The liability of company administrators is a key issue in the commercial field, especially in situations where the company’s accounting does not reflect a true and fair view of its assets and financial situation. At Tecem Abogados, experts in legal and accounting advice in Málaga, Benalmádena and the Costa del Sol, we deal with complex cases of liability of company administrators, helping companies and communities of goods to comply with their legal obligations.

What does the lack of a true and fair view in accounting imply?

According to commercial law, the annual accounts of a company must give a true and fair view of its assets and financial situation. However, when this does not occur, it can generate important legal consequences for the company’s administrator. A recent example is a judgment of the Provincial Court of Barcelona (AP Barcelona 27-2-24, EDJ 545225) in which the administrator was ordered to pay a debt due to the lack of proof of contributions from shareholders that were reflected in the accounts, but whose existence was doubtful. In this case, since it was unable to prove the reality of these contributions, the company’s accounts did not reflect a true and fair view of its financial situation. As a result, the company was in a state of dissolution due to losses before incurring the claimed debt, which generated the joint and several liability of the administrator.

Obligations of the administrator in insolvency situations

The Spanish Corporate Enterprises Act (LSC) establishes that directors are obliged to act diligently when the company is dissolved due to losses (LSC art. 363.1.e). In the aforementioned case, the administrator did not comply with his duty to promote the dissolution of the company or to solve the cause of the losses, which entailed his liability for the debts incurred. It is important to emphasize that the administrator must prove the reality of the contributions of partners when these are included in the accounting. If he is unable to do so, as happened in this case, the consequences can be serious, including personal liability for the debts of the company.

Key aspects of the administrator’s liability

Adequate accounting: The annual accounts must reflect the economic reality of the company. 2.Contributions of partners: They must be adequately proven with the required documentation, such as bank receipts or contracts.Cause for dissolution: The administrator must act immediately if the company enters in cause of dissolution by losses, either promoting its dissolution or correcting the cause.Joint and several liability: If the administrator does not comply with his obligations, he may be jointly and severally liable for the debts incurred by the company.

Legal advice in Málaga, Benalmádena and the Costa del Sol

In Tecem Abogados, we have extensive experience in cases of liability of directors for debts and in the review of the annual accounts of companies. If you are a company administrator and have doubts about your responsibilities or are facing a debt claim, our professionals can advise you to minimize the legal risks. Our firm offers comprehensive legal, tax and accounting advice for companies and communities of property in Malaga, Benalmadena and the entire Costa del Sol. Contact Tecem Abogados and make sure that your annual accounts reflect a true and fair view of your company’s situation and avoid unnecessary liabilities.