acquisition, disposition or contribution of essential

operating assets to another company.

XV. Resolutions approving transactions that would have an effect equivalent

to the Liquidation of the Company.

XVI. Deciding or voting on any other matter assigned under the law or the
Bylaws. The General Shareholders’ Meeting may be ordinary or extraordinary.
The Ordinary General Shareholders’ Meeting, which shall be previously called
for such Purpose, must be held within the first six (6) months of each fiscal
year in order for the Shareholders to review corporate management, approve
financial statements from the prior Fiscal year, if appropriate, and resolve
upon the allocation of profits or losses from such fiscal Year, as well as to
approve, if appropriate, the consolidated accounts, without prejudice to Their
competence to deliberate and resolve on any other matter included in the
agenda.

Declaration and payment of Dividend

Definition:

Section 2(35) “dividend” includes any interim dividend.

Important points relating to dividend:

 It is a distribution of profits

 Final dividend is declared and approved by shareholders (by OR at AGM) on

recommendation of Board

 The rate of dividend declared by SH shall not exceed the amount

recommended by BOD

 Dividend % is a proportion of nominal value or face value

Types of dividend:

Classification based on time

Particulars Interim Dividend Final Dividend

Announcement Announced and declared Recommended by BoD and
by SH BOD at any time declared by Shareholders at the
During the FY or from AGM of the co.
closure of FY till the AGM

Provision in AOA Declared only when the Does not require any specific
AOA permits the Provision in the articles
Declaration.

Source Out of profits before final ------

adoption of accounts
 Sources for interim
dividend = Surplus in PL
or CY

Profit or Prior Profits

Ratification Shall be ratified at the

AGM by the members Not applicable

Rate of Dividend If the company has The rate recommended by the

incurred loss during the Board
CY upto
Preceding quarter Cannot be increased by the
members
 dividend not to be
declared at a rate higher

 than Avg rate of

dividend declared by Co

 during the immediately

preceding 3 FYs.

Revocation Can be revoked with

consent of ALL Once declared – cannot be
shareholders revoked.

The Dividend shall be deposited in a separate A/c of a scheduled bank within

5 days from the date of declaration

Section 123: Declaration of Dividend

(1)Source: Dividend shall be declared or paid by a company for any FY out

of:

1. Can capital reserve be used for payment of dividend? – No! Only free
reserves can be used for dividend
 2. Carried over previous losses and depreciation not provided in PY has to
be set off against CY profits

Before declaration of dividend

3. Capital profits are not earned in normal course of biz. Hence, not
available for distribution as dividend
4. Is it okay if a company decides not to transfer any amount to reserves
before dividend? – Yes! Whether Or not to transfer and what % to be trf
to reserve is left to the discretion of the company.

Section 124: Unpaid Dividend Account

(1)Where a dividend is declared but not paid or claimed within 30

days from the date of declaration,

 the company shall, within 7 days from the expiry of the said 30 days,
Transfer the total unpaid/unclaimed amount of dividend to a special account
(with scheduled bank) called The Unpaid Dividend Account (UDA)

Preparing of Statement of the Unpaid Dividend

 Within 90 days of transferring any amount to the Unpaid Dividend Account

 prepare a statement containing the following:

 and place it on website and on any other website approved by CG for this
purpose.

Payment of Interest on default

If default is made in transferring the total amount u/ss (1) to UDA, company
shall:

 Pay interest @12% p.a. from the date of such default

 Interest accruing on such amount shall ensure to benefit of members of the

co. in proportion to amt. Remaining unpaid to them

 Furnish details of shares and unpaid dividend in Form IEPF 3 within 30 days
from end of FY.
Claimant to apply for payment of Claimed Amount apply to the Co concerned
for payment of the money claimed

Transfer of Unclaimed or unpaid amount to Investor Education and Protection

Fund (IEPF)

If remains unpaid or unclaimed for 7 years from the date of such transfer

It shall be transferred by the company along with interest to the IEPF

Prevention of oppression and mismanagement

The Companies Act, 2013 in India has provisions to prevent oppression and
mismanagement in companies:

Section 241: Allows members of a company to apply to the National

Company Law Tribunal (NCLT) if they believe the company’s affairs are being
conducted unfairly or against their interests.

Section 244(1): Allows members to apply to the NCLT.

Section 245: Allows members or depositors to file applications if they

perceive prejudicial conduct in a company’s management.

NCLT can enforce rules on the company’s future operations, transfer shares,
dismiss management personnel, and impose fines. The punishment for a
company that does not comply with the law is a fine of Rs. 1 lakh to Rs. 25
lakh. An officer in default may be liable for a fine of Rs. 25,000 to Rs. 1 lakh
and may also be imprisoned for up to 6 months.

The principle of majority rule is the common norm in corporate democracy,

but it can overshadow minority rights. The Companies Act, 2013 aims to
balance the interests of minority shareholders with the effective control of
the company.