In this article, we address the definition of the managing body according to Spanish regulations and the different modalities of company administration. Finally, we focus on the requirements for being appointed company director, which do not include Spanish nationality or residence.
The Managing body
The Spanish Capital Companies Act, in its articles 209 and following, defines the managing body by the authority it exercises within the company. Specifically, the law establishes that: the management and representation of the company are the responsibility of the directors….
Thus, the managing body of a company is responsible for executing and directing all corporate actions aimed at achieving the corporate objective defined in its bylaws.
Regarding the representation function, the managing body acts on behalf of the company in all acts. Therefore, the company may be bound to third parties who have acted in good faith and without gross negligence, even if the act performed by the board is unrelated to the corporate purpose registered in the Commercial Registry. According to the law, limitations on the director’s powers of representation are not binding on third parties, even if registered in the Commercial Registry.
Structure of the Managing Body
Regarding the structure of the managing body, the law provides for four modalities:
- Sole Director: a single person assumes all the functions of administration and representation of the company
- Joint Directors: several persons act jointly and must sign together to make decisions
- Joint and Several Directors: several persons may act independently, making decisions binding on the company
- Board of Directors: a group of individuals forms a council or collegiate body, which makes collective decisions
There may be various positions within the Managing body, such as President, Vice President, Secretary, and CEO. In the case of a limited liability company (LLC), the Board of Directors has a minimum of three and a maximum of twelve members. In the case of a public limited company (PLC), the Managing body has at least three members, and there is no legal maximum limit. Listed companies must have a Board of Directors to oversee their management.
The bylaws can establish different ways to organize the administration of a company, giving the shareholders’ meeting the power to alternatively opt for any of them without the need to modify the bylaws.
The Director in Spain
The shareholders’ meeting appoints and dismisses the directors. The appointment of a director takes effect upon acceptance and must be registered in the Commercial Registry.
In Spain, the law requires the following subjective requirements for directors:
- Condition of a natural or legal person with legal capacity, meaning they must be of legal age and emancipated. If the director is a legal person, it will be necessary to appoint a single natural person.
- Normally, directors are not required to be shareholders unless the bylaws expressly provide otherwise.
- Directors cannot incur any of the prohibitions outlined in the law, such as being declared liable for the insolvency of a company under a judgment rendered in a bankruptcy proceeding. Furthermore, this prohibition extends to persons convicted of crimes against freedom, property, the socio-economic order, public safety, the administration of justice, or any falsehood, or any other crime that prevents them from engaging in commerce, as well as to public officials, judges or magistrates, and other persons affected by legal incompatibilities. It is possible to seek information from another Member State of the European Union to verify these disqualifications.
- There are no requirements related to nationality, directors can be foreigners. However, foreign directors must have a tax identification number (NIF) or a foreigner identification number (NIE).
- As for physical or fiscal residence, the law does not require directors to reside in Spain, which means they can reside abroad.
As for foreign directors residing outside the Spanish territory, it is advisable to grant power of attorney to one or more persons living in Spain (authorised representative) to manage competencies and aspects related to the company’s daily functioning.
Mariscal Abogados offers comprehensive advice to establish companies in Spain, including any aspect regarding the appropriate managing body for your company or subsidiary.
If you need additional information regarding the managing body of companies in Spain,
