Company’s administrators carry out the daily management of the company and they represent it with third-person parties. On the other hand, the general assembly is a body formed by the shareholders and it is responsible for making most of the relevant agreements within the company: – the corporate organization, the modification of its bylaws, capital increases, dissolution, mergers, etc.–

The administrators are appointed by the general assembly. This general assembly is the body expressing the corporate will and the rest of corporate bodies are subject to it for their appointment, action and revocation.

The appointment must be registered at the Companies Registry. This is compulsory, by law, and it must be done within a period of ten days from acceptance. Also, this is very advisable as the registration means that the appointment affects not only the company but also third persons who might reject the appointment: for example, a third party that has signed a contract when an administrator was on duty but such administrator has been substituted for a new one and these actions have not been registered. In such case, the administrator substitution could not be opposed by the third party, who has trusted the registry, and the company will have to respect the contract.

Theoretically, it is possible that the administrative body is formed by only one person, or several persons. When it is formed by more than one member, each of them might be entitled to act either individually or jointly or communally. It might also be a body which makes decisions based on a majority.

Choosing one of these options depends on the corporate volume and the composition of the shareholders. A small company, a family company or a quasi unipersonal company may operate appropriately with a sole administrator (frequently being the major shareholder). A company having different shareholders needs a bigger and more representative administrative body.

Co-administrators or joint administrators may be a good solution for intermediate companies in which the shareholders are the administrators. Acting as co-administrators means that consent from all the administrators is required for any action: it is safer but less dynamic.

Joint or individual administration means that the administrators may do anything without the previous consent of the rest of the company members: it allows a very agile management but demands a great amount of mutual trust between the company’s administrators.

In limited liability companies, the new law allows indefinite term limits, although the bylaws may establish a fixed term.

Administrators’ liability

The Corporations Law, to which the new Limited Liability Companies Law is referred, has significantly increased the administrator’s liability.

• Under the former regulations, administrators were only responsible in the case of wilful misconduct, abuse of power and gross negligence.

• Currently, the administrator is responsible to social creditors for illegal acts or those performed against the corporate bylaws or for those performed without due diligence.

This liability is a joint liability for all the administrators and only those who can prove that he has not participated in the decision making and the execution of the action, that he did not know about its existence or that he knew it but did all he could to prevent the damage, or at least that he specifically opposed such action.

• The fact that the action has been decided, authorised or ratified by the general assembly does not exonerate the administrator from liability.