27 Oct Director Liability in Spain: How Shareholders Can Act Against Disloyal Management
When a shareholder suspects that the person managing the company is running it for their own benefit, there are three questions of director liability in Spain to resolve before taking action. The first is whether the facts amount to the criminal offence of disloyal administration (administración desleal) or merely to a breach of directors’ duties under company law. The second is who has standing to respond, and the answer turns largely on who has suffered the loss. The third is which route to take, criminal or commercial, and what consequences that choice has for the claim for damages.
The offence: a serious and intentional breach of the director’s duties
Article 252 of the Spanish Criminal Code punishes anyone who, having powers to manage the assets of another, exceeds those powers in exercising them and causes loss to the assets under management. In words the Supreme Court has repeated (Order 285/2018, ECLI:ES:TS:2018:2185A), the offence condemns conduct that breaks the bonds of fidelity and loyalty linking the director to the assets entrusted to them. For that reason, it is irrelevant that the director holds broad, unrevoked powers: if they exercise them disloyally and harm the principal, the conduct falls within the offence. Since Organic Law 1/2015, it has been a general offence against property, which may be committed against any person and is no longer confined, as under the former Article 295, to the corporate sphere.
The Supreme Court’s case law breaks the offence down into three elements.
- Holding powers to manage the assets of another, whether conferred by law, by an authority or by a legal transaction.
- Exceeding those powers in their exercise.
- Causing financial loss.
The core of the offence lies in the verb ‘to exceed’ (excederse). Supreme Court Judgment 735/2023 of 5 October (ECLI:ES:TS:2023:4012) explains that Article 252 uses a broader expression than the repealed Article 295, so that a director acts unlawfully not only when misusing the powers they hold, but also when exercising powers they do not hold to the detriment of the assets under management. This covers both abuse and overreach and also, as formulated in the Chamber’s case law, failing to act with the diligence required in the management entrusted to them. In these cases, the director breaches their duties and acts against the interests of the assets under management.
Loss, for its part, need not consist of an actual reduction in assets. It may also take the form of a loss of profit resulting from an omission by the guarantor, who failed to carry out the transaction required of them.
What distinguishes it from a mere breach of company law?
To understand where the line lies with a mere breach of company law, it is worth recalling that, objectively, the criminal offence closely resembles the civil wrong under Article 236 of the Spanish Companies Act (LSC): both require loss attributable to a breach of the duties of office. The difference lies in the mental element. The offence requires intent, although dolus eventualis is sufficient. Decisions protected by the business judgment rule, unintentional breaches of the duty of diligence and negligent breaches of the duty of loyalty all fall outside the offence, without prejudice to the obligation to make good the loss. The prevailing view among criminal law scholars is that unlawfulness under company law is a necessary but not sufficient condition, and that the criminal assessment acts as a filter, reserving punishment for the most serious breaches.
The duties the director breaches
To identify disloyalty, the starting point is the statutory duties. Article 225 LSC requires the diligence of an orderly businessperson, which includes actually performing the role, monitoring and supervising, and keeping informed. Article 227 LSC requires directors to perform their role with the loyalty of a faithful representative, acting in good faith and in the best interests of the company. Paragraph 2 adds a significant consequence: breach of the duty of loyalty gives rise to an obligation not only to compensate the loss caused to the company’s assets but also to return to the company any unjust enrichment obtained by the director. Article 228 LSC sets out the basic obligations deriving from the duty of loyalty, including:
- not exercising their powers for purposes other than those for which they were granted;
- abstaining from taking part in decisions in which the director or a related person has a conflict of interest;
- taking the necessary measures to avoid situations of conflict with the company’s interest.
Article 226 LSC also protects business discretion. The standard of diligence is deemed to be met where the director has acted in good faith, without any personal interest in the matter, with sufficient information and in accordance with an appropriate decision-making procedure. This protection does not extend to decisions personally affecting other directors and related persons, nor to the transactions referred to in Article 230. Anyone alleging disloyalty must therefore look precisely for that personal interest or that conflict.
Conduct falling within the offence
Disposing of company funds without genuine justification.
The Supreme Court has treated the absence of documentary evidence of consideration as key evidence of unlawfulness where payments have been made to companies personally linked to the director. Supreme Court Judgment 1112/2024 (ECLI:ES:TS:2024:6073) holds that, once the movements between bank accounts have been documented, there is no explanation other than an intention to appropriate where the accused fails to account for where the money went.
Self-dealing and conflicts of interest.
Even where the service is genuine, the payment may be disloyal if the director awards the transaction to themselves without the knowledge or approval of the shareholders or the competent body. Supreme Court Judgment 449/2025 of 20 March (ECLI:ES:TS:2025:1169) offers a particularly illustrative application, holding that a director who contracts services for the company with other companies in their group without disclosing the conflict to the general meeting is, per se, in breach of the duty of loyalty, since disclosure must be express, irrespective of any subsequent analysis of whether the company’s interest prevailed in that contract.
Diverting business opportunities.
The same judgment recognised as compensable loss the loss of profit resulting from entrusting the management of the occupancy of the company’s apartments to a company linked to the director and in competition with it, and quantified it on an estimated basis. The Court acknowledged that there was no direct evidence that clients had been diverted, but considered it significant that the linked companies’ turnover increased while that of the managed company fell so sharply.
Concealment from shareholders.
Supreme Court Judgment 189/2024 (ECLI:ES:TS:2024:1170) describes a case in which the director used invoices to simulate building works, failed to file the annual accounts in order to prevent the shareholders from exercising control and never sought any resolution from the general meeting. Such concealment strengthens the charges, as it reveals awareness of the unlawfulness.
The boundary with misappropriation
Between Article 252 and Article 253 of the Criminal Code, the decisive criterion is the ‘point of no return’. There is disloyal administration where the disposal is abusive but made with the intention of returning the funds, even if that intention is later frustrated. There is misappropriation (apropiación indebida) where the disposal is definitive, with the assets being incorporated into the director’s own estate or that of a third party (Supreme Court Judgments 700/2016, ECLI:ES:TS:2016:3975, and 962/2016, ECLI:ES:TS:2016:5825). With the penalties now aligned, Supreme Court Judgment 1112/2024 (ECLI:ES:TS:2024:6073) states that the principle of alternativity has lost its practical relevance and that the two offences behave like concentric circles. Supreme Court Judgment 117/2022 (ECLI:ES:TS:2022:435) adds that diverting funds in the belief that they can be repaid does not exclude intent, and that personal enrichment need not be proven. Supreme Court Judgment 768/2024 (ECLI:ES:TS:2024:4354) points out that not knowing the ultimate destination of the money does not negate the offence.
A word of caution: what is not enough
Judgment 240/2025 of Barcelona Commercial Court No. 2 of 12 November (ECLI:ES:JM:2025:205) points out that a negative financial result is not unlawful in itself and that specific conduct by the director must be proven, not attributable to external factors such as the insolvency of third parties. Two concurring expert reports submitted by the defendant attributed the losses to the insolvency of subsidiaries and described the accounting errors as merely formal. The claimant provided neither its own expert evidence nor any comparative market evidence. The judgment adds that repeated approval of the management by the majority does not bar the action, but places a heavier burden of proof on the party bringing proceedings.
Who can act, and by which route
The key lies in who suffers the loss. Where the company suffers it, the action belongs to the company itself, with extraordinary standing for the minority. Where a shareholder or third party suffers it directly, they have their own action.
The first route: the company as owner of the assets (criminal proceedings and the corporate action)
Balearic Islands Provincial Court Judgment 485/2023 (Section 2) of 25 October (ECLI:ES:APIB:2023:2877) distinguishes between the offended party, who holds the protected legal interest, and the injured party, who suffers harmful consequences without holding it. Although in that economic sense the shareholders are the ultimate owners of the company’s assets, legally the sole owner of the assets under management is the company, and the director does not manage the shareholders’ property. It follows that shareholders are not victims of the offence and lack standing to act as private prosecutor (acusación particular), in light of Articles 109, 109 bis and 281 of the Criminal Procedure Act (LECrim) and the distinction drawn in Article 2 of Law 4/2015 between the victim and indirectly harmed third parties.
In commercial proceedings, the corporate liability action (acción social) requires an unlawful act, actual loss and a causal link, with the burden of proof on the claimant (Article 217 of the Civil Procedure Act, LEC). Compensation goes to the company, not to the shareholder. Article 236.3 LSC extends liability to de facto directors.
The second route: the individual action of the shareholder or third party
Article 236.1 LSC makes directors liable to the company, the shareholders and creditors, and Article 241 LSC preserves the claims for damages available to shareholders and third parties for acts of directors that directly harm their interests. Legal scholars, following the Supreme Court’s case law, describe it as an organic wrong and a form of non-contractual liability embedded in the company law framework, with its own rules. It requires:
- loss consisting of direct harm to the shareholder’s or creditor’s assets, so that the mere insolvency of the company, non-payment of a debt or the de facto closure of the business is not enough;
- negligent or wilful acts or omissions, without an act contrary to the law or the articles of association necessarily being required, since failing to exercise the diligence of an orderly businessperson and loyal representative is sufficient;
- a causal link between the conduct and the loss;
- direct loss, not merely a reflection of that suffered by the company.
This fourth element is what separates the corporate action, which seeks to restore the company’s assets, from the individual action, which compensates the loss to the assets of the shareholder or third party.
This gives rise to its main procedural advantage: the individual action is independent of any involvement of the company in how it is brought, conducted or resolved, and standing lies with any person, even if they are not a shareholder. No resolution of the general meeting or capital threshold is therefore required. Liability is joint and several among the members of the body that adopted the resolution or performed the act. Under Article 237 LSC, the only members exempted are those who prove that they did not take part, that they were unaware of the act, or that they did everything appropriate to prevent the loss or expressly opposed it.
Shareholders should be realistic about this limitation. In most cases of disloyal administration, the loss is suffered by the company and only indirectly affects the value of the shares, and that route belongs to the corporate action. The case law insists that the individual action should not be applied indiscriminately to any breach, so as not to undermine the company’s separate legal personality or the privity of contract. A contractual breach by the company does not, in itself, give rise to liability for the director.
The third route: complementary company law actions
Article 232 LSC makes clear that bringing a liability action does not preclude actions for the challenge, cessation, removal of the effects and, where appropriate, annulment of acts and contracts entered into by directors in breach of their duty of loyalty. To these must be added the return of unjust enrichment under Article 227.2 LSC. Combined with the claim for damages, these actions make it possible to attack the harmful contract, halt the conduct and recover the profit obtained by the director.
Practical considerations
The limitation period for the corporate action is four years from the date on which it could have been brought (Article 241 bis LSC).
Joint and several liability among the members of a collegiate body is governed by Article 237 LSC, rather than by the subsidiary liability of accomplices under Article 116.2 of the Criminal Code.
Waiver agreements in transfers of controlling interests can deprive the corporate action of substance. They are valid and, if signed by all shareholders, may amount to a waiver by the company (Article 238.2 LSC). Supreme Court Judgment 316/2018 (ECLI:ES:TS:2018:2498), however, took a different view, because the company bringing the criminal complaint had assets and interests distinct from those of the waiving shareholder. It is always advisable to check what was agreed and with whom, without assuming that the waiver extends to the criminal complaint.
Three ideas sum up the analysis. The first is that success depends on proving that the transactions lacked genuine justification or any corporate interest, and that there was intent rather than mere management errors. The second is that failing to disclose a conflict of interest to the general meeting is, in itself, a breach of the duty of loyalty. The third is that the route depends on who suffers the loss: the company, with the minority having standing to act on its behalf, or the shareholder or third party directly, with their own individual action and no need for the general meeting.
If you are a shareholder in a Spanish company and suspect that its director may have committed the offence of disloyal administration or breached their legal duties, it is essential to analyse the transactions carried out, assess the available evidence and determine the most appropriate course of action to protect your interests. Do not hesitate to contact us at info@navarrollimaabogados.com so that we can study your case and provide you with specialist legal advice.
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