19 Jun The Non-Director Company Secretary: Professionalising Corporate Governance in Spain

As companies grow — particularly within a heavily regulated environment such as the European one — they increasingly require legal advice from qualified lawyers. Accordingly, one way for a company to ensure that its decisions are lawful and to secure objective, impartial advice is to appoint a non-director secretary with certain qualities.

What is a board of directors?

Under Spanish company law, a board of directors is one of the available ways of organising a company’s management where there are multiple directors.

This body has two mandatory offices:

• • • The chairman.
    • The secretary.

In addition to the powers conferred on them by law, both hold those granted to them by the company’s own articles of association.

The secretary therefore plays a particularly important role in preparing and holding board meetings, as well as in formalising and implementing its resolutions:

1. 1. 1. 1. Liaising with the chairman in the preparation of meetings
         2. Advising on the board’s powers
         3. Certifying corporate resolutions and formalising them in a public deed.
         4. And even acting as custodian of the minute books and all other documentation.

Given these powers, it is advisable to appoint a secretary with certain qualities, the ideal being someone with legal training and corporate experience.

Must the secretary be a director?

Unless the company’s articles of association expressly provide otherwise, the secretary need not be a member of the board of directors, which opens the door for the role to be held by lawyers and other types of professional advisers.

Why is it advisable to have a lawyer as secretary of the board of directors?

At this point, we can turn to the figure of the lawyer as a fitting answer to a company’s management needs, for the following reasons:

First. The lawfulness of decisions.

A commercial lawyer with appropriate training in company and commercial law will be able to safeguard the lawfulness of every decision the board reaches. They will also ensure that resolutions are formalised in a public deed where appropriate — duties that are entirely routine for them — thereby relieving the rest of the board of these formalities.

Second. The lawyer’s experience.

By the very nature of the legal profession, an experienced lawyer specialising in commercial law inherently brings knowledge of hundreds of business situations, from shareholder disputes to methods of organising production. This makes them especially well placed to hold the role, since they can offer strategic advice during board meetings.

Third. Managing conflicts and other matters.

Within a board of directors, it is practically impossible to avoid potential conflicts of interest or personal and professional confrontations altogether.

For this reason, a lawyer acting as secretary brings an external, comprehensive perspective: managing conflicts, establishing ways to resolve disputes without affecting the company’s operations, and helping to reach the best decision among the range of differing viewpoints. All of this thanks to the experience described in the previous point.

Fourth. Near-continuous advice.

A lawyer’s involvement in decision-making substantially deepens their understanding of the company’s actual operations and business processes. This translates into tacit, near-continuous advice: by keeping abreast of the company’s operations and corporate decisions, the lawyer gains a far clearer view of the company’s reality, which can make a substantial difference to legal advice not strictly related to board matters.

When is it appropriate?

While it is true that nowadays it is always advisable to have a trusted lawyer to turn to when checking the legality or strategic aspects of certain business decisions, this does not mean that having a lawyer act as non-director secretary is strictly mandatory.

Nor can it be denied, however, that their presence will be (at the very least) beneficial for the company in general terms, and may even make a considerable difference to the quality of the decisions taken.

We therefore believe that appointing a lawyer as a non-director company secretary is a sound and natural step in a company’s growth, particularly for those organisations seeking to professionalise their governance and safeguard their decisions from the outset.

Our experience

At Navarro Llima Abogados, we have extensive experience advising companies across a wide range of sectors and commercial fields. With more than 20 years’ track record, we have built up a wealth of information and expertise that equips us to provide legal advice and commercial insight.

Our managing partner, Jaime J. Navarro, has extensive experience providing these services, having acted as a non-director secretary for companies that have requested it. This is complemented by an in-depth knowledge of commercial matters, gained through his involvement in various business projects that have grown from just a handful of employees into entities with dozens of staff and group corporate structures.

If you are considering appointing a lawyer as a non-director company secretary, or have any questions on a related matter, we remain at your disposal for any enquiry at info@navarrollimaabogados.com.