Can the powers of the administrator be limited?

The administrator is the person who, by law, has the power of representation and management of the company. In this way, their actions bind the company vis-à-vis third parties, so that, internally, they must also be accountable to the partners for their management.

In this sense, the law establishes that the administrator may receive instructions from the partners and, to the extent that they are not complied with, they must respond to them, but the actions they carry out will be binding on the company with regard to third parties.

Commercial transactions take precedence, and anyone who contracts in good faith with an administrator or even a representative of a company is protected even if that administrator or representative has exceeded their powers.

Limiting the powers of the administrator

The administrator of the company who holds the power of representation may confer powers of attorney, which shall not have the effect of making the attorneys-in-fact hold the position of administrators of the company or form part of this body as delegates. General powers of attorney must be registered in the Companies Register, with the exception of general powers of attorney for lawsuits or those granted for specific acts. The power of attorney may be granted for a specific or indefinite period of time. In the latter case, the power of attorney is extinguished by resignation, by its revocation or by insolvency proceedings in which the liquidation, insolvency or liquidation phase of the company that has granted it has been opened.

When a company has a sole administrator or two joint administrators, there is a risk that, if the administrator leaves office, for example, due to death, the company will be inoperative until the shareholders’ meeting is held and a replacement is appointed.

This risk can be avoided by appointing one or more alternate administrators.

Furthermore, it is accepted that the administrator can grant a conditional power of attorney. That is to say, that the attorney can only exercise their functions when the administrator dies. In this way, it is ensured that, if the administrator is absent, there is at least an attorney who can act in the name of the company: For example, to authorise payments, sign contracts, etc. Until the new administrator is appointed.

If you have any questions regarding this matter, please do not hesitate to contact us, by calling Núria Martí García or sending an email to nmg@btsasociados.com. We will be delighted to help you.