Companies Act 19,550 · Article 58 — Representation: governing rules

How far a representative binds the company (LGS art. 58)

Article 58 of the General Companies Law determines the extent to which an administrator or representative binds the company toward third parties: the company is bound by all acts that are not manifestly foreign to its corporate purpose. Internal restrictions on authority do not prejudice good-faith third parties, although violation of those restrictions may create internal liability.

Source: Act 19,550

What article 58

Article 58 governs the company's organic representation: which acts of an administrator or representative bind the company toward third parties and the effect of internal limitations on authority.

Official text · Act 19,550, art. 58

An administrator or representative who, under the company agreement or by operation of law, has authority to represent the company binds it by all acts that are not manifestly foreign to the corporate purpose. This rule applies even in breach of a plural-representation arrangement where obligations are incurred through negotiable instruments, contracts between absent parties, adhesion contracts or contracts concluded through standard forms, except where the third party had actual knowledge that the act was entered into in breach of the plural-representation requirement.

Internal effect of limitations. These statutory powers of administrators or representatives vis-à-vis third parties do not affect the internal validity of contractual restrictions or liability for their breach.

Source: Law 19,550, art. 58 - InfoLEG (updated official text)

Commentary

The key formula is “acts that are not manifestly foreign to the corporate purpose”. It protects good-faith third parties. The company remains bound even where an administrator exceeded internal authority, unless the act is clearly outside the corporate purpose or the third party actually knew of the breach of a plural-signature arrangement.

Internal limitations—such as joint-signature requirements or monetary thresholds—are not generally opposable to good-faith third parties, but they remain effective internally: an administrator who breaches them may be liable to the company. The provision is a corporate-law expression of transactional security.

Distinctions often confused

Act manifestly foreign to the corporate purpose is not the same as Act exceeding internal authority. The former does not bind the company toward third parties; the latter generally does bind it in order to protect the third party, without prejudice to the administrator's internal liability.

Representation (external relations) is not the same as Administration (internal management). Representation projects the company's will externally; administration concerns internal management. Article 58 addresses representation; article 59 addresses diligence in management.

Practical impact

For third parties contracting with a company, article 58 provides transactional certainty: the act need only not be manifestly foreign to the corporate purpose. For the company, joint-signature clauses and monetary limits remain effective internally and may support liability of an administrator who disregards them.

Frequently asked questions

Is the company bound if the administrator exceeds internal authority?

Yes, toward good-faith third parties, unless the act is manifestly foreign to the corporate purpose or the third party knew of the breach of a plural-representation requirement.

Do joint-signature limitations matter?

Yes, internally. They generally cannot be asserted against good-faith third parties, but an administrator who violates them may be liable to the company.

This page is informational and does not constitute legal advice nor replace professional consultation. It quotes the official text of the rule; for its application to a specific case, consult a licensed professional.

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