Corporations - Validity of general powers of attorney for acts of administration and disposition

The Public Registry of Commerce (“PRC”) has issued Resolution No 1504/2003 (the “Resolution”) which denied the registration of a general power of attorney for acts of administration and disposition. The Resolution was issued in relation to the file of the company Agromanía S.A. (the “Company”). Although this Resolution applies only to the Company, it provides the criteria that the PRC will probably follow in similar cases.

1. Precedents of the case

The Company requested the registration of a general power of attorney for administration and disposition matters, including the powers to dispose and levy real estate and movable property. The power of attorney was granted by the board of directors of the Company and was duly notarized. The president and vice-president of the Company were two of the individuals empowered by the board of directors’ resolution.

2. Grounds of the denial

The PRC expressed that general powers of attorney for acts of administration and disposition entail the delegation of the management of the company. This delegation is inadmissible under section 255 of Argentine Companies Law No 19,550 (the “ACL”) because the management of a company is exclusively conferred to the Board of Directors.

Likewise, the PRC sustained that section 266 of the ACL provides that the position of director is personal and cannot be delegated. Thus, if the board of directors were to delegate all their functions they would cease to fulfill the role they had been appointed for. Moreover, the PRC also expressed that the delegation of the power to dispose of real estate and movable property is inadmissible because according to section 268 of the ACL the representation of the Company corresponds to the president of the board of directors.

To conclude, the PRC stated that the denial of the registration of a general power of attorney does not mean that the board of directors cannot delegate certain powers or duties provided that such delegation is limited. In this respect, the PRC mentioned the possibility of delegating functions in an executive committee (“comité ejecutivo”) or in one or more general managers, as provided in sections 269 and 270 of the ACL, respectively. While the executive committee can only deal with matters related to the ordinary course of business, the general managers can only carry out those decisions taken by the board of directors.