In the Official State Gazette of the 9th of August 2022, the Resolution of the Directorate General of Legal Security and Public Trust – GDLSPT (Dirección General de Seguridad Jurídica y Fe Pública – DGSJFP) of the 27th of July 2022, was published, in relation to the refusal of the registrar of the commercial registry of Mahón to register a deed containing the articles of association of a limited liability company (LLC.).
In this case, the articles of association of a limited liability company established that the position of director “shall be remunerated through fixed remuneration, which is to be set by the Assembly of Partners.”
The registrar rejected the registration in consideration of the fact that the remuneration structure of the management body remained undetermined and, therefore, was in violation of article 23 e) of the Spanish Companies’ Act – SCA (Ley de Sociedades de Capital – LSC).
An appeal was filed against this decision, alleging the following:
The purpose of company bylaws is not to establish the quantity nor the items of remuneration, but rather that, through statutory reserve, the company resorts to the Assembly of Partners to set the quantity and items of remuneration, a system which guarantees the rights of partners and members of the management body.
The Directorate General rejected the appeal and confirmed the registrar´s decision for the following reasons:
With regards to the issue of the remuneration structure of directors, it must be clearly determined in the company bylaws whether said structure includes the benefits of (i) a share in the company´s profits, within the legally-established limits; (ii) allowances; (iii) a monthly or yearly salary; (iv) a life insurance plan; (v) a private pension plan; (vi) access to in-kind company benefits; (vii) delivery of membership interests in the company, or option rights to those membership interests; (viii) or whichever other structure the company wishes to establish.
Since the company bylaws limit the remuneration of the position of director to be established by the general meeting of partners for each fiscal year, it is evident that the company is leaving the concrete remuneration structure of directors to the discretion of this body, and is thereby lacking in the security that said structure is assumed to provide for both current and future partners of the company, as well as the director him/herself, whose remuneration would depend on the concrete majorities that are formed within the general meeting.
As a consequence, a mere reference to the future agreement of a partners´ meeting is not sufficient to consider that the cut-and-dry demands of the SCA have been met.
Vilá Abogados
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2nd September 2022
