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The decision of the General Directorate of Registries and Notaries (Dirección General de Registros y Notariado  – “DGRN”) of 20th September 2019 ruled upon the need for the acceptance of the power of attorney granted to a natural person by the director of a company, which is a legal entity, for registration at the Commercial Registry.

In summary, the facts of the matter are, a legal entity, which is the director of a company, grants express power of attorney for the permanent exercise of the position of director, to a natural person; however, the registrar refuses registration, insofar as she understands that acceptance by the natural person is necessary in order for registration as a representative to take place.

For a better understanding of the premise  we must clarify that there are differences in the types of representation, thus it can be voluntary or legal.

The general rule in Spanish law is that powers of attorney, insofar as voluntary representation is concerned, given that they are unilateral acts granted by the appointing party, there is no need for express acceptance by the representative; and as a general rule, neither are they object  of obligatory registration at the Commercial Registry, although this is debatable since the legal  system would gain more security if the acts relative to powers of attorney (granting, revocation, etc.) were recorded with a registry which provided them with publicity. On the other hand, organic representation, that is to say representation exercised by a legal entity in order for it to operate in legal transactions, requires registration of the acceptance of the office with the Commercial Registry.

We must also bear in mind that the office of director may be held both by a natural person and a legal entity. Pursuant to article 212 of the Spanish Capital Companies Act, when a director is a legal entity,  the designation of just one natural person for the permanent exercise of the functions  corresponding to the office of director is required. Along these lines, article 236.5 states that this natural person appointed to exercise the functions of director must meet the legal requirements established for directors, and are submitted to the same duties (loyalty, etc.) and they must respond jointly and severally with the legal entity director.

According to the General Directorate, in this case a special situation exists regarding the representation exercised by the natural person: although they are not an organic representative (director) of the director company, the effects of this representation are being equated with the organic representation, although at the time of its inception, it is a matter of a voluntary power of attorney relationship. This is due to the fact that this natural person would be exercising the powers of the administrative body by virtue of the power granted to him.

The problem which arises in such a situation is the lack of a legal or regulatory provision which expressly requires the acceptance of the office by a natural person appointed as a representative of a legal entity director in order for registration to take place; such registration is required, among other reasons, due to the special responsibility of the directors derived from the exercise of their functions.

However, the  General Directorate of Registries and Notaries, upholding the registrars decision, considers that it may be understood that the set of provisions of articles 212bis, 215 and 236 (which are those which require prior acceptance for the registration of the directors of the legal entities), and given the special responsibility of the natural person appointed by the legal entity director to exercise the functions of director, the prior acceptance of the appointment is required for the registration of this natural person as representative.

The premise analysed does not however comment regarding cases wherein the natural person granted powers of attorney is the director itself of the legal entity director and not just a mere representative of the legal entity director. In such cases, if we look at the reasoning of the special responsibility that one would have when becoming a representative of another company (the administered company) different from the responsibility and relationship with the company of which it is director, it seems that said acceptance would be equally required.

 

 

For more information, please contact:

Jaime Madero

va@vila.es

 

Barcelona, 5th December2019

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