The resolution of the General Directorate of Legal Security and Public Trust – GDLSPT (Dirección General de Seguridad Jurídica y Fe Pública-DGSJFP) of 7th July 2021 regarding the refusal of the Registrar XXIII of the Commercial Registry of Madrid to register a public deed of modification of bylaws of a limited liability company was published in the Official Gazette on 26th July 2021.
In this case, the company proposes the modification of the articles of the bylaws relative to the remuneration of the directors. The articles in question provide that “the post of Director shall be remunerated by means of a fixed amount for each fiscal year, which shall be set by the General Partners’ Meeting”. If the management body were a Board of Directors, the members of the board would be entitled to “compensation due to death or termination, provided that the termination is not on account of the non-fulfilment of the functions of director”. In these cases, “it corresponds to the partners Meeting to set a maximum annual amount to be received for these compensations”. “If the management body were to consist of a Board of Directors, it would be the Board’s responsibility to determine for each fiscal year the exact amount to be paid to each member within the limit established by the General Partners’ Meeting”.
It also provides that “the board members may carry out executive and professional functions in the company, and in this case, they will be entitled to receive, additionally, the retributions which correspond to the performance of said executive functions”. And, thereafter, the provisions of the text of article 249 of the Spanish Companies Act (Ley de Sociedades de Capital – LSC) regarding the contract to be signed in such cases are reproduced.
The registrar suspended the registration given that in order to fix the remuneration envisaged for the members of the Board of Directors, to whom executive functions are assigned, “it is necessary that this is passed by the General Meeting of the Company, in accordance with that set forth in articles 217 and 249 of the Spanish Companies Act and the judgment of the Supreme Court of 26th February 2018.
An appeal was filed against this decision.
The General Directorate analysed the different questions raised regarding the remuneration of the directors, especially those questions following the amendment to the LSC by Law 31/2014, and explained that, “in line with the flexibility in the interpretation of articles 217 and 249 of the LSC endorsed by the judgment of the Supreme Court of 26th February 2018 and following previous Rulings, this Directorate has admitted that even when the different remuneration items for executive directors must be indispensably recorded in the bylaws, the latter may refer to the contract entered into between the executive director and the company to specify whether the director will be remunerated for all or for only some of the remuneration items established in the bylaws. In this way, due protection of the partners is reconciled, in that the bylaws establish the possible items of remuneration and the general meeting approves the maximum amount of annual remuneration for the directors, adapting to practical needs in so far as the board of directors has the competence to choose, case by case, from the different items of remuneration provided for in the bylaws, those items, which must be included in the contract referred to in article 249 of the LSC, without the need for any modification of the bylaws”.
And the Directorate General concluded that in the case in question the registration cannot be refused on the grounds given by the registrar in the contested decision, since the clause now under discussion is similar to the clause admitted by the Directorate General in the prior Resolution of 31st October 2018 and conforms to the parameters of the provisions of articles 217 and 249 of the Capital Companies Act.
Finally, the Directorate General upheld the appeal and revoked the contested decision of the registrar.
Vilá Abogados
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27th August 2021
