The tenure as manager of a corporation or limited in Spain will bring significant obligations and responsibilities that need to be known before accepting the appointment.
The post of administrator, regardless of the administration system chosen by the company (either as sole director, mutual, pooled or board), involves a chain of obligations under Spanish Commercial Law. To this end, numerous Court decisions have been delimiting , within the daily life of corporations, the actual content of voices such as loyalty, non-competition or diligence of an orderly businessman. Similarly, the new Bankruptcy Act (in force since 1 September 2004) has also introduced new criteria for the allocation of responsibilities to managers of insolvent companies.
The main duties of the position of general manager are:
First .- Duty of care. It involves active duty and the obligation of being properly informed of the company's financial situation and legal and statutory obligations as the carrying of proper accounting and legal obligations such as depositing the yearly accounts in the commercial register in the legally prescribed period, the understanding of the obligations to reduce or increase the capital or dissolve the company in the event of losses that reduce the patrimony of the company to what is legally established and the duty to request a voluntary declaration of insolvency in the legitimate cases, together with the compliance with Taxes and Social Security obligations.
Second .- Duty of fidelity. The obligation is always to prefer the interests of the company to the own interests.
Third .- Duty of loyalty: By not using the name of the society nor invoking the position as administrator to carry out operations on his own. Not to make to his own benefit or to the benefit of people linked to him, investments linked to the assets of the company that he administers or of which he has knowledge due to the position as manager. To notify the company of any possible conflict of interest. To report subscriptions to the company´s patrimony of companies with equivalent objects.
Fourth .- Duty of confidentiality: It means to keep secret of confidential information which has been accessed deriving from the exercise of the position, when such information can have harmful results for the company.
The consequences of failure to meet these obligations, although in many cases the law does not provide concrete and direct sanction against the defaulting administrator, have special mention in cases of subsequent insolvency of the company.
By Jesús Castro and María L. de Castro