The Responsibility of the Administrators in the Family Business

Legal Area: Corporate Law
Industry: Professional Services

Lately, the responsibility of the administrators has acquired a growing importance in the business field, but it becomes a really complex issue when it comes to the field of family business, since family ties are intrinsically linked to business management and even and in some cases, we can find unprofessional management, the result of the relationship of trust between family members over the years. But this relationship of trust that must be observed as a positive element must not be denial of the obligation of diligence that certain members of the organization have in the company.

We can not forget that the weight of the family business in our business fabric is important enough, because the question of the responsibility of the administrators of this family business, is at present the center of many of these decisions administrators And it is true that until a short time ago the management of many of these family businesses was unprofessional and in a present and future with an important normative complexity, professional accompaniment becomes indispensable.

And this responsibility can be analyzed from different fields such as the mercantile or corporate, labor, criminal or fiscal. For this reason, the different norms of the Andorran legal system devote important sections to determine the responsibility of the administrators in the business management and the management of the familiar company is no exception.
In the criminal sphere, it is important to highlight the content of article 24 of the Criminal Code that gives criminal liability who acts as the legal administrator in fact or of a legal person. That is, although initially criminal liability is personal, this article includes within the scope of responsible persons, not only the right administrators of societies, but also those who through powers act as such.

And without leaving the criminal area, we can make clear that the Criminal Code also punishes the fact that administrators do not face situations of economic crisis that lead them to a situation of criminal bankruptcy. Therefore, the order in the economic field will be of importance not only in the field of property but also in criminal matters.
But it is in the fourth chapter where we are specifically dealing with those crimes against the commercial activity of companies, such as the falsification of social accounts or other documents that reflect the legal or economic situation of a company or company, the imposition of Abusive agreements within the framework of a privileged situation within the administration body, compromising the competitiveness of the company. It should be noted that prison sentences could reach four years in some cases.

In the work field, the criminal responsibility of the administrators is also especially relevant, and those who refuse to declare totally or even partially the salary of workers before the CASS may be punished with imprisonment of up to 3 years if the amount Frauded in the previous 12 months exceeds 30,000 Euros. Even in amounts exceeding 10,000 Euros of fraud, there would also be criminal liability. However, it is important to emphasize that it would be exempt from responsibility that regulates its situation before knowing that the judicial procedure is directed against him. For this reason, it is also important to keep up to date with professional obligations, professionalizing services if necessary.

In the case of criminal proceedings, the corporate regulations also provide specific sections regarding the responsibility of the administrators, as they will respond to damages caused to the company by acts or omissions contrary to legal or statutory rules. It is clear that many administrators do not know all the rules applicable to their activity, and more at a time when the excess of legal obligations marked by newly approved regulations has considerably increased this end.

It is interesting to note that the Law of Societies contemplates a clause of exoneration of liability when the administrators, for reasons not attributable to themselves, are unaware of the existence of the action or omission. Nor should the administrators respond, who, knowing this action or omission, have done their best to avoid or reduce the damage. The evidence of opposition to harmful conduct is a necessary requirement for this purpose. We once again arrive at the need for written tests to prove the absence of responsibility. It is also necessary to comment on the so-called social responsibility action against administrators that may be exercised by the same company, in other words, the company has been damaged by the guilty of the administrators and with the previous agreement of the general meeting, it may adopt the exercise of This action, even if it does not appear on the agenda. And do not forget that the administrator is also responsible for the social debts that do not institute judicial dissolution when there is legal cause to dissolve the company. The causes are expressly included in article 85.5 of the Companies Act. This is an aspect that has already been highlighted by the jurisprudence of our Courts.

Finally to conclude, as regards the potential criminal liability of the administrators of family companies and senior management teams, it should be taken into account that this criminal responsibility may exist both for concrete actions carried out by these people, as well as for the omission of its obligations, and in particular when the administrators have not adopted all due diligence measures that mark their position.

Therefore, in a time of crisis within the family business, such as the moment of succession, this omission of legal obligations could lead to criminal liability as well as other important types, as well as in the The framework of inspections by the competent administrations (CASS, Tributaries, etc ...) would indicate this type of responsibility.

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Elena Redondo Elena Redondo

Elena Redondo is a Partner at Cases & Lacambra in Andorra. Her practice is focused on Public Law, Real Estate, Construction and Environmental Law and she has participated in the drafting of regulatory projects in such areas.

Parròquia d'Andorra la Vella - Andorra

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