Directors’ Duties in Spain

>> Board Requirements in Spain

Appointment of directors

The appointment and removal of a director is exclusively reserved for the general shareholders meeting. The appointment is effective as of the moment of the acceptance by the director.

In order to be appointed as director the following criteria must be met:

  • the individual must be of legal age, currently 18 years old
  • if the individual is not a Spanish citizen, a Spanish Tax

Number must be obtained

  • in addition the following restrictions apply:
    • non-emancipated minors, the legally incompetent, persons disqualified pursuant to the Insolvency Act, and persons convicted of a criminal offense (under a number of different areas) cannot be appointed  as a director
    • public officials whose responsibilities are associated

with activities intrinsic to the company in question,

judges or magistrates and other persons bound by legal incompatibility cannot be appointed as  a director

In Spain there are no residency, educational or professional experience requirements.

Board meetings and composition requirements

There can be a sole director or two joint  directors or two joint and several directors, or  a Board of Directors.

Where there is a Board of Directors, there is a minimum of 3 directors required and a maximum of 12.

The Spanish Companies Act requires the Board of Directors to meet at least once a quarter. The minimum quorum will be a mathematical majority of the addressed members, and the President of the board and the company secretary should be in attendance of the meeting.

If the company’s Articles of Association (“Articles”) allow for it, meetings may be held by teleconference or written resolution.

Signatory rights/powers of directors

The main source of powers for directors is the Spanish Companies Act.

Regarding the manner of exercise the powers  by the Board of Directors, as it is a collegial  body, all members should unanimously approve the resolutions or sign documents on behalf of the Company.

Conflicts

Directors owe the company a duty of loyalty, and as a result must avoid conflict of interest situations. Directors must perform their functions according to their best personal judgment and independent of third parties’ instructions. In particular, they must not:

  • use their powers for purposes other than pursuing the best corporate interests of the company
  • reveal or disclose confidential information and/or company commercial secrets
  • participate in deliberations and vote in relation to matters where they are personally affected by a conflict of interest

The law sets out the following specific prohibitions:

  • directors may not directly or indirectly carry out professional or trading transactions with the company unless they are minor economic value transactions conducted on standard conditions
  • use the name of the company for their own benefit in private transactions
  • use information or assets of the company for private transactions
  • take advantage of business opportunities which could have benefitted the company
  • receive any compensation from third parties for the performance of their duties as directors
  • carry out any activity which may compete with the business of the company

The above prohibitions also apply if the benefitting person is closely linked to the director (including relatives and entities controlled by  the director).


Latest version updated 10th April 2018

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