Resignation from the position of director is typically considered a straightforward procedure with minimal formal complexity. However, when a company is subject to legal dissolution and the administrative body is composed of a sole director, that apparent simplicity disappears: resigning incorrectly can be as dangerous as not resigning at all.
In professional practice, we often encounter sole directors who, faced with an inactive, insolvent, or blocked company, seek to resign from their position to avoid liability. However, the Capital Companies Act (hereinafter, “LSC”) does not allow such a hasty exit when the directors’ duty to react to one of the causes for dissolution under Article 363 of the LSC has already been activated, imposing reinforced obligations on them.
1.- The cause for dissolution changes the rules of the game
From the moment a legal cause for dissolution arises —or the director becomes aware of it— the liability regime is significantly intensified. Article 365 of the LSC, except in the case provided for in paragraph 3, imposes a clear and unavoidable duty on the director: to call a General Meeting within two months of the occurrence or discovery of the cause for dissolution so that the shareholders can decide whether to dissolve the company or take measures to remove the existing cause.
Failure to comply with this duty is not harmless, as Article 367 of the LSC establishes a consequence that should be feared by any director: joint and several liability for corporate debts incurred after the cause for dissolution. And here, it should be emphasised: simply resigning from the position does not neutralise this risk if the legally required diligence has not been exercised beforehand.
2.- Can the director resign in these circumstances? Yes, but not arbitrarily
The director may resign from their position at any time. This is expressly recognised in Article 147.1.º of the Commercial Registry Regulations, which makes the effectiveness of the resignation conditional only on its communication to the company, without requiring additional formalities. However, when the company is in the process of dissolution, the resignation must be carried out in such a way that it is clear that the director has diligently fulfilled their enhanced legal duties, in particular the obligation to promote the adoption of the necessary agreements to deal with the situation of dissolution in order to avoid the possible attribution of personal liability.
3.- Calling a meeting: the step that protects the director
The most legally secure way to articulate the resignation is to call a General Meeting and, in that same call, communicate the resignation, incorporating in the agenda the matters legally necessary for the partners to decide on the continuity or dissolution and liquidation of the company, as well as on the appointment of the corresponding administrative or liquidation body.
This action serves a dual purpose:
(i) It allows the director to fulfil their legal duty to call a meeting in the event of dissolution, so that, even if the dissolution or removal of the cause is not approved, it is proven that the director has offered the partners the possibility of adopting the legally required decisions, as well as proceeding, where appropriate, with the appointment of a new administrator to prevent the company from being left without an administrative body (leaderless).
(ii) It facilitates the registration of the resignation in the Commercial Registry, even in the event that the partners do not adopt any agreement, as the administrator’s diligent action is accredited.
With regard to the registration of the administrator’s resignation, the Directorate General for Legal Security and Public Trust (formerly DGRN) has had the opportunity to rule on this matter in its Resolution dated November 3, 2016: if the sole administrator informs the shareholders of his or her resignation and calls a meeting to appoint a new administrator, regardless of the outcome of the meeting, this resignation must be registered on the understanding that the administrator has acted diligently, encouraging the partners to appoint a new administrator, and without the consequences of the partners’ negligence or refusal to appoint a new administrator falling on him or her, since the fact that the company is left without an administrative body is a circumstance beyond the control of the resigning administrator.
Therefore, if the administrator diligently calls on the partners to appoint a new body or dissolve the company, he or she cannot bear the consequences of the company’s passivity or deadlock. The company may be left without a leader, yes, but that situation is no longer attributable to the resigning administrator.
4.- Why is it advisable to communicate the resignation and convene the meeting in a single act?
Although from a strictly legal point of view it is not essential for the administrator’s resignation and the convening of the General Meeting to take place simultaneously, from a practical and preventive perspective, this option offers the most guarantees.
Combining both actions into a single act allows: (i) avoiding temporary gaps in administration; (ii) reducing the risk of delaying tactics by partners; (iii) eliminating uncertainties about the effective date of resignation; and (iv) reducing unnecessary costs and procedures arising from procedural duplication.
5.- What if the meeting is not held or the proposed resolutions are not adopted?
According to the Resolution of the DGRN dated March 6, 2013, if the meeting convened does not agree on the appointment of a new administrator or the dissolution and appointment of a liquidator, the sole administrator whose resignation has already been registered in the Commercial Registry loses the power to convene new meetings. In this scenario, the company is left without a leader and the shareholders must resort to the legal proceedings provided for in Article 171 of the LSC in order for the corresponding meeting to be convened.
This moment constitutes a key turning point: once the resignation has been registered, the former administrator no longer has the power to intervene, and the initiative to adopt the necessary resolutions is transferred to the partners, who must resort to the judicial convening of a meeting, unless a universal meeting is held.
The relevance of this detail is fundamental: responsibility is no longer in the hands of the outgoing director and passes to the sphere of decision—or inaction—of the partners, who must act to ensure the continuity of the company or its orderly dissolution.
6.- Registration: proof and effects
The resignation of the sole directormust be recorded in a public deed before a notary and accompanied by the notice of meeting and reliable proof that the partners were duly convened or, if the meeting was held, the corresponding minutes. Once these requirements have been met, the Commercial Registry must register the resignation even if there is no new appointment or dissolution agreement.
This registration provides publicity and reliable proof of the resignation, making it enforceable against third parties. However, it should be remembered that the registration is not constitutive: the resignation takes effect against the company from the moment it is communicated.
Conclusions
Resignation from the position of sole director when the company is in the process of dissolution should be understood as a legal operation that requires planning, reliable evidence, and strategy. The way in which the resignation is articulated determines whether the director is protected from possible future liabilities or, on the contrary, exposed to unnecessary risks.
If implemented correctly, the resignation: (i) protects the director from possible future liabilities; (ii) preserves the regularity of corporate legal transactions; and (iii) transfers the liability that legally corresponds to the shareholders to them.
On the other hand, a poorly executed resignation may expose the administrator to claims for corporate debts, with consequences that could have been avoided by acting with due diligence.
