The way in which legal entities (companies, foundations, etc.) can express their will and carry out certain acts is through individuals. To do so, these individuals tasked with performing an activity on behalf of a given company must prove that authority and its limits.
The technical capacity to determine with certainty the extent of an individual’s powers to act in the name and on behalf of a legal entity rests principally with solicitors. At BBM Abogados we have the best experts in this field, so do not hesitate to contact us.
Before arranging a guarantee for your company with a financial institution or a public tender, it is essential to check the legal validity of the signatory’s powers. If you have questions about the basic legal concepts of this procedure, learn what power verification (bastanteo) is and how it works in our complete guide. Get to know the general timescales and requirements before proceeding with the specific study of your bank guarantees.
What does power verification involve?
Power verification (bastanteo) is the document or seal, issued by a solicitor, containing their declaration on the sufficiency of the representation granted by a legal entity to one or more individuals. Likewise, the document will determine the nature of the representation, its form and, where relevant, its validity.
This instrument certifies that the powers submitted by an individual have been checked to be “sufficient” to carry out certain actions in the name and on behalf of an entity before a public body or a bank.
Who turns to power verification?
Clearly, of the wide range of relationships a company may develop, some of its counterparties will be stricter than others in checking powers.
Nevertheless, there are actions in which the review of these powers is unavoidable, given the nature of those relationships. Thus, we find that banks or credit institutions are, above all, the ones that turn to power verification. This is perfectly logical, since we must bear in mind that companies, businesses and other legal entities need to hold accounts, operate them, apply for loans and carry out countless other transactions at a bank.
For their part, financial institutions, in order to provide their services, must make sure that those presenting themselves as authorised representatives genuinely are, and that they are empowered to carry out the action they intend. Likewise, this procedure allows them to comply with all the legislation on the prevention of unlawful acts to which banks are subject.
Alongside banks, the public administration and public bodies are among those interested in applying power verification in their various public tender procedures, since in cases of contracting with private parties they have a particular interest in knowing whether the representation meets their requirements.
In this case, the authority will have an office, with its own staff tasked with carrying out the assessment.
The usefulness of power verification
As can be deduced from all of the above, the main purpose of this validation process is to prevent fraud. In other words, it seeks to reduce the risk of an unauthorised person carrying out acts on behalf of a company.
By studying the documentation, it is possible to identify the individuals authorised to carry out certain transactions on behalf of the company.
Likewise, it makes it possible to establish the scope and extent of the powers granted by the company. That is, whether the person’s authority is unlimited, joint or separate with respect to other representatives, among other aspects.
It is important to stress that, for this security measure to be truly effective, the company must immediately report any change in its authorised representatives. In other words, it must keep its details up to date.
Documentation required for power verification in Santander
For the solicitor handling this verification process to carry it out, they will need all the documentation proving the representation, as well as the company’s own identification.
Depending on the institution carrying out the verification, additional documentation may be requested, but as a rule the documents required are:
- The power of attorney in favour of the representative or the appointment of the company’s director, duly notarised and registered at the Companies Registry.
- The representative’s ID (D.N.I.).
- The company’s incorporation deed.
Results of the power verification
Once the documentation has been assessed, it may be established that the powers granted to a particular person are correct, evidencing the role each person holds and the arrangements for disposal. Likewise, the term of office must be stated, and fresh documentation must be provided once that term expires.
That said, it may also happen that the documentation is insufficient to establish the persons and the positions they hold. In this scenario, the company or grantor must resubmit the documentation once the shortcomings identified have been remedied.
The importance of power verification
There is no doubt that this procedure is extremely important, especially for financial institutions that grant loans and for public bodies. This is in order to give legitimacy to the transactions they carry out.
When power verification is carried out by professionals with high quality standards, the risks of fraud or error are eliminated, so do not hesitate to seek the best legal representation to carry out this procedure.
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