novedades

Powers of representation and responsibility of the company for acts of its representatives

February 20, 2026

Articles

Considering that a legal entity is a different legal fiction from those who constituted it, it will be necessary for their will to generate legal effects (signing contracts, agreements, acts before the administration, commercial and banking acts, etc.), to be expressed through their representatives (ultimately, a natural person). Thus, in the case of commercial companies - regulated by the General Companies Act - such work will be carried out by the bodies or individuals to whom the Law or the statute granted powers (General Manager, Board of Directors, representatives, etc.).

Now, although the will of a company will always be expressed through its representatives; on the contrary, not in all cases will the expression of the representative - even in cases where it seems to act on behalf of the company - will generate effects in the legal sphere of that entity or will result in responsibility for it as a result of such acts.

The following points are developed in the following cases in which a company will be responsible or bound by the acts carried out in its name by its representatives:

Acts performed in accordance with the powers established by law

The General Companies Act, the Civil Code and other regulations of scope in the commercial sphere establish a series of powers that the organs of a company will hold just because they are, and for these purposes the sole verification of having been validly appointed is sufficient.

Thus, for example, in the specific case of a General Manager, in accordance with the provisions of Article 14 of the General Companies Act and unless expressly restricted by the statute, he shall have general and special powers of representation specified in the Code of Civil Procedure and powers of representation provided for in the Arbitration Act. Likewise, once appointed, they will enjoy all the powers of representation before private and/or public natural and/or legal persons for the initiation and execution of any procedure, management and/or procedure referred to in the Law on General Administrative Procedure. Likewise, it has powers of disposition and encumber with respect to the assets and rights of the company, being able to enter into any type of civil, banking, commercial and/or corporate contract provided for in the laws of the matter, sign and carry out all types of transactions in securities without any reservation or limitation and in general make and sign all the public and/or private documents required for the fulfillment of the purpose of the company.

Those powers that are not recognized in favor of the representative by law or because they are not related to the corporate purpose, may be granted in his favor

As a result, the Company will be linked to third parties and will be responsible for any act in which its representative participates when he acted in accordance with powers recognized in his favor by law, without any need for the general meeting or the corresponding body to have conferred express powers in this regard.

Events held because they are related to the corporate purpose

Another assumption to consider is that of those powers that, although not recognized by the statute or the Law expressly in favor of the representative, are necessary for the business to develop according to its purposes -or to these directly related purposes-. The company will thus be linked to all those acts carried out by its representative for the fulfillment of the corporate purpose. It would be absurd, for example, if, in the case of a company dedicated to the sale of real estate, its representative had limited the possibility of signing contracts for the transfer of assets in favor of third parties.

The case of acts performed by the representative will be different, when they are not related to the corporate purpose. I consider that, in such cases, as will be seen below, the company will only be responsible to third parties, when it expressly - through the statute or subsequent act - grants powers that allow its conclusion. The verification of such powers will thus be conditioned on a reasonable duty of care on the part of the contracting third parties.

Events held in accordance with express powers granted to representatives

Finally, those powers that are not recognized in favor of the representative by law or because they are not related to the corporate purpose, may be granted in his favor - whenever so decided - by means of an express indication contained in the statute or act of granting powers later.

The company will thus be free to grant powers so that its representative acts in any act it considers -even beyond the corporate purpose-, being free to establish the limits of such representation.