A forgotten figure but mandatory on certain occasions, whose existence becomes key to prevent possible corporate conflicts.
The figure of the legal advisor in commercial companies, although it is a somewhat forgotten figure, as we shall see, is mandatory in certain cases. It is regulated by Law 39/1975, of October 31, 1975, on the appointment of legal advisors to the administrative body of certain commercial companies and developed by its Royal Decree 2288/1977, of August 5, 1977.
Why is the figure of the legal advisor important in commercial companies?
The importance of the existence of this figure lies in the legal advice that this legal advisor provides to the administrative body in making its decisions, respecting the legal regulations, and avoiding the consequences that may arise from a lack of diligence or non-compliance in the development of the corporate activity by the administrative body.
In many occasions there are corporate conflicts due to the legal ignorance on the part of the administrator of the company about the rules and legal norms that govern the life of the entity and the operation of its governing bodies, which could be avoided with the existence of the legal advisor.
In order to be a legal advisor for the purposes of this Law, it is necessary for this person to be a registered lawyer. Each bar association will keep a registry in which these advisors can be registered.
It is established in the above mentioned Law that, with obligatory character, the mercantile Companies must designate a legal adviser in the following cases:
- In the case of companies domiciled in Spain, when their capital is equal to or exceeds 300,506 euros, or their normal business volume, according to the balance sheet and accounting documentation corresponding to the last fiscal year sanctioned, reaches the figure of 601,012 euros, or their permanent staff exceeds fifty employees.
- In the case of companies domiciled abroad, when the volume of their operations or business in their branches or establishments in Spain is equal to or exceeds 300,506 euros or their permanent staff exceeds fifty employees.
In addition to the functions established in the company’s bylaws, the main functions of the secretary of the board of directors are to provide legal advice on the legality of the resolutions and decisions adopted by the board of directors and on the deliberations it attends.
His functions are different from those of the secretary of the board of directors. However, the law allows that when the obliged company has a secretary or a member of its management or administration, who is a practicing lawyer, he/she may assume the functions attributed to the legal advisor.
Among the main functions of the legal counsel are the following:
- The control, advice, attendance and, in case of being also secretary, formalization, of the General Meetings of Partners or Shareholders of the company and of the decisions of administrators or of the sessions of the Board of Directors.
- Drafting, reviewing and advising on commercial and civil contracts.
- Advising on the structure of the company’s capital and corporate management.
- Keeping of the register of partners and the book of minutes.
- Formalization and registration of agreements in the Commercial Registry.
- Control of the deposit of accounts.
The figure of the legal counsel, therefore, is directly related to the implementation of the regulatory compliance model in organizations, whose implementation is the most practical, effective and simple way to build a prevention and compliance program that allows organizations to ensure compliance with the laws and regulations in force. The legal counsel is an important tool to demonstrate before the judge, in the event of a trial, that the company has carried out good practices for the prevention and reduction of the risk of crime, and its absence may be taken into account in any liability proceedings against the administrators, leaving the determination of such impact in the hands of the judge.
At AddVANTE we have years of experience advising commercial companies both as legal counsel and as Secretary, so if you are part of a company or you have decided to incorporate a company that meets the characteristics indicated ut supra, please do not hesitate to contact us.