Spain's Supreme Court rules on the period for action against administrators of corporate debt
Published on 22nd Dec 2023
The judgment has drawn an unexpected conclusion to the debate around how to calculate the prescriptive period
The Spanish Supreme Court, in a recent judgement (number 1512/2023) issued on 31 October, has finalised the legal discussion revolving around the prescription period of the liability action against administrators for company debts (article 367 of the Spanish Companies Act).
Ever since article 241 bis of the Spanish Companies Act (CA) entered into force, there has been a divergence of opinions within doctrine and among the courts over how to calculate the prescription period of the liability action against administrators for company debts.
On the one hand, there were those who defended the thesis that this action was subject to the term outlined in article 949 of the Spanish Code of Commerce. Advocates of this position argued that the period for filing the action had to be calculated from the cessation of the administrator. They contended that, so long as the cessation had not taken place, the administrator remained obliged to fulfil their social obligations.
This rule avoided evidentiary challenges, as the creditor needed only to refer to the register in order to become aware of the circumstance.
On the other hand, there were those who asserted that article 241 bis CA should be deemed applicable. They argued that the article – labelled "prescription term for liability actions" – encompassed the terms for individual and corporate actions, including the action for corporate liabilities contained in article 367 CA.
Supreme Court interpretation
At this point, the Supreme Court's resolution issued on 31 October put an end to the discussion.
Spain's highest court reasoned that article 241 bis of the CA is in fact not applicable. This determination is made based on the literal wording of the article, its systematic position within the Companies Act, and its distinct nature compared to other actions, which collectively rule out the possibility of its application.
Likewise, the Supreme Court dismissed the possibility of resorting to article 949 of the Spanish Code of Commerce, as its scope is limited to personalist companies, excluding limited liability companies.
The judgement further stated that the law considers administrators to be solidary guarantors for those obligations that arise after the dissolution cause. Consequently, the Supreme Court concluded that the prescription period for filing the action must be the same as the one indicated in each case for the guaranteed obligation (that is, the corporate debt).
Osborne Clarke comment
The Spanish Supreme Court has settled the discussion surrounding a widely discussed matter, and it has done so in what can be considered a completely unexpected outcome.
The issuance of this resolution implies that the liability action for corporate debts now depends on the nature of the corresponding obligation in question. In practice, this will mean that the viability of these actions will necessarily have to be analysed on a case-by-case basis.
