Daily Manager: Efficient Body, but Vigilance Remains Necessary

This way, the entire management body does not need to be convened for decisions of limited or urgent nature. The daily operations of the company can then be entrusted to a separate body, while the directors can focus on strategic policy.

The management body itself is authorized to appoint daily managers. Additionally, the management body remains competent to act within the domain of daily management and is also obliged to supervise the functioning of this body.

The law defines daily management as follows:

Daily management includes:

• all actions and decisions that do not go beyond the needs of the daily life of the company, as well as
• the actions and decisions that, either because of their lesser importance or because of their urgent nature, do not justify the intervention of the management body.

What exactly falls under “daily management” will, however, differ from company to company. What is a common decision in one company (for example, financial transactions up to 25,000 EUR) may be rather exceptional in another company.

Statutory limitations on the representation authority of a daily manager in a private or public limited company only have internal effect and are not enforceable against third parties. A third party may, in principle, assume the validity of a signature by the daily manager, even if that action is contrary to internal agreements or statutory provisions. In that case, the daily manager remains internally accountable. The management body can ratify the action afterwards but also retains the possibility to hold the daily manager internally liable.

Caution is advised, however, when it comes to signing bids for public contracts.

In practice, it is often wrongly assumed that a daily manager is automatically authorized to do so. However, the signing of a bid in the context of a public contract is generally not considered an act of daily management.

The risk? The bid is considered “substantially irregular” due to the lack of a valid signature. If a majority of the directors is not available at that time to validly sign the bid, the deadline is missed, and the opportunity for an important contract is lost.

To avoid discussions or rejection of the bid in the context of a public contract, the following precautions are recommended:

• Show when submitting the bid that the signature by the daily manager falls under: i) the needs of the daily life of the company, ii) an act of minor importance, or iii) an act of urgent nature. This should take into account the nature and scope of the public contract and the nature, scope, and object of the bidding company. The bidder can include the necessary evidence with their bid.
• Draft a special power of attorney for one or more persons (for example, a director or employee) who is expressly authorized to sign bids for public contracts.
• Consider including in the company’s articles of association that each director is individually authorized to represent the company. Note: this is not always desirable, for example, in companies with A and B directors or companies that consciously work with a collegial management body.

Important: although an unauthorized action by a daily manager can be ratified afterwards by the management body, this does not apply in the context of public contracts. There, a subsequently granted power of attorney or ratification of a signature is not accepted. The power of attorney must exist before the opening of the bids and cannot be drawn up or submitted afterwards.

Although a daily management body often contributes to the efficient functioning of the company, vigilance is required. As the example of public contracts shows, a single signature from an (unauthorized) daily manager can have serious consequences. An invalid signature can lead to the rejection of a bid and the loss of an important contract.

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This article was written by Azeddine El Bastani, specialized in corporate law, mergers, and acquisitions.