Administrator Responsibility, duty of loyalty and corporate groups



Is responsible administrator of damaging a subsidiary carrying out the orders of the dome of the corporate group?

The duty of loyalty to managers, It is defined in Articles 227 a 232 of the Corporations Act.

Article 227 LSC establece:

1. Managers must hold their position with the loyalty of a faithful representative, acting in good faith and in the best interest of society.
2. Breach of duty of loyalty will determine not only the obligation to compensate the damage to social equity, but also to give back to society unjust enrichment obtained by the administrator.

Namely, the breach of the duty of loyalty can demand accountability Administrator.

In real life business, this requirement may be complicated when there corporate groups and transfers of clientele between some companies belonging to the same organization.

The Supreme Court has solved one of these cases at its Judgment 11 December 2015.

In 2003 The company was founded Alphaspray S.L.. (hereinafter "Alpha") dedicated primarily to paint aerosols in the French market.

Its founding members were:

  • D. Evaristo with 20% (the plaintiff)
  • D. Augusto with 25% (demandado)
  • D. Nazario with 4% (demandado)
  • D. Imanol with 51% (and you happen to pass away Ms.. Yolanda)

D. Augusto and D. Nazario were named solidarity administrators.

Until the year 2005, "Alpha" sold its products on the French market and had a sales office in France.

In November 2005 French society "Actispray SRL" was established, (hereinafter "Acti"), with a corporate purpose similar to "Alpha" and with headquarters in the same direction.

The founders of "Acti" were:

  • D. Augusto
  • The French Society International represented by Ms. Cofipague. Yolanda

Namely, both "Alpha" and "Acti" are integrated into a group of companies dominated by the French bank Cofipague International is the majority partner Ms.. Yolanda. And the embroidery, Cofipague group is part of "ID" and "FISA", whose majority shareholder is also Ms.. Yolanda.

D. Evaristo (the plaintiff) He was commercial director of "DNI" until his dismissal in the year 2006.

"Acti" was established in late 2005, commercial and tax reasons. He offered to D. Evaristo participate as partner, but he did not.

Late 2005, It was carried out customer transfer "Alpha" a "Acti", by sending a letter, in which it is stated that "Alpha" becomes "Acti".

So in the year 2006, sales of "Alpha" are reduced 84%, entering losses. Such sales are mainly trasvasadas to "Acti".

D. Evaristo tried to sell their stakes in "Alpha" group, but it did not reach an agreement.

The board of trustees of "Alpha" of 30 June 2008 He rejected the proposal D. Evaristo to exercise corporate liability action against the directors. So D. Evaristo, filed suit against D. Augusto and D. Nazario, exercising corporate liability action, by breach of the duty of loyalty and fidelity to transfer most of the clientele of "Alpha" to "Acti".
He requested were ordered to indemnify the first commercial with the amount of 1.691.584 euros.

El Juzgado de lo Mercantil Nº 8 Barcelona, dismissed the claim.
He considered that the transfer of clientele It should be assessed in the context of group of companies that were part of. Also, D. Evaristo, He learned of the creation of "Acti", He decided not to participate in it and even decided to become independent to pursue the same activity through Revettech and societies Aertech.
The Court not appreciated liability of directors that abided by a group decision. And the group's decisions, on some occasions harm to the society and other benefit.

D. Evaristo appealed. The Provincial Court of Barcelona, in sentence 21 June 2013, upheld in part the appeal: He condemned D. Augusto to compensate "Alpha" with 154.377 euros and acquitted D. Nazario.
For Hearing on duty of loyalty to managers It refers to the corporation they administer and not others even if they belong to a group. Neither the minority shareholders or creditors of "Alpha" may be adversely affected by the operations agreed upon from the direction "in the interests of a group". The room does not consider proved to have been a "compensation" to "Alpha": the clientele was generated by the efforts of the company between 2003 and 2005 and the diversion of clientele you created a clear disadvantage.

So D. Augusto appealed to the Supreme Court, on the following grounds:

1.- The transfer of customers was known and agreed by the partners and the applicant withdrew part in "Acti".
2.- Administrators were mere agents of the group's parent.
3.- There was no fraud or personal gain at the expense of harm society.
4.- The dome of the group intended to prevent harm to another company of the same.
5.- There was no risk to creditors.

The Supreme Court considers proven that the transfer of customers caused injury a “Alpha”, that the applicant was minority and foreign partner to the management of the group, that there was no counterpart to "Alpha" in exchange for the transfer of customers and the offer to D. It evaristo the opportunity to participate in "Acti" was unable to compensating for the loss in "Alpha".

The decision of the Court was correct. The duty of loyalty Administrator It has referred to the company that manages and not the other, even if they belong to the same group. Acting in compliance with the orders of the leadership group, does not relieve him of his duty of loyalty. No "due obedience" about the group.

In any case, They should evaluate possible "countervailing benefits" that the group would offer to society, but such compensation must be verifiable, no mere hypotheses fit. Also, They should have a real economic value and proportionate to the damage suffered by the subsidiary.

The administrator caused a property damage society and jeopardized their viability, making into losses. He offered no compensation for any damage. The fact that the performance was not secret but transparent, does not prevent it was unfair.
Nor was relieved of its responsibility the absence of mind damage or personal gain (contentious issue) because what matters is the harm to society.

Ultimately, Administrator responsibility is confirmed by breach of duty of loyalty, despite having acted on demands of the corporate group.

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