{"id":10942,"date":"2021-08-27T07:58:27","date_gmt":"2021-08-27T07:58:27","guid":{"rendered":"https:\/\/vila.es\/?p=10942"},"modified":"2023-07-06T15:17:10","modified_gmt":"2023-07-06T15:17:10","slug":"remuneration-clause-for-members-of-the-board-of-directors-with-executive-functions","status":"publish","type":"post","link":"https:\/\/vila.es\/en\/corporate\/remuneration-clause-for-members-of-the-board-of-directors-with-executive-functions\/","title":{"rendered":"REMUNERATION CLAUSE FOR MEMBERS OF THE BOARD OF DIRECTORS WITH EXECUTIVE FUNCTIONS"},"content":{"rendered":"<p style=\"text-align: justify;\">The resolution of the General Directorate of Legal Security and Public Trust \u2013 GDLSPT (Direcci\u00f3n General de Seguridad Jur\u00eddica y Fe P\u00fablica-DGSJFP)\u00a0of 7<sup>th<\/sup> 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 26<sup>th<\/sup> July 2021.<\/p>\n<p style=\"text-align: justify;\">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 \u201cthe post of Director shall be remunerated by means of a fixed amount for each fiscal year, which shall be set by the General Partners\u2019 Meeting\u201d. If the management body were a Board of Directors, the members of the board would be entitled to \u201ccompensation due to death or termination, provided that the termination is not on account of the non-fulfilment of the functions of director\u201d. In these cases, \u201cit corresponds to the partners Meeting to set a maximum annual amount to be received for these compensations\u201d. \u201cIf the management body were to consist of a Board of Directors, it would be the Board\u2019s responsibility to determine for each fiscal year the exact amount to be paid to each member within the limit established by the General Partners\u2019 Meeting\u201d.<\/p>\n<p style=\"text-align: justify;\">It also provides that \u201cthe 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\u201d. And, thereafter, the provisions of the text of article 249 of the Spanish Companies Act (Ley de Sociedades de Capital &#8211; LSC) regarding the contract to be signed in such cases are reproduced.<\/p>\n<p style=\"text-align: justify;\">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, \u201cit 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 26<sup>th<\/sup> February 2018.<\/p>\n<p style=\"text-align: justify;\">An appeal was filed against this decision.<\/p>\n<p style=\"text-align: justify;\">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, \u201cin line with the flexibility in the interpretation of articles 217 and 249 of the LSC endorsed by the judgment of the Supreme Court of 26<sup>th<\/sup> 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\u201d.<\/p>\n<p style=\"text-align: justify;\">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\u00a0 of 31<sup>st<\/sup> October 2018 and conforms to the parameters of the provisions of articles 217 and 249 of the Capital Companies Act.<\/p>\n<p style=\"text-align: justify;\">Finally, the Directorate General upheld the appeal and revoked the contested decision of the registrar.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\">\n<p style=\"text-align: justify;\">Vil\u00e1 Abogados<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\">For more information, please contact:<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"mailto:va@vila.es\">va@vila.es<\/a><\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\">27<sup>th<\/sup> August 2021<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The resolution of the General Directorate of Legal Security and Public Trust \u2013 GDLSPT (Direcci\u00f3n General de Seguridad Jur\u00eddica y Fe P\u00fablica-DGSJFP)\u00a0of 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  [&#8230;]<\/p>\n","protected":false},"author":4,"featured_media":5986,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[],"class_list":["post-10942","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - 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