No valid directory server found

What causes this issue?

The system attempted to automatically determine a directory server. Die
aim in doing so was to find a server for the application &V1& with the
indicator <LS>Proposal</>.
As no server of this type was found, the system then searched with the
application ROOT and then with the application <initial>.
However, the system could not find a server.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Check the configuration of the directory server in Customizing (View
cluster VC_LDAP).

Procedure for System Administrators

Error message extract from SAP system. Copyright SAP SE.