The conflict in the granting of powers of attorney and the sufficiency of the notarial judgement

The DGSJF strengthens the authority of the notary’s judgement as regards the sufficiency of representative powers and limits the possibility of the notary’s judgement being called into question by the registry’s qualifications without a reasoned and factually substantiated justification.

The Resolution of the Directorate General for Legal Security and Public Faith (DGSJFP) of 23 July 2024 addresses a relevant question regarding powers of representation and powers of attorney in limited liability companies (SL), emphasising the importance of the notary’s judgement of sufficiency and the rigour in the registry qualification.

The case under examination arises from the appearance of a person representing a limited company (SL), who, in the execution of a deed, acts to grant powers of attorney to several persons and, at the same time, to revoke a power of attorney previously granted to a third party. In the execution of the deed, the person appearing identifies himself as both attorney-in-fact and managing director, mentioning two different public deeds that endorse the powers he holds in these positions.

As a result of this granting, the Commercial Registrar decided to suspend the registration, based on the interpretation of Article 261 of the Commercial Code, which regulates the powers of representation in commercial companies. The main reason for the suspension was that the person appearing, in his capacity as authorised representative or managing director, did not have sufficient powers to grant the powers of attorney or to revoke the previously granted power of attorney.

In analysing the appeal, the Directorate General for Legal Certainty and Public Trust emphasises the importance of the notary’s judgement on the sufficiency of powers, an aspect which, it states, must be respected unless there is sound justification for contradicting it. In this case, the powers of the attorney-in-fact, the DGSJFP points out, are not only transcribed in the deed granted, but are also duly registered in the Commercial Register.

The DGSJFP stresses that the registry qualification merely stated that the principal lacked the necessary powers to grant the powers of attorney, without clearly specifying the basis for this conclusion. The decision emphasises that the lack of a detailed explanation as to why the attorney-in-fact was deemed to lack the powers to carry out such legal acts invalidates the suspension of the registration. The DGSJFP therefore emphasises the importance of notarial judgement in the area of commercial law, stressing that the sufficiency of the powers of representation must be based on a correct assessment of the documents and the register.