Carlota Simón Prida
ADMINISTRATIVE LAW DIVISION
Article 237 of the Spanish Companies Act (Ley de Sociedades de Capital) states that “all members of the management body who adopted the resolution or carried out the harmful act shall be jointly and severally liable, except for those who prove that, having not participated in its adoption and execution, they were unaware of its existence or, having known of it, did everything necessary to prevent the damage or, at least, expressly opposed it.”
Consequently, the liability of a company’s Management Body is not limited solely to the formal compliance with its duties and responsibilities. Rather, the law establishes that all directors are jointly and severally liable for any damage that may arise from their decisions, and must fully repair such damage with their own assets, both present and future. An exception applies only where one or more directors can rely on legally established grounds for exemption. To do so, they must demonstrate that they acted with due diligence and, in particular, that they clearly and expressly opposed the adoption of the decision that proved harmful.
For these reasons, it is essential that companies with Boards of Directors have appropriate protective mechanisms against these types of risks. In this regard, the procurement of directors’ and officers’ liability insurance has become indispensable.
Spanish law also recognizes the figure of the Legal Advisor to the Board. This is a licensed practicing attorney who provides legal advice to a company’s management body. The relationship is strictly professional. The functions of the Legal Advisor include, among others, advising on the legality of the Board’s resolutions and decisions, as well as the resolutions convening General Shareholders’ Meetings. This role is regulated under Law 39/1975 of 31 October.
The appointment of a Legal Advisor is mandatory for companies that have: share capital equal to or greater than €300,000, annual turnover equal to €600,000, and/or a permanent workforce exceeding 50 employees.
To avoid potential liability issues, it is recommended that companies meeting the legally established requirements appoint a Legal Advisor who serves as a non-director Secretary of the Board of Directors. This strengthens regulatory compliance and ensures that the management body receives ongoing and specialized legal guidance. The liability of the non-director Secretary is limited to the correct performance of the functions assigned to them under the Companies Act and the company’s internal regulations. They do not assume the responsibilities of the directors or the company itself, and are only liable in cases of culpa in vigilando, meaning omission or lack of diligence in supervising irregular actions of the Board, pursuant to Article 1902 of the Spanish Civil Code.
Failure to appoint a Legal Advisor is subject to legal sanction, since “the infringement will be expressly assessed in any proceeding regarding liability arising from resolutions or decisions of the management body.” Having a practicing attorney as Legal Advisor not only satisfies a legal obligation but also adds value to corporate decision-making. Their involvement facilitates the adoption of sound resolutions, prevents corporate conflicts, and provides security in operations of particular significance such as capital increases, mergers, acquisitions, or amendments to the bylaws. It involves anticipating legal risks before they materialize, which means acting with foresight and professionalism, ensuring that every decision adopted by the management bodies is supported by solid and up-to-date legal criteria.
