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The office of the non-director secretary is independent and different from that of the corporate directors (or the Board of Directors). This office finds its legal endorsement in Article 529 g of the Capital Companies Law (TRLSC) which, although this precept refers to listed companies, their functions and responsibilities will be the same, regardless of the type of company in which the office exists.
Likewise, with regards to their appointment, this corresponds to the board of directors, not the Shareholders’ General Meeting. Furthermore, unlike the secretary of the Shareholders’ General Meeting, whose appointment will be made at the beginning of the meeting, the secretary of the board of directors, once elected by the board, will exercise their position permanently for as long as their position is in effect, without requiring approval at the beginning of each session.
However, although the articles of association may require the secretary of the board of directors to be one of the members of the board, that is, a director, this function may, however, be performed by a non-member.
Thus, regarding the admissibility of the office of the non-director secretary, the Resolution of the Spanish General Directorate of Registries and Notaries (RDGRN), of 7th November 2016, stated the following:
“The position of secretary of the board of directors of a limited company – in fact, of any capital company – can be held by a person who is not a director [Article 109.1.a) of the Companies Registry Regulations], which confers certifying powers on the secretary of the company’s executive body, regardless of whether they are a director. There is no rule requiring the Secretary of the Board to be a member of the Board, when the company is managed by a Board of Directors.”
This detail of being or not being a director is very important, since responsibility differs with regards to the acts carried out by the company, in such a way that directors will be responsible for the actions and obligations of the company, while “non-directors” are exempt from any liability for such acts of the company.
On the other hand, with regards to their functions, it must be highlighted that the company’s resolutions, given the purpose of the companies’ business activity, have two perfectly distinct facets: the first, the trading or economic facet; and the second, just as important, the legal facet. Therefore, it is precisely in this field where the office of the non-director secretary can be incardinated and takes on special relevance.
In this way, the non-director secretary will not only make sure that all business operations carried out by the company meet the requirements that the legislation requires for its documental execution, but also others such as providing comprehensive counselling on all kinds of repercussions and consequences -not only legal- of the different resolutions to be adopted; to ensure that the board complies with the formal requirements established by law and the articles of association, as well as other requirements specific to their role (sending notices, drawing up minutes, certifying resolutions, etc.).
The aforementioned reasons highlight why the existence of a technician in such matters is necessary, since the directors, in general, are going to be chosen for their commercial or corporate management competence, and not always for their legal competence.
In this sense, with regards to the importance of this position within the organisational regime of trading companies and the exercise of their functions, the Resolution of the Spanish General Directorate of Registries and Notaries, of 15th November 1993, states that:
“The Non-Director Secretary may be a person appointed on the basis of their professional knowledge or the merits they have acquired as an employee of the company, normally called upon to carry out a number of other activities, generally advisory, in which permanence and knowledge of the internal workings of the company is essential“.
On the other hand, with regards to the scope of liability of this position, while the directors themselves may have to answer for the good or bad election of the board-member secretary for “culpa in eligendo”, the secretary may have to answer for “culpa in vigilando” regarding the directors.
Moreover, in the exercise of their power to certify the resolutions of the Board of Directors, the non-director secretary assumes the competence to certify the resolutions of this body, with the prior or simultaneous control exercised by the Chairman of the Board (thanks to the requirement of a double signature: secretary and chairman), but generating an inadequate use of this certifying power, liability before the Board, the shareholders and other injured parties, as the case may be.
Similarly, it is interesting to note that the position of non-director secretary needs not be subject to any time limits that may have been set for the performance of the position of director, provided that the articles of association do not state otherwise.
In this sense, with regards to the application to the secretary of the time limits for the exercise of the position of director, the aforementioned Resolution of the Spanish General Directorate of Registries and Notaries, of 15th November 1993, stated that:
“The first question raised in this appeal is whether the Secretary of the Board of Directors, when they are not a Director, is subject to the time limit imposed by Article 126 of the Spanish Public Limited Companies Law. (…) In view of the fact that the Secretary of the Board of Directors might not be a Director, it is clear that they are not directly covered by the time limit imposed by Article 126 of the Spanish Public Limited Companies (…). It is therefore to be understood that in such a case, unless stated otherwise in the Articles of Association or in the appointment resolution itself, the latter is to be understood as indefinite, without this entailing any obligation for the Company, since, in short, and once again leaving aside the provisions of the Articles of Association, the Board may always agree to remove them by simple majority, subject to periodic renewal“.
The functions of the non-director secretary are usually contracted with law firms outside the company itself. These services are offered through lawyers who are experts in the commercial matters of these companies, providing their clients with peace of mind.
