Legal representatives shall not make decisions contrary to corporate statutes, even if they are made to protect corporate interests

Corporate statutes establish the rules and provisions by means of which the corporation shall achieve its purpose, including, among others, the authority -duties and limitations- granted to a chief executive officer, general manager, administrator and/or legal representative, which must be carefully exercised by whoever occupies such position. As stated by the Superintendence of Companies in Ruling 800-12 dated February 19, 2015, legal representatives shall not breach corporate statutes or any applicable law based on or under pretext of corporate interest.

Even though protecting corporate interest is an essential duty of a legal representative, he cannot exceed his powers and/or make decisions on matters over which, pursuant to corporate statutes, he has no authority. Consequently, if a legal representative enters into any agreement exceeding the value he is authorized to underwrite or any other of his powers, he will be held liable for any damages caused to the company as a result of his actions.

Now then, the Superintendence of Companies has clearly stated that legal representatives shall not breach corporate statutes based on or under pretext of corporate interest protection. As a matter of fact, it has repeatedly pointed out that legal representatives are obligated to abide by corporate statutes, based on the fact that any action exceeding powers granted must be previously authorized by the General Meeting of Shareholders or by whoever has been expressly authorized in the statutes to amend them. The Superintendence even went a step farther by stating that corporate interest cannot be validly argued in case of breach of corporate statutes or of any applicable law.

Conclusion.

Companies and its officers must acknowledge that legal representatives cannot exceed his/her authority or act in breach of corporate statutes or applicable law based on or under pretext of corporate interest. In any case, if the legal representative were to exceed the limits of his/her authority he will be held liable for any damage incurred by the company as a result of the breach of corporate statutes or of malfeasance.