Chair and deputy chair duties

On 4 December 2019 the Supreme Court of Cassation (n 31660) set out important principles regarding the duties of the chair and deputy chair of a company's board of directors.

According to Article 2381 of the Civil Code, the chair's main duties are to:

  • summon the board of directors;
  • decide the agenda;
  • coordinate the board's activity; and
  • maintain transparency in order to ensure an adequate awareness of the board's members.

Therefore, a chair's duties are of an organisational nature and must be fulfilled in a neutral way with the aim of coordinating the board as an impartial body.

Consequently, a chair has powers in addition to the specific delegation of powers granted by the board. Chairs must act in order to guarantee a proper deployment of the board's activity and comply with the specific rules according to the law, the article of association rules and the general principle of good faith as per Articles 1175 and 1375 of the Civil Code.

Directors' revocation

The Supreme Court also ruled on directors' right to be indemnified in the event of their revocation without cause before the expiration of their appointment, according to Article 2383 of the Civil Code.

The option to proceed with revocation – if eventually elected by the shareholders' meeting – derives from non-compliance with directors' diligence and fiduciary duties, even if the revocation is unrelated to a director's non-fulfilment of these duties.

Therefore, the revocation of a chair or deputy chair, as well as the revocation of any other board member, is always admitted even without just cause in the event that their relationship with the board has been jeopardised.

Further, the court added that a possible conflict between a chair and other board members is insufficient to justify the chair's revocation for just cause, since it does not imply a violation of their fiduciary duty. However, in such cases, the chair has the right to monetary compensation.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.