Powers Granted to the Legal Representative of the Company 

April, 2004 - Olga M Barreto

In the commercial scope, the legal representation of limited liability companies is usually exercised by the President of the Board of Directors. There are two types of faculties granted on the development of companies functions, according to what the partners have settled down in the Articles of Incorporation and Bylaws:

Management Power Faculties

General Power Faculties

In case of a Management Power, the Legal Representative is authorized to execute all the company general administration acts, according to the corporate purpose. In that sense, he will be able to celebrate agreements and execute the necessary acts for the conservation or exploitation of company's assets, judicial representation of the company, to rent the corporate properties for a maximum period of one year, to sell the goods set aside for selling, to demand the payment of the credits and issue the corresponding receipts and, finally, to execute any legal transactions included in the nature of the business of the company.

Unless otherwise specified, under any circumstances the Management Agent is not authorized to transfer or to burden corporate properties. An authorization of the Board of Directors of the company (as the organ in charge of company's administration usually has the most general faculties), will always be needed.

The General Power granted to the Legal Representative of the company authorizes the holding of all kind of contracts and the execution all the other legal transactions representing the company, including sales, mortgages, alienation or encumbrance of all kind of assets. This means that the Legal Representative with faculties of General Agent is able to handle by itself the company, without the intervention of the Board of Directors or the General Shareholders Meeting.

Therefore, the decision to grant General Power or Management Power must be analysed taking in consideration the kind of company that currently exists and that will exist in the foreseeable future.

Thus, in the case of family-run businesses or companies, where one of the partners holds most of the share capital and directly controls the company, it is probable that the Legal Representative faculties are General. On the contrary, in companies with different interests, the General faculties are usually reserved to the Board of directors, where the different groups are generally represented, and faculties of Management Power are granted to the Legal Representative.

These faculties granted to the Legal Representative of the company have to be considered without prejudice of Management Powers, General, or of any other nature, that the company can grant to third parties, whether they are shareholders or not. In this case the representatives will represent the company in one or several matters, but they will not have the legal representation of the company. Thus for example, a company could grant a Management Power to the General Manager, without becoming a Legal Representative of the company, since the designation of the person with the legal representation of the company, depends on the partners desire as expressed in the Articles of Incorporation of the company.



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