DESCRIPTION OF TELEFÓNICAS ORDINARY SHARES
Our shares are governed by our bylaws (
estatutos
) and by Spanish law, namely, the Spanish Corporation Act (
Ley de Sociedades de
Capital
), approved by Royal Legislative Decree 1/2010 of July 2, as amended (the Spanish Corporation Act), Law 24/1988 of July 28 on the Securities Market, as amended (the Spanish Securities Market Act), and by
ancillary provisions further developing those pieces of legislation. Shareholders rights are principally governed by the Spanish Corporation Act and Telefónicas bylaws (
Estatutos Sociales
) and regulations on the general
shareholders meeting (
Reglamento de la Junta General de Accionistas
).
The Spanish Corporation Act was recently amended by
Law 31/2014 of December 3 to improve corporate governance (Law 31/2014). The main changes relate to the following two areas: general shareholders meetings and shareholders rights and the legal status of directors and
companies boards of directors. Law 31/2014 entered into force on December 24, 2014, although certain specific provisions affecting listed companies will not be effective until after the first general shareholders meeting held
by such companies in 2015. Other provisions of Law 31/2014 entered into force as from December 24, 2014 and, in the event of any conflict between those mandatory provisions and those in the companys bylaws, the former will prevail. Our
next general shareholders meeting, to be held on June 11 or June 12, 2015 (if the required quorum is not reached on June 11, 2015), is expected to deliberate and decide upon certain proposed amendments to our bylaws and regulations on
general shareholders meetings to bring them in line with the new provisions of Law 31/2014.
The following summary describes the
material considerations concerning the capital stock of Telefónica and briefly describes the material provisions of Telefónicas bylaws and relevant Spanish law. This summary does not include all the provisions of our bylaws nor
of the Spanish laws mentioned herein and is qualified in its entirety by reference to the detailed provisions thereof.
A copy of
Telefónicas bylaws has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part.
General
As of May 13, 2015, Telefónicas paid in share capital was 4,938,417,514, represented by a single class of
4,938,417,514 ordinary shares with a nominal value of 1.00 each. As of December 31, 2014, Telefónicas paid in share capital was 4,657,204,330, represented by a single class of 4,657,204,330 ordinary shares with a
nominal value of 1.00 each.
Our shareholders have delegated to the Board of Directors the authority to issue share capital up to
2,281,998,242.50 (equal to half of Telefónicas share capital on May 18, 2011, the date of the authorization). The Board of Directors is authorized to exclude preemptive rights, in whole or in part, pursuant to the applicable
provisions of the Spanish Corporation Act. The Boards authorization to issue new shares expires on May 18, 2016. Telefónicas Board has already utilized part of this authorization and, as of the date of this prospectus, it is
authorized to issue share capital up to 1,874,734,638.50 pursuant to this authorization. Our next general shareholders meeting, to be held on June 11 or June 12, 2015 (if the required quorum is not reached on June 11, 2015), is expected
to deliberate and decide upon the delegation to the Board of Directors, with express powers of substitution, for a period of five years, of the power to increase the share capital of Telefónica pursuant to the provisions of Section 297.1.b) of
the Spanish Corporation Act (which would allow the Board of Directors to issue share capital up to an amount equal to half of Telefónicas share capital on the date of the general shareholders meeting) and delegation of the power to
exclude the preemptive right of shareholders as provided in Section 506 of the Spanish Corporation Act.
Attendance and Voting at Shareholders
Meetings
We hold our ordinary general shareholders meeting during the first six months of each fiscal year on a date fixed by
the Board of Directors. Extraordinary general shareholders meetings may be called, from time to time,
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