The functioning of the board of directors in companies

 

Practical keys for proper organization and legal compliance

The board of directors is the collegiate management and representation body adopted by many companies, especially those requiring a more structured leadership. Its role is decisive: it centralizes strategic decision-making and ensures the company’s continuity within the legal framework.

Composition and number of members

The bylaws must regulate the number of directors, either by setting a fixed number or establishing a minimum and maximum, which the shareholders’ meeting will determine in each case.

In limited liability companies (LLCs/SL in Spain), the maximum permitted number of directors is 12 members.
The board must meet at least once per quarter, with minutes of each session drafted and signed by the chair and the secretary to record the agreements reached.

Unless otherwise provided in the bylaws, the board may appoint from among its members executive directors or executive committees to carry out certain management functions.

Call and constitution of the board

The meeting must be convened by the chair of the board. However, if at least one third of the directors request a meeting and the chair fails to convene it within one month, they may do so directly.

The board is deemed validly constituted if the number of directors required by the bylaws participate and, in any case, if the majority of board members are present.
In public limited companies (SAs), resolutions are adopted by the absolute majority of those attending.

Delegation of powers

The board may delegate certain functions to executive directors or an executive committee. For the delegation to be valid, two conditions must be met:

• Approval by two-thirds of the board.

• Registration in the Commercial Registry.

However, there are powers that cannot be delegated, such as:

• The preparation of the annual accounts.

• The appointment and dismissal of senior executives directly reporting to the board, as well as defining their contractual conditions.

• The calling of the General Shareholders’ Meeting.

Furthermore, when a director assumes executive functions, they must sign a contract with the company, approved by the board itself (with the director concerned abstaining from the vote). This contract must be attached to the minutes of the meeting.

An effective board of directors provides transparency, control, and professionalization to corporate management. Proper statutory regulation, together with a clear definition of roles and responsibilities, helps prevent internal conflicts, ensures the validity of resolutions, and builds confidence among shareholders, investors, and third parties.