We already know that the general meeting is competent in order to carry out the appointment of directors, as established by article 214 of the Spanish Companies Act (hereinafter referred to as the “SCA”).
When appointing a legal entity as a director, the latter must appoint just one natural person for the permanent exercise of the functions inherent to the position (as established in article 212 bis 1 of the SCA).
That said, given that neither article 212 bis of the SCA nor article 143 of the Commercial Registry Regulation (hereinafter referred to as the “CRR”) clarify which is the competent organ for appointing a natural person representative of a legal entity director, we must refer to doctrine in order to ascertain this.
The Resolution issued by the Directorate General of Registries and Notaries (now known as the General Directorate for Legal Security and Public Trust) of 11th December 2019 is enlightening.
It dealt with a case wherein the natural person representative of a sole partner company designated as a director was dismissed pursuant to a public deed granted by a person with powers of attorney. The public notary who granted the public deed expressed that the faculties of the person granting the public deed arose from the deed of power of attorney authorised by the same notary public himself, and the powers of attorney were sufficient for granting the public deed of dismissal and appointment of a natural person for exercising the post of director.
The Commercial Registry rejected the registration of the appointment of the natural person as the agreement of the management organ of the company appointed as director was not on record.
The notary public sustained that the company designated as the director was able to appoint a natural person through the figure of voluntary or legal representation, and in the former scenario, through any person with powers of attorney and the sufficient faculties to do so.
The Directorate General partially upheld the appeal concerning the defect regarding the lack of a resolution passed by the board of directors of the company appointed as director, based upon the following arguments:
- Established doctrine.
Since the passing of the Resolution of 11th March 1991 until 18th May 2012, doctrine has been established in a three-fold sense:
a) It falls upon the legal entity designated as a director -and not upon the administered company- to appoint the natural person who exercises the functions inherent to the post;
b) Due to practical and operative requirements the appointed natural person must be just one person;
c) The appointed natural person will act in the name of and on the behalf of the legal entity director permanently for the stable exercise of the functions inherent to the post of director.
2.- Necessary registration. Form.
a) The designation of the representative natural person and that of the legal entity director must be registered on the company records held at the commercial registry.
b) If the appointed person belongs to the management body of the legal entity director, the filing of the certification of the agreement issued by the competent organ of the legal entity director will be sufficient.
c) If neither of the above are the case, the appointment must be recorded in a public deed of power of attorney.
3.- Competence for carrying out the appointment of the natural person.
The appointment of the natural person is not an internal corporate act of the company, but instead it is a decision which exclusively corresponds to the management body of the legal entity appointed as director and by nature must be either a power of attorney or a delegation of faculties.
For this reason, either a public document or a certification of the resolution conferring powers issued by the competent body of the legal person appointed as director will be required for the formalisation thereof.
According to the Resolution of 22nd September 2010, the appointment of a natural person through a representative holding powers of attorney of the company appointed director cannot be refused if the notary public has indicated that the public deed of power of attorney has been shown to him and the notary has found the representative powers to be sufficient.
Another matter altogether is whether, in the event that it is the general meeting which appoints the natural person, this defect of an incompetent body can be remedied when the sole director of the legal person director formalises in a public deed the resolution to appoint the natural person passed by the meeting, on the understanding that it is consented to (as upheld in the Resolution of 10th July 2013).
Mireia Bosch
Vilá Abogados
For more information, please contact:
13th October 2023
