The resolution of 24th May 2021 issued by the Directorate General of Legal Security and Public Trust – GDLSPT (Dirección General de Seguridad Jurídica y Fe Pública-DGSJFP) was published in the Spanish State Gazette of the 10th June 2021, and addresses the refusal of the registrar of the Bilbao Commercial Registry to register a public deed of agreements adopted unanimously by the board of directors of a joint-stock company at a meeting held on a universal basis, relative to the termination of the secretary non-member of the board and the appointment of another person in said post.
In this case, article 29.2 of the bylaws of said company establishes that the Board of Directors shall designate, in the event that the General Meeting has not done so, a Secretary and, at its discretion, a Vice Secretary, and the appointment may be made by those who are not directors, in which case they shall act with the right to speak but not to vote.
The registrar suspends the requested registration because the termination and appointment of the secretary of the board is not registrable, given that an appointment already exists which was executed by the General Meeting, given that the power of the Board to appoint a Secretary is only applicable, according to article 29.2 of the Bylaws, “in the event that that the General Meeting has not done so”; consequently, in order to proceed with the appointment by the Board:
(i) the post must be vacant, either by termination or other legal grounds, since it has no expiry term; and
(ii) the Meeting does not foresee another appointment;
for this reason the Secretary must first be removed by the very Meeting that appointed him or her, since if the Board were to do so, the Meeting’s powers would be undermined, as the Board would be able to immediately remove the Secretary appointed by the latter and appoint another.
An appeal was filed against the registrar’s decision, containing the following arguments:
The bylaws do not require that the termination of the secretary be passed by the general meeting, thus the revocation of the post corresponds to the administration organ, in accordance with article 146.1 of the Commercial Registry Regulation, so that once the post becomes vacant the board of directors may appoint a new secretary non-member.
The Directorate General points out a series of disquisitions on the figure of the secretary of the board regarding its great importance within the company, its lack of systematic regulation, and as a consequence thereof, the convenience of its statutory regulation or, failing that, the regulation carried out by the board itself pursuant to its freedom of self-organisation.
According to the explanation given by the Directorate General, the post of secretary non-member may be a person designated on the basis of their professional knowledge or as an employee of the company, normally called upon, due to their services or labour relationship, to carry out other activities, generally consultancy, in which permanence and knowledge of the internal functioning of the company is usually fundamental. For this reason, unless the bylaws or the agreement on the appointment itself provide otherwise, the appointment must be understood to be for an indefinite period of time, without implying any obligation for the company, since ultimately, and again leaving aside the provisions of the bylaws, the board of directors is always able to agree to their removal by a simple majority. Due to the freedom of self-organisation, which is attributed to the board of directors, this organ must be recognised as having powers to revoke the post of secretary non-member and, when such powers have been exercised, it must also be recognised as having the authority to appoint a person to hold such position.
And in the case at hand, the Directorate General arrives at the conclusion that without the need to prejudge whether the power of the meeting to appoint a secretary only refers to the possibility of appointing the person appointed as director by this organ or also to the possibility of appointing a secretary non-member, the fact is that the provision of the bylaws under discussion, according to the literal content thereof, does not prevent the board of directors from removing the person appointed as secretary non-member from the post or, in any event, when said post is vacant, from appointing another person to undertake the post. Finally, the Directorate upholds the appeal and revokes the challenged decision of the registrar.
Vilá Abogados
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9th July 2021
