You must act within the powers imposed by legislation, the company’s Articles and by-laws. The articles govern how the company is to be run, including the powers and responsibilities of directors.
Duties – skill and care
When exercising directors’ powers, you are required to exhibit such a degree of skill as may reasonably be expected from a person with your knowledge and experience, as well as exercise independent judgment.
You must also exercise a degree of diligence and care in your actions as a company director. The test applied to determine ‘an acceptable level of care’ is what a reasonable person would do in looking after their own affairs.
Duties – general
As a subsidiary director, you must act in a way which you think is most likely to promote the success of the company. You need to consider a number of statutory factors relating to corporate requirements, including the long term consequences of your decisions, the company’s reputation and the interests of other stakeholders such as employees, customers and the community.
- Duty of care and due diligence: directors shall perform their duties with the care and diligence of an orderly businessman. The standard of diligence is understood to be complied with when the following conditions are fulfilled: acting in good faith, absence of personal interest in the taken decisions, having sufficient information and achieving an appropriate process for the making of the decision.
- Loyalty: directors shall act as loyal representatives in defence of the corporate interest, understood to be the interest of the company, and shall perform any duties laid down by the legislation or the by-laws.
- Prohibition to take advantage of business opportunities: directors may not invest, for their own benefit or the benefit of affiliates, in any operations relating to company assets of which they may become aware by reason of their position, when such investment or operation is offered to the company or the company has an interest therein, unless the company has ruled out the investment or operation in a decision not influenced by the director. These obligations can be subject to exemptions in special cases. By way of example, the general shareholders` meeting, in some cases, and in others the management body can authorise the director to perform the transaction in which a conflict of interest occurs.
- Secrecy: directors, even after severance, shall keep all confidential information secret, and shall be bound to honour the nonpublic nature of information, data, reports or precedents of which they may become aware by reason of their position and refrain from their disclosure to third parties or the public at large where the consequences may be detrimental to the corporate interest. This duty shall not apply to cases in which such information is required by or must be sent to the respective supervisory authorities.
- Company representation: in corporate enterprises, the company shall be represented, in or out of court, by the directors.
- In the event that a director is a legal person represented by a natural person both will be subject to the same legal duties of any director and the natural person will be jointly and severally liable with the legal person in case of breach of duties or the commission of acts and omissions contrary to the law or the by-laws.
Duties – other
There are many other areas of law that impose duties on directors and senior managers. Matters likely to be of particular relevance, depending upon the nature of the entity and its activities, are set out below:
- Supervision of the fulfilling of the legal requirements for non-cash contributions.
- The updating of the corporate books (shareholders registry book, minutes book, etc).
- To be the addressee of the notifications and communications sent to the company.
- The formulation of annual accounts.
- The calling of the general shareholders meeting.
- Winding up the company when required.
- Any serious accidental injury and environmental breaches must be reported in accordance with company policy if applicable.
- Like all employees, you must comply with AntiBribery and Corruption legislation, including the UK Bribery Act and the US Foreign Corrupt Practices Act, and must understand, follow and promote the internal policies and procedures.
- You must comply with all competition law and regulations. This could include fixing prices with the competitors or to provide confidential documents of the Company to third parties.
- You must comply will all areas of tax law and regulations. Directors will be responsible of the tax debt when the company had committed a tax offence and had not made the necessary acts for the fulfilment of tax obligations and duties or if the directors had consented the breach. For example, not to declare before the Tax authorities the relevant incomes or to apply for an incorrect tax deduction.
- Generally your corporate secretarial provider will maintain your statutory records but is there a duty on directors to ensure certain records are maintained while not necessarily within the premises/offices.
Data privacy requirements
Overall, there are no specific director’s duties arising in connection with the local data protection law apart from the general responsibility of a legal entity to comply with the applicable laws.
For the processing of data to be legal, the 15/1999 Act on Data Protection (“SDPA”) must be complied with. This pertains to any files which include data which can be related to a person (regardless of whether the file is organised by persons or otherwise, and regardless of whether the file is contained in a software media or otherwise in paper).
This applies to any files controlled by an entity located in Spain or, outside the European Union/ European Economic Area, but used in Spain.
Companies are obliged to comply with data protection legal obligations. Entities will be responsible for the files which they “control”.
In general terms, when there is breach of the data protection laws in a company, the company shall be found liable. The Spanish Data Protection Agency is the administrative entity with enforcement power, and may impose fines up to EUR 600,000 for very serious infringements of the data protection regulations.
Latest version updated
10th April 2018