Board of Directors in Spain

The Management Structure of Spanish Companies

Spanish capital companies have two main options for their management structure:

1. Sole administrator (administrador único): A single individual or legal entity with full management powers. Simple and suitable for small companies or wholly-owned subsidiaries.
2. Joint administrators (administradores solidarios or administradores mancomunados): Two or more administrators, acting independently (solidarios) or jointly (mancomunados, requiring all signatures).
3. Board of directors (Consejo de Administración): A collegiate body of three or more members. Mandatory for listed SAs; optional but common for larger private companies and joint ventures.

The choice is enshrined in the articles of association and can be changed by shareholder resolution.

Composition of the Board

The board must have a minimum of three members (consejeros). There is no statutory maximum, though the articles may set one. Members are appointed by the shareholders’ meeting (Junta General) for terms specified in the articles:

• SA: Maximum 6-year terms (renewable)
• SL: Indefinite terms unless the articles set a limit

Director Categories (Corporate Governance Best Practice)

For listed companies and larger private companies applying good governance standards, directors are typically classified as:

• Executive directors (consejeros ejecutivos): Directors who also hold senior management roles and receive a salary.
• Non-executive proprietary directors (consejeros dominicales): Representatives of significant shareholders, appointed to protect investor interests.
• Independent directors (consejeros independientes): Without ties to management or significant shareholders, providing objective oversight.

The CNMV’s Good Governance Code for Listed Companies recommends that independent directors form the majority of the board, though this is a recommendation, not a statutory requirement, for non-listed companies.

The Chairman and CEO

The board elects a chairman (presidente del consejo) from among its members to preside over meetings. The chairman’s role is distinct from the CEO (consejero delegado) unless both roles are combined. Spain’s good governance framework encourages separation of these roles in large companies to avoid concentration of power.

The board may delegate its management powers to a delegated committee (comisión delegada) or to individual executive directors or a CEO under a delegación de facultades.

Director Duties Under Spanish Law

Spanish directors are subject to two fundamental duties established by the Ley de Sociedades de Capital:

Duty of Diligence (Deber de Diligencia)

Directors must act with the diligence of an orderly businessman (ordenado empresario) — informed, prudent, and acting in the company’s best interests. This includes:

• Attending board meetings regularly
• Seeking adequate information before making decisions
• Monitoring the company’s management and compliance systems

The business judgment rule (rule of protection for business decisions) provides a safe harbour for directors who make informed decisions in good faith: courts will not second-guess commercially reasonable decisions that later prove wrong.

Duty of Loyalty (Deber de Lealtad)

Directors must act in the best interests of the company, subordinating their personal interests. Specific obligations include:

• Not using company resources or information for personal benefit
• Avoiding conflicts of interest (situaciones de conflicto de interés)
• Disclosing conflicts and abstaining from related decisions
• Not exploiting corporate opportunities (no apropiación de oportunidades de negocio)
• Maintaining confidentiality regarding company information

Breach of the loyalty duty can lead to personal liability for all damages caused to the company, shareholders, creditors, or third parties.

Board Meetings and Governance

The board must meet as frequently as the company’s business requires — typically at least quarterly for active companies. Formalities include:

• Adequate notice to all members
• Meeting at the registered office (or as the articles permit)
• A quorum of at least half the members present or represented
• Resolutions by majority of members present

Minutes must be kept, signed by the chairman and secretary, and maintained in the company’s minutes book.

Delegated Powers and the Secretary

The board may grant powers of attorney (poderes notariales) to executives, managers, or third parties for specific transactions. These powers must be granted in a notarial deed and registered at the Commercial Registry to be effective against third parties.

The board secretary (secretario del consejo) — who may be a non-director — is responsible for keeping minutes, certifying board resolutions, maintaining the corporate books, and acting as the liaison between the board, shareholders, and the notary/registry. The secretary role is distinct from the statutory secretario of the company described in the company-secretary entry.

Frequently Asked Questions

Must a Spanish company have a board of directors? No. Most Spanish SMEs use a sole administrator or joint administrators, which is simpler and cheaper. A board becomes mandatory for listed SAs and is advisable when multiple investors want direct board representation.

Can a foreign company be appointed as a director of a Spanish company? Yes. Legal entities can be directors of Spanish companies, but they must designate a permanent natural person representative (representante persona física permanente) who carries the same responsibilities as an individual director.

How are directors compensated in Spain? Director compensation must be expressly permitted in the articles of association. Executive directors’ remuneration is set by the board (upon proposal of the remuneration committee for listed companies). Compensation paid to directors without proper corporate authorisation is not tax-deductible.

What happens when a director wants to resign? Directors can resign at any time by notifying the company. The resignation must be recorded in the minutes book and, if it leaves the company without a valid management body, the resigning director must immediately convene a shareholders’ meeting to appoint a replacement.

Can shareholders remove a director at any time? Yes. Shareholders can remove any director at any time by ordinary resolution of the general meeting, regardless of any fixed term in the appointment or any contractual agreement. Directors dismissed without cause may have claims for contractual damages, but the removal itself is always effective.

How BMC Can Help

We advise on the design and governance of Spanish boards for foreign-owned subsidiaries and joint ventures: structuring director appointments, drafting delegation instruments, advising on director duties and conflicts, and ensuring compliance with the applicable governance framework.