In relation to this topic, we will begin by referring to another contribution of this blog. It is more up to date and complements the content of this one: Practical guide to corporate crime.
Corporate crimes, are introduced in Spain in 1995 and the wording of the types is so vague and extensive that, in order to understand the prohibited conducts, it is necessary to examine the Jurisprudence.
Due to its transcendental importance, it should be taken into account that in Spain (nowadays) corporate crimes require malice (bad faith).
However, let´s see, as a first approximation, how the Criminal Code defines the crime and the penalty attributed to it.
|Misrepresentation of social information (art. 290)||1 to 3 years imprisonment and 6 to 12 months fine.|
|Imposing abusive agreements (art. 291 and 292)||Imprisonment from 6 months to 3 years or a fine of up to three times the profit obtained.|
|Denying or impeding corporate rights (art. 293)||Fine of 6 to 12 months|
|Denying or impeding inspection or supervision (art. 294)||Imprisonment from 6 months to 3 years or fine from 12 to 24 months.|
|Unfair or fraudulent administration (art. 295)||Imprisonment from 6 months to 4 years or a fine of up to three times the profit obtained.|
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Denying or impeding corporate rights
(293CP) The conduct does not need to be repeated to be a crime)
What conducts are understood to be included in this crime?
Conducting a Meeting by stealing information that affects the economic and political rights (not all of them, only the minimum and essential ones) inherent to the condition of partner. Thus, the protected economic and patrimonial rights are the right to participate in the profits, to participate in the liquidation quota and preferential subscription; and the political rights are those of information and attendance and vote in the general meetings. (…)
Within the Shareholder’s Right to Information, it is a crime (in accordance with article 293 of the Penal Code) to refuse information ( the reports or clarifications that are deemed necessary regarding the matters included in the agenda) after a written request, prior to the meeting or verbally during the meeting. Therefore, the directors shall be obliged to provide them with such information, except in those cases in which, in the opinion of the chairman, the publication of the data requested would be detrimental to the company’s interests. This exception does not apply when the request is supported by shareholders representing at least one quarter of the capital.
It also commits an offence ( pursuant to Article 293 PC), who prevents from the date of the call of the General Meeting, any shareholder from obtaining from the company, immediately and free of charge, the documents to be submitted for approval by the Board, as well as, where appropriate, the management report and the auditors’ report.Ruling No. 532/2012 of the SC, 2nd Chamber, Criminal, June 26, 2012
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295 CC (and MISAPPROPRIATION 252 CC)
If the administrator of a Company acts unlawfully outside the powers granted, it would be facing a possible crime of misappropriation, and when unlawful acts are executed within the framework of the powers entrusted to the administrator, we would face the crime of unfair or fraudulent administration of art. 295 ( SSTS 462/2009, of 12-5 ; 623/2009, of 19- 5 ; 47/2010, of 2-2 ; and 707/2012, of 20-9 , among others). However, it cannot be considered that, by the mere fact of executing acts related to the powers of administration granted by the company, the application of the two criminal offenses referred to thereinbefore must be ruled out. Sentence nº 906/2012 of SC, 2nd Chamber, Criminal Court, November 2, 2012.
Criminal Code Reform
The reform of the Criminal Code aims to repeal article 295 of the PC so that the crime of Unfair or Fraudulent Administration ceases to be a corporate crime and becomes a property crime (subsuming it in article 252 of the PC).
What does it intend to acheive? That the following unlawful behaviors can be punished as crimes:
- Payments for fictitious services.
- Simulation of non-existent advice.
- Economic operations that harm the administered patrimony, with clear excess of the power received.
- Hiring of services that are not provided.
- Hiring of services for a higher price than the real market price.
- Creation of “B” funds outside the control of the owner of the administered patrimony.
- Granting of high remunerations or millionaire pensions to members of boards of directors.
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