Legal Status - JANUARY 2022
Transparency in breach reporting in companies
The deadline for member states to transpose Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law, hereinafter the “Whistleblower Directive” passed on December 17th. The Ministry of Justice opened a public consultation period on the transposition of the Whistleblower Directive in January 2021, but no preliminary draft has been published. Therefore, this regulation has not been approved before the end of 2021 despite the government’s forecasts.
Scope of application
The Whistleblower Directive establishes common rules for the protection of whistleblowers on breaches of EU law that are harmful to the public interest. This Directive is applicable when reporting breaches of EU law in one of the following areas i) public procurement; ii) financial services, products and markets, and prevention of money laundering and terrorist financing; iii) product safety and compliance; iv) transport safety; v) protection of the environment; vi) radiation protection and nuclear safety; vii) food and feed safety, animal health and welfare; viii) public health; ix) consumer protection; x) protection of privacy and personal data, and security of networks and information systems.
Internal channel for whistleblowers
According to the Whistleblower Directive, public and private entities with more than 50 employees are obliged to establish an effective, confidential and secure internal whistleblowing channel within their organisation where employees, customers or suppliers can report potential regulatory breaches by the entities.
The whistleblowing proceedings include a series of stages. The first one consists of the report of the breach, which can be done verbally or in writing. Then, the company department in charge of investigating the reported breach must diligently follow up on the matter and provide feedback within a maximum period of 3 months, as established in Article 9 of the Whistleblower Directive.
External whistleblowing channel
However, and without prejudice to the above, the Whistleblower Directive also establishes an obligation for Member States to provide external reporting channels that are independent and autonomous which will have to receive reports, give feedback and follow up on them. It also obliges Member States’ competent authorities to designate staff members responsible for handling reports.
Measures to protect whistleblowers and persons affected by whistleblowing
The Whistleblower Directive aims to encourage whistleblowing by those who are in the best position to know about illegal or fraudulent activities taking place in companies, including employees, directors and managers.
In order to benefit from the protections of the Whistleblower Directive, the whistleblower must report on matters that fall within its scope. Furthermore, the whistleblower must have reasonable grounds to believe at the time of the report that the information reported was true and must have used internal and/or external whistleblowing channels, i.e. the competent authorities, or have made a public disclosure of the relevant information in cases where they consider that the necessary measures have not been taken within the time limit set by the Whistleblower Directive.
The Whistleblower Directive contains a non-exhaustive list of measures that may constitute threats or retaliation against whistleblowers. For instance, suspension, lay-off or transfer of duties are included. To combat such measures, the Whistleblower Directive provides supportive measures for whistleblowers, such as comprehensive and independent information and advice on the protection provided by the legal system, effective assistance from competent authorities and, where appropriate, legal assistance in proceedings in which the whistleblower may be involved.
The Whistleblower Directive also obliges member states to incorporate a number of measures to protect the whistleblower from retaliation, including exempting them from liability for breaching any restrictions on disclosure of information or for acquiring or accessing the information communicated or publicly disclosed unless this acquisition constitutes a criminal offence in itself.
The Whistleblower Directive aims to harmonise legislation at the European level on the protection of individuals who report breaches of EU law. Member States had until 17 December 2021 to transpose the Whistleblower Directive. However, the Spanish legislature has not commented on this matter and no dates have been provided regarding its transposition to national legislation.
The Spanish legislature could extend the scope of application of the Whistleblower Directive, extending it from European Union law to Spanish law, so that whistleblowing channels can be used to report infringements of these rights. The legislator will have to decide on the protection of the identity of the whistleblower because, despite the guarantee of confidentiality foreseen in the Whistleblower Directive, Member States can establish the obligation for reports to be made anonymously accomplishing an optimal protection for wistleblowers.
To date, we have not learned of any rulings that have taken a position on whether or not the “rebus sic stantibus” clause should be
Corporate action for liability of the administrators
In a previous article we analyzed the different actions that can be brought against a company administrator for prejudicial actions: the individual action, which can be brought by the partners or creditors on their own behalf due to personal injury or damage; and, the corporate action, which can be brought by the partners for damage to the company.
Recently, the Supreme Court issued judgment No. 889/2021 of 21 December, by which it provides an in-depth analysis of the characteristics and requirements for a corporate action.
In this specific case, some partners sued the administrators because they considered that they had damaged the company’s interests, having transferred to their accounts amounts of approximately €350,000 for one administrator and €690,000 for another over a 3-year period, as well as having indebted the company with a bank loan of €600,000 to cover those costs.
The Supreme Court, like the Provincial Court, rejects the action based on the following arguments:
That there were shareholders' agreements approved at a general shareholders' meeting approving the remuneration payment to the shareholders working for the company, and the administrators were shareholders who actually worked for the company (it was a school, and they were teachers).
That the plaintiff partners should have challenged those shareholders' agreements when they were approved instead of filing a social action for liability years later.
That the plaintiff partners should bring an individual liability action if they consider that their personal rights as minority partners were adversely affected instead of a corporate action because there were approved partner agreements.
- That obtaining a bank loan is a usual commercial operation for any company and must be presumed to be correct, and that in this specific case said loan was used to pay taxes.
The judgment also makes an interesting analysis of the "corporate interest" concept, assessing that it consists mainly of the interest of the partners as a whole, essentially economic, but that it also includes an interest of the company itself, which is materialized in the achievement of its corporate purpose.
On the other hand, the judgment also refers to the requirement of good faith by the plaintiffs, indicating that this requirement does not apply in this case because the plaintiff partners had also received payments from the company and had not offered to repay them, i.e., they were participants in the acts denounced. However, the court states that this does not prevent it from assessing the merits of the case and from considering that the objective requirements of the social action for liability were not met.
In conclusion, the judgment considers that there can be no corporate action when the actions of the administrators are legitimized by a prior shareholders’ agreement, and that if the plaintiff shareholder claims because he considers that his own interests have been adversely affected, then he must file an individual action instead of a corporate action.
Consequently, when intending to sue the administrators, it is essential to thoroughly analyze and assess the circumstances of each case to determine whether such claim should be brought as an individual action or as a corporate action, beyond other possible relevant or necessary legal actions such challenging a shareholders' meeting resolution.
Approval of the PERTE for Renewable Energies, Hydrogen and Energy Storage, expected to mobilize 16,300 million euros and generate 280,000 jobs
Following the proposal of the Ministry of Ecological Transition and Demographic Challenge (MITECO), on December 14 the Council of Ministers approved the Proyecto Estratégico para la Recuperación y Transformación Económica (PERTE) de Energías Renovables, Hidrógeno Renovable y Almacenamiento (ERHA) [Strategic Project for the Recovery and Transformation of the Economy (PERTE) of Renewable Energies, Renewable Hydrogen and Energy Storage (ERHA)] to develop technology, knowledge, industrial capacities and new business models to strengthen Spain’s position in the field of clean energies.
1. What are PERTE?
The Strategic Projects for the Recovery and Transformation of the Economy (PERTE) are projects within the framework of the Recovery, Transformation and Resilience Plan (PRTR) with a great capacity for economic growth, employment and competitiveness of the Spanish economy, with a high component of public-private collaboration and involving different administrations.
They are a new figure meant to become permanent, conceived as a mechanism to promote and coordinate high-priority projects, especially complex or those with a clear market failure, significant externality or insufficient initiative or investment capacity on the part of the private sector. Its objective is to contribute to fast and efficient management of funds and to reinforce those projects that clearly contribute to the transformation of the Spanish economy.
The PERTE which have been approved so far include the PERTE for the development of electric and connected vehicles (July 13, 2021), PERTE for cutting-edge health (November 30, 2021) and the one we refer to herein, the PERTE for renewable energies, renewable hydrogen and energy storage (December 14, 2021).
2. What is the PERTE for Renewable energies, renewable hydrogen and storage?
The PERTE for renewable energies, renewable hydrogen and energy storage is a set of measures with which the Spanish Government intends to support those areas associated with the energy transition in which Spain is well positioned, such as renewable energies, power electronics, energy storage or renewable hydrogen, and to reinforce those still in development.
In order to achieve this, the following actions are being implemented:
i. 25 transforming measures aimed at the development of technology, industrial capabilities, new business models and their implementation in the country's productive system.
ii. The NextGen Energy seal to monitor projects related to the same strategic objective that receive different types of aid.
iii. 17 accompanying measures to promote the development of PERTE, such as training and capacity building to enable industries to adapt to new technologies and take advantage of job creation opportunities.
iv. A system for monitoring, evaluating and analyzing the impact on the energy transition value chain in Spain.
Furthermore, the instruments and measures of the referred PERTE for renewable energies, renewable hydrogen and energy storage foresee to:
a) mobilize a total investment of more than 16,300 million euros between public and private contributions,
b) generate more than 280,000 jobs, including direct, indirect and induced jobs in the rest of the economy,
c) maximize economic, industrial, labor, innovation and citizen and SME involvement opportunities.
3. When and how will the PERTE funds for renewable energies, renewable hydrogen and energy storage be available?
According to government sources, the PERTE ERHA aid lines will be available between 2022 and 2023, although the beneficiary projects will be able to be executed until 2026. In fact, some of the programs are already underway, as four calls for proposals worth more than 500 million euros have just passed the public information phase.
These programs are linked to the renewable hydrogen value chain, pioneering green hydrogen projects, R&D projects in energy storage and pilot projects for energy communities. The rest of the lines of action will be specified in the coming months.
In addition to this, and in general, the PERTE grants will be awarded through competitive calls for proposals to select the best projects. The calls will share common selection criteria that will take into account the participation of SMEs, the impact on territorial cohesion, just transition, job creation and innovation.
Priority will also be given to short-term investment that is compatible with the achievement of medium and long-term goals.
The budget for each of the actions will be approximately as follows:
The PERTE on Renewable Energies, Hydrogen and Energy Storage will mobilize a substantial amount of economic resources and generate hundreds of thousands of jobs, reaffirming the importance of clean energies and the commitment to the environment on the part of the Spanish state and the European Union.
Other PERTEs are expected to be published in the areas of aerospace, the agri-food chain and the Spanish language. However, the most ambitious and the one that will have the greatest impact on the Spanish economy will be the PERTE on Renewable Energies, Hydrogen and Energy Storage.
Negotiation of the Equality Plan in companies without employees' legal representatives: Is it possible to set up an Ad Hoc employee committee?
The Supreme Court, (Judgment of 26 January 2021, rec. 50/2020), ruled out the possibility of negotiating the Equality Plan through an ad hoc committee of employees in companies that do not have Workers' legal representatives, thus ratifying the criterion maintained by the National High Court (Judgment of 10 December 2019, rec. 163/2019).
In this particular case, a company signed the Equality Plan with a commission of five employees appointed unilaterally by the company. The Supreme Court ruled that this committee cannot be considered to be an ad hoc committee. Specifically:
The idea that the negotiation of equality plans can be entrusted to an ad hoc committee is ruled out, since the '...Equality Plan must have the agreement of the company and the Workers' legal representatives which does not allow it to be replaced by an agreement between the company and a committee of workers created ad hoc for its negotiation’.
Moreover, Article 5.3 of Royal Decree 901/2020 of 13 October, which regulates equality plans and their registration and amends Royal Decree 713/2010 of 28 May on the registration and deposit of collective bargaining agreements does not explicitly enable this option. In this regard, the article mentioned previously establishes for these cases the employees’ representation should be made up of the most representative trade unions and the trade unions representative of the sector to which the company belongs, with a maximum of six members. This trade union committee shall be composed of those organisations that respond to the company’s call within ten days.
The Court argues that the ad hoc committee is an exceptional negotiating formula enabled by the legislator when there is no employees' legal representatives for certain modalities of collective bargaining on internal and external flexibility, for example, in consultation periods on geographical mobility (art. 40 ET), substantial collective modifications (art. 41 ET), contract suspensions and reductions in working hours (art. 47 ET), collective dismissals (art. 51 ET) and non-application of agreements (art. 82.3 ET).
Without prejudice to the above, it is worth analysing what happens in those cases in which, in addition to there being no employees' legal representatives, no trade union responds within the period of 10-day to the company’s call, given that the regulations do not sate what happens if the company has not received this response.
In this case the company will have to exhaust all the possibilities foreseen, once again requesting the legitimate trade unions to be part of the negotiating committee of the plan. Needless to say, the non-response of the legitimate trade union(s) does not render ineffective the company’s obligation to sign up to the Equality Plan.
In the event that the company does not eventually receive a response, it will have to adopt the Equality Plan unilaterally. In such a case, it is highly advisable to obtain input from the company’s staff insofar as it can speed up the implementation of the Plan.
Article 47 of Organic Law 3/2007, of 22 March, for the effective equality of women and men establishes the importance of the transparency of the process of implementing the Equality Plan, since “access to information on the content of the equality plans and the achievement of their objectives is guaranteed to the workers' legal representatives or, in their absence, to the employees themselves”.
Therefore, in view of the increase in the number of companies obliged to draw up an Equality Plan as from March 7, 2022 (companies with more than 50 employees), it is important to note that it is not feasible to replace the employees’ unit or union representatives with an ad hoc committee, and that the Equality Plans must be negotiated through the most representative trade unions in the sector in which the company operates.