The representation of society in Spain: key aspects

The representation of a company in Spain is a crucial issue for its functioning and operation in the market. Capital companies, such as the Sociedad Anónima (SA) and the Sociedad Limitada (SL), acquire legal personality when they are registered in the Mercantile Register, but this personality is manifested in the market through the persons who have the power to represent them. In this article, we will analyse the two main types of representation: organic representation and voluntary representation.

A) Organic Representation: The Company Administrators

In capital companies, the representation of the company, both in and out of court, is vested in the directors. This type of representation is called ‘organic representation’ and is regulated in accordance with the provisions laid down in the articles of association. The basic rules are as follows:

1. Sole director: If the company has a sole director, he/she holds the power of representation of the company.
2. Joint and several directors: Where there are several joint and several directors, each of them may represent the company independently, although the provisions of the articles of association or resolutions of the general meeting may provide for an internal distribution of powers.
3. Joint administrators in a limited liability company: If there are more than two joint administrators in a limited liability company, representation must be exercised jointly by at least two of them, in the manner determined by the articles of association. In public limited companies, representation is also exercised jointly.
4. Board of directors: In the event that the company is managed by a board of directors, representation corresponds to the board acting collegially. However, the articles of association may grant representation to one or more directors individually or jointly. If functions are delegated to an executive committee or managing directors, the delegation agreement must specify the rules of procedure.

The representation granted to the directors is broad and covers all acts falling within the corporate purpose as defined in the articles of association. In certain cases, it may even extend to acts that go beyond this object, thus protecting third parties who contract in good faith with the company.

B) Voluntary representation: proxies

In addition to organic representation, a company may grant powers of representation to third parties, called ‘voluntary representatives’ or proxies. These powers may be of a general or limited nature.

1. General power of attorney: A general power of attorney gives the attorney-in-fact a representative capacity similar to that of directors, allowing him/her to manage the company as a whole. This type of power of attorney is commonly granted to managers such as general or territorial directors. To be fully effective, the general power of attorney must be granted by public deed and registered in the Commercial Register, as required by Article 94.1 of the Commercial Register Regulations.
2. Limited powers of attorney: It is also possible to grant limited powers of attorney, restricted to specific acts or to a particular area of the company, such as a purchasing manager authorised to enter into contracts within certain limits of amount. These powers of attorney do not require registration in the Commercial Register.

Conclusion

Representation of the company is essential for its day-to-day operations and its relations with third parties. Both organic representation, exercised by the directors, and voluntary representation, delegated through proxies, allow companies to act in the market with legal certainty. The correct structuring of these powers of attorney and their registration in the Commercial Register, when necessary, is essential to guarantee the validity of the acts carried out on behalf of the company and to protect both the company itself and the third parties with whom it has dealings.

This publication does not constitute legal advice.

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