A new change of interpretation has occurred very recently in the question concerning the Remuneration of Company Managers, and which especially affects the Executive Directors.

Specifically, the past 26 of February of 2018 the Supreme Court issued a ruling agreeing to reject the possibility that the Board of Directors determines the possible remuneration of its Executive Directors, without the need for it to be provided for in the bylaws or adjustment to that agreed by the General Meeting of Members.

The Supreme Court interprets that the Capital Companies Law establishes 3 levels of control that in all cases must be taken care of by the Companies, with regard to the Remuneration of Company Administrators:

  1. The Social Statutes that they must establish the gratuitous or remunerated nature of the position and, in this last case, the system of remuneration, with the remunerative concepts to be received by the administrators.
  2. The agreements to be adopted by the General Meeting of Members, that must establish the maximum amount of annual remuneration, in force as long as its modification is not approved.
  3. The decisions of the administrators themselves, in relation to the distribution of remuneration between them, according to the specific functions and responsibilities attributed to each director.

The will of the Supreme Court is clear, to recognize the Board of Partners the maximum rank of the Company, having to pass through it and by the corresponding statutory provision any decision that refers to the remuneration of the Company's Directors, regardless of whether they are Directors, Directors or executive Directors.

This Judgment supposes an important interpretative change with respect to the position that was followed by many Provincial Courts and Hearings, as well as by the General Directorate of Registries and Notaries and a large part of the most authoritative Doctrine.

Notwithstanding the foregoing, the CEOs or executives must also sign a contract with the company, previously approved by 2 / 3 of the board of directors (with the abstention of the director affected), although now it will be mandatory that it meets the provisions of the Law on Capital Companies on the retribution of company managers (provided with the importance and economic situation of the company, of the market, ...), the provisions of the Bylaws, as well as the maximum annual amount of the directors' remuneration fixed by agreement of the general meeting.

Finally, indicate that one of the effects of said ruling will be the necessary revision and, if applicable, adaptation of the Bylaws, and the adoption of the corresponding agreements of the Boards of Members of many Companies must be adjusted - both in the case of limited companies and corporations - to what is established in the analyzed judgment of the Supreme Court.


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