Libro I · Título I · Capítulo VI Sección Cuarta. Administracion

A sole director or several directors, acting jointly constituted as a board of directors, shall be the management body of the company and shall be in charge of the direction of its business.

If the articles of incorporation do not indicate a fixed number of directors, it shall correspond to the general assembly to determine it, when making each election.

The directors may or may not be shareholders; they shall be elected by the general assembly and their appointment may not be made for a period greater than three years, although their re-election is permitted.

The directors shall continue in the performance of their duties even when the term for which they were designated has concluded, while their successors do not take office.

The appointment of a director is revocable by the general assembly at any time.

The extent of the powers of the directors shall be governed by the provisions of the articles of incorporation and, in their absence, by the provisions of article 47 of this Code, and their limitations must be expressed in the appointment itself.

The sole director or the board of directors, as the case may be, shall have the legal representation of the company in and out of court and the use of the corporate name, unless the incorporation deed provides otherwise.

The board of directors may grant powers in the name of the company, but the sole director may do so only if authorized to that effect by the articles of incorporation or by the general assembly.

If the articles of incorporation expressly authorize it, the directors may be represented and shall vote in the meetings of the board of directors through another director accredited by a letter of attorney or mandate.

The articles of incorporation shall determine the form of designating the president of the board of directors and, in the absence of stipulation, the director first appointed shall be president and, in their absence, the one who follows by order of designation.

The president of the board of directors shall be the executive body of the company and shall represent it in all the matters and businesses that it has resolved, unless otherwise agreed. Notwithstanding the foregoing, the board of directors may appoint from among its members a delegate for the execution of specific acts.

For the board of directors to deliberate and take valid resolutions, the majority of its members must be present or duly represented at the meeting, unless the articles of incorporation require a greater number.

The resolutions of the board of directors shall be taken by the majority of votes of the directors present or represented at the meeting, unless the articles of incorporation require a qualified majority.

Each director shall have one vote. The president may have a casting vote in the case of a tie, if so determined in the articles of incorporation.

The articles of incorporation may provide for the appointment of alternate directors. These shall fill the temporary or definitive vacancies that arise in the board of directors, in accordance with the provisions of the articles of incorporation.

If there are no alternate directors, nor has the manner of filling the vacancies that arise in the board of directors or in the office of director been provided for in the articles of incorporation, the general assembly shall make the designation.

The director who has a direct or indirect interest in any operation or business must disclose it to the other directors, abstain from participating in the deliberation and resolution of such matter and withdraw from the meeting room.

The director who contravenes this provision shall be liable for the damages caused to the company.

Every director who, by reason of being such, derives any personal profit or benefit unrelated to the corporate business must disclose it to the board of directors or to the general assembly in the case of being a sole director, so that the pertinent resolutions be taken. If they fail to do so, they may be compelled to contribute such benefit or profit to the assets of the company and shall also be removed from office.

The director shall be liable before the company, before the shareholders and before the creditors of the company for any of the damages caused by their negligence (culpa). If the directors are several, the liability shall be joint and several.

The directors who have voted against the agreements that caused the damage shall be exempt from such liability, provided that the vote against is recorded in the minutes of the meeting.

In addition, the directors shall also be jointly and severally liable:

1ºFor the effectiveness of the contributions and of the values assigned to them, if they are in kind.

2ºFor the real existence of the net profits that are distributed in the form of dividends to the shareholders.

3ºFor the accounting of the company being kept in accordance with the legal provisions and for it being truthful.

4ºFor the exact compliance with the agreements of the general assemblies.

The liability of the directors before the company and the shareholders is extinguished:

1ºBy the approval of the reports and of the financial statements rendered in the general assemblies with respect to the operations explicitly contained in them, unless:

a)The approval of such documents has been made by virtue of untrue data; and

b)If there is an express agreement of the shareholders to reserve or exercise the action of liability.

2ºIf they have proceeded in compliance with agreements of the general assembly that are not manifestly unlawful.

3ºBy the approval of their management or by express waiver or settlement agreed by the general assembly.

The action of liability against the directors shall be brought following an agreement of the general assembly, which may be adopted even if it does not appear on the agenda of the session.

The assembly itself shall designate the person who is to exercise the action in the name of the company. If it does not bring the action within the two months following the agreement, any shareholder may, in the absence of the designated person, bring the action in the name of the company.

The exercise of that action may only be waived, desisted from or settled to that effect by agreement of a general assembly adopted by a majority of seventy-five percent (75%) of the shares with voting rights.

The agreement to promote the action of liability against one or several directors causes the removal of the same as a matter of law, even if it is subsequently provided to settle with them.

Notwithstanding the provisions of the preceding article, the shareholders representing at least ten percent (10%) of the capital may jointly bring, against one or several directors, the action of liability, provided that:

1º.The claim covers the total amount of the liabilities in favor of the company and not only the interest of those who promote the action.

2º.The plaintiffs have voted against the resolution that extinguished the liability of the directors.

The property obtained as a result of the action shall be received by the company, after deduction of the proven expenses incurred to exercise it.

Notwithstanding the provisions of the preceding articles, the actions of compensation that may correspond to the shareholders or to third parties are preserved, for acts of the directors that directly harm the interests of those.

The creditors of the company may only proceed against the directors when the action tending to reconstitute the corporate assets has not been exercised by the company and it is a matter of an agreement that seriously threatens the security of the credits.

The creditors may exercise the action of revocation, as to the agreement of the general assembly that provides to waive the exercise of the action of liability, desist from the respective proceeding or settle with one or several directors.

The directors may be removed, without the need for expression of cause, by agreement adopted by a general assembly.

When resolving the removal of one or several directors, the assembly itself shall appoint those who substitute them.

For the partial removal of the directors, a vote shall be taken for each one who is to be removed; to achieve it, the votes that oppose their removal must be fewer than those required to elect them.

If the articles of incorporation contemplate the election of directors by diverse classes of shares, their removal shall be made by vote of the shareholders of the same class.

Insofar as applicable, the accumulation of votes prescribed in article 115 shall be observed.

The directors removed by cause of liability may only be appointed again in case that, in a final judgment, they are absolved of the action brought against them.

The general assembly or the directors, as provided by the articles of incorporation, may appoint one or more general or special managers, whether or not they are shareholders.

The appointments of managers may be revoked at any time by the general assembly or by the directors, as the case may be.

The office of manager is personal and non-delegable.

The managers shall have the powers and attributions established by the articles of incorporation and, in addition, those conferred on them by the board of directors and, within them, they shall enjoy the broadest powers of legal representation and of execution. They must periodically render account of their management to the board of directors.

If the powers and attributions of the managers are not delimited, they shall have those of a factor. The manager shall be liable before the company for the same causes as the directors.

Although the manager has been designated by the general assembly, it corresponds to the directors to direct and supervise their management and they shall be jointly and severally liable with them for the damages that their performance causes to the company, if there is gross negligence in the exercise of those functions.