Administrators of limited companies
In this post we will discuss the management body of commercial companies, focusing on limited companies (or SL) since almost all companies in Spain are SL. The management body is also known simply as management or as company directors.
Liability of the director of a limited company
According to article 209 of the Revised Text of the Capital Companies Act, the administration of a company is the body of the company responsible for the management and representation of a company, always acting with diligence and loyalty in the performance of the functions assigned to it.
In the case of limited companies, the position of administrator is unpaid and has an indefinite duration. However, the partners of a company may agree both that the position of administrator is remunerated and that the position has a specific duration, always stating this in the company’s articles of association.
The administration can be entrusted to both natural persons and legal persons or companies, but in the case that the administration falls to a legal person or a company, it will be necessary to designate the natural person who will carry out the administration, according to article 212 bis.
Types of directors of a limited company
The management of a limited company allows for several possibilities. There may be one administrator, or several (who can act jointly or severally), or a Board of Directors. Let us analyse each of these options.
Individual management: When the management falls to a single person
In this case, the administration is entrusted to a single person, who alone can perform all the functions typical of the administrative body.
What are joint administrators?
It consists of having two or more persons appointed as administrators, but it is necessary that all the administrators act jointly, so the signature of all the administrators is required for them to bind the company. This option has the advantage that it is very difficult for administrators to commit fraud against the company, but the great disadvantage is that the joint administrators are slower in carrying out their duties, so it is not usually the most practical solution.
What are joint administrators?
When there are several joint administrators, each one of them, individually, can carry out all the functions corresponding to the administration, without the need for more than one of the joint administrators to sign. This alternative is the most efficient for commercial and legal transactions.
What is a Board of Directors?
This type of management is somewhat more complex and normally used in companies of considerable size. In SLs it must be made up of between 3 and 12 members. It makes its decisions collectively, by majority, and it is common for it to be accompanied by the existence of a Chief Executive Officer.
It is advisable to consider using a Board of Directors in companies that have grown significantly and seek to adapt to their new size, but in other cases it is not a recommended system and it is better to opt for a sole administrator or for two or three joint or several administrators.
How are the administrators appointed in SL companies?
When an SL is created, a deed of incorporation of a limited company must be granted. In this deed of incorporation, the company’s statutes are incorporated, which are the rules of organisation and operation of the SL. In these statutes, either the specific type of administration chosen must be established, or it must be stated that several types of administration can be opted for and that the partners can change it later without modifying the company’s statutes. This latter option is the most common and the most advisable.
In the deed of incorporation of an SL, the persons who will be the administrators for the first time must always be appointed.
Subsequently, for the company to change to a new administrator, this change must be decided by the partners of the SL and must be formalised in a notarial public deed, with the appointment being expressly accepted. But this topic, the appointment and dismissal of administrators in companies, will be left for another blog.
The Position of Administrator and Registration in the Commercial Registry
The position of administrator, once accepted by them, must be registered in the Commercial Registry. This registration is mandatory, according to article 215 LSC, and must be carried out within 10 days from the acceptance. However, although the registration is mandatory, it is not constitutive. This means that from the moment of acceptance the administrator can exercise their position, even if they are not yet registered and, therefore, can represent the company in any type of act, including sale, as indicated by the Resolution of 3 January 2022, of the Directorate General of Legal Security and Public Faith.
We hope that this information about the role of the administrator of a limited company has been helpful to you. If you need more information or advice, do not hesitate to contact us by email at bcn@jlanotarios.com or write to us from the contact form. From JLA Notarios, notary Barcelona, we will be delighted to advise you!
We also offer you the opportunity to find out more, at the following link, about how we collaborate in the incorporation of new companies or about our notary for appointment and dismissal of administrators.
