Liability Upon the Resignation of the Legal Representative in Horizontal Properties

Luz Saldaña

Revisado por abogados · Consejurídico S.A.S.

#### By: Dr. Luz Eneida Saldaña, Attorney (Universidad del Rosario), specialist in Administrative Law and Financial Law

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The person holding this position must submit their resignation to the competent corporate body defined in the Bylaws. However, if a replacement, that is, the new appointment, is not registered in the commercial registry, even though that condition does not depend on the representative, the legal representative must, to safeguard their liability, notify the Chamber of Commerce in writing of their resignation.

Just as liability as a Legal Representative begins with acceptance of the appointment, toward third parties it is only enforceable from the moment the appointment is registered in the commercial registry of the company they represent.

Now, under Article 164 of the Commercial Code: "Persons registered with the Chamber of Commerce of the company's domicile as representatives of a company shall retain that status for all legal purposes until that registration is cancelled through the registration of a new appointment or election."

And Article 442 of the same Code provides: "(…) the persons whose names are registered in the corresponding commercial registry as principal and alternate managers shall be the representatives of the company for all legal purposes, until their registration is cancelled through the registration of a new appointment."

Therefore, mere resignation (even if accepted) does not release the Legal Representative from their responsibilities, and it is appropriate to check whether the bylaws contain a provision regulating the period during which they must remain in their capacity as representative once they have resigned.

Indeed, the Constitutional Court, in judgment C-621 of July 29, 2003, determined that until a new legal representative is registered, the functions and responsibilities remain with the person who appears as such in the Commercial Registry, that is, until a new appointment is registered, since the lack of publicity of the end of the legal representation makes the act or fact unenforceable against third parties, before whom the legal representative or statutory auditor registered as such will continue to answer for all legal purposes.

Thus, the continued entry in the commercial registry of the name of the person who had been exercising the company's legal representation, even after their departure, serves as a guarantee of third parties' interests and for reasons of legal certainty.

Now, if there is no corporate body to receive the resignation, or if there is one but the replacement is not appointed or registered, the legal representative, to safeguard their liability, must inform the Chamber of Commerce of their resignation in writing so that this information is incorporated into the company's certificate of existence and legal representation. However, as stated in Constitutional Court Judgment C-621 of 2003, administrators or representatives are only removed from the certificate of existence and legal representation when there are new appointments.

The judgment also established that "…the liability imposed on legal representatives and statutory auditors leaving their posts, while a new appointment is being registered, carries the correlative obligation of the competent corporate bodies in each case to provide the replacement and register the new appointment, observing the provisions of the corporate bylaws…"

It also brings up the content of the opinion of the Superintendency of Corporations, in official letter 220-40463 of July 21, 1998, according to which, "… if the Corporate Bylaws do not expressly provide a period within which the replacement of the outgoing legal representative or statutory auditor must be provided, the corporate bodies in charge of making the appointment must do so within thirty days, counted from the moment of resignation, removal, incapacity, death, end of the stipulated term, or any other circumstance that ends the exercise of the office. During this period the person who has been performing it will continue to exercise it with the full responsibilities and rights inherent to it."

This is by analogous application of the rules governing termination of open-ended employment contracts, contained in Article 47 of the Substantive Labor Code, as replaced by Article 5 of Decree-Law 2351 of 1956.

The judgment goes on to state that once that period has elapsed without the competent corporate body having appointed and registered a new legal representative, the legal liability of the person who ceases to exercise those functions ends, including criminal liability.

The Court concludes that, after the thirty-day period, and with notice from the interested party of their departure, that registration becomes merely formal, without prejudice to any actions for damages that the former legal representative may bring against the company.

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