Español
Русский
Over the last few years, the remuneration of administrators has led to different controversies in different areas and with this post we are going to try to provide answers to some of the current situations.
Is the administrator position free or paid?
The current Capital Companies Law dedicates an article exclusively to the remuneration of administrators, expressly indicating that the position of administrators is free, unless the company’s bylaws indicate otherwise.
In the event that it is established in the statutes that the position is paid, it must be expressly clarified or specified what will be the concept and exact form by which the position will be paid, such as, for example: a fixed allowance, attendance fees, a percentage of profits, variable remuneration with general reference indicators or parameters, linked to its evolution, savings systems or forecasts that are considered appropriate, etc. That is, any remuneration that involves an exact amount and that can be justified may be accepted, otherwise its registration in the commercial registry could be denied.
The general meeting of the company must approve the maximum amount of remuneration and this will remain in force as long as a new modification is not approved by the same party. The distribution of remuneration among the different administrators will be established by their agreement unless the general meeting determines otherwise.
The remuneration of administrators must in all cases be applied with common sense, be reasonable, ensuring the general interest of the company,taking care of the economic situation at all times and monitoring the market standards of comparable companies. The profitability and sustainability of the company must be taken into consideration and the necessary precautions must be established to avoid excessive risk-taking and the reward of unfavorable results, as well as paying special attention so that the distribution does not represent a special imbalance with the social assets or that benefits the majority partner to the detriment of the other partners.
Everything in the company works until, due to some issue, enmity arises between the partners and remuneration items for administrators come to light that have not been approved at the General Meeting of Partners and that, therefore, cannot be justified. It is at that moment when the administrator and majority partner calls for extraordinary shareholders’ meetings to urgently approve salaries from previous years and correct previous salary payments not included and already paid.
When must the paid position be approved?
The answer to this specific question gave rise to different currents, however, the majority of jurisprudence had been motivating that the general meeting agreement for the remuneration of the administrators should be made at the beginning of each year. However, a recent ruling from our high court expands the range of options.
The Supreme Court Ruling of May 13, 2021 expressly states that: “The ratio of art. 217.3 LSC is that this maximum amount of annual remuneration be approved by the general meeting and that it governs as long as it is not modified by the general meeting itself. But both the initial fixation and the eventual modifications do not necessarily have to be carried out in advance of the beginning of the year to which it is intended to apply. It also fits the purpose of the provision that this approval is made, as is the case, very late in the financial year, since what is relevant is that the board provides its authorization or approval during that year.”
This leaves the door open for the administrators’ fees to be approved after they have been delivered, but always within the same year and not years later.
