Legal representative: Responsibilities and risks

It is well known that for the constitution of a company in Colombia it is very necessary to create an organizational chart of ownership. In this we find the CEO or Manager, the administrative body and almost adjacently, the legal representative who plays a crucial role in all legal aspects of the company.

The legal representative: An important part of the company

A legal representative is one who performs acts on behalf of another individual, and in this case, performs the role of representing a company. Likewise, the ‘legal’ surname is obtained since such representation is made based on agreements related to the law.

We can say that legal representation is an administrative figure, since it is in charge of managing the assets, taking care of the rights and obligations of the company, managing assets and assets in general, following the guidelines of the contract.

It does not apply to all cases, but it is common to see that the manager acts as the legal representative, and also, it is not always fulfilled, but mostly we will see lawyers occupying this position, due to their knowledge of laws and procedures.

Just like any other job in a company, the legal advisor has crucial functions for the development of many topics and among these we find:

• Company representation

It may sound basic, but the first and main function of this is to appear as the person who faces the company in most situations where the company is called or requested, both in front of the state and in front of other private entities.

• Assets and equity administration

In most cases it is the representative (although on other occasions the manager) who oversees the general assets of the company; to acquire goods and the documentation that this process requires.

• Execute contracts

All types of contracts that the company may have will be studied, approved, and finally signed by him. Since he is the one who, as we said before, stands up for the company.

• Stick to the orders of the board of directors and shareholders and manage their processes in addition to presenting reports and holding meetings.

This task requires listening to the requests and needs of the company in general and acting based on these. Therefore, it will be subject to both the shareholders and the board of directors and must deliver pertinent reports in this regard and summon any meetings in which any needs can be determined.

We can see then the wide range of functions that the legal representative must fulfill, and therefore, we instantly think about the risks involved in not having a good legal representative, hence the imperative need to contact an accounting firm.

Failure to comply with the functions of the legal representative brings along a series of negative consequences for both the legal rep and the company, including:

• Respond jointly and severally for the damages that his actions cause to the company, shareholders and even third parties, as long as it is done in a fraudulent or negligent manner. In addition to this, he must pay with his own equity.
• Mismanagement by the legal representative can present problems with the shareholders, needing to solve them immediately.
• An irresponsible administration could lead to the total loss of the company and the loss of important assets for it, property and equity included, hence the need for advice when we choose a representative act.

After thoroughly seeing what a legal representative is and what it does, we can see the great importance that it has for a company. That is why it is crucial to choose an experienced and suitable advisor to run the business.