Time limit for actions of individual liability against managers of companies in Spain
01.19.2011 Legal

Abstract of the Resolution 700/2010 of the Civil Chamber of the Supreme Court of 11.11.2010, 1927/2006 appeal

Final Judge: Xiol Ríos, Juan Antonio

Since the STS of July 20th , 2001 the Court has been argued that the limitation period for all claims alleged liability of directors for its organic activity is the four years that points to the Commercial Code Article 949. This doctrine has been applied by this Court in SSTS dated March 1, 2004, May 26, 2004, October 5, 2004, March 25, 2005, June 15, 2005, December 22, 2005, March 6 2006, January 30, 2007, February 21, 2007, April 30, 2008 (RC No. 3355/2000), July 3, 2008 (RC No. 4186/2001), July 10, 2008 (CR No. 4059 / 2001), March 12, 2010, No. 1435/2005 RC and April 15, 2010, CR No. 470/2006, among others.

As stated in the STS of March 11, 2010, SR No. 1239/2005, citing those of December 18, 2007, SR No. 3550/2000, July 3, 2008, CR No. 4186 / 2001 and April 14, 2009, RC 1504 / 2004), Article 949 Commercial Code regarding the practice, a specialty dies a quo [opening day] of calculating the said period of four years, which is set at the time of the cessation administration by any valid reason to produce it.

Among the cases considered suitable to produce the Court (SSTS of October 26, 2004 and December 22, 2005, among others), said, among other possibilities, the opening of the liquidation of the company, an automatic consequence, except in cases exceptional for its dissolution (Article 266 LSA), in determining the substitution of administradorpor the liquidators in the management activities and representation (Articles 267 and 272 LSA), or also the resignation of manager (Article 147.1 º RRM) , or removal by a decision of the general meeting (Article 131 and 148 LSA RRM). In contrast, there is reason enough to have ceased to administradorla by mere fact that the company ceases to be active, as are the administradoresquienes are obliged to promote the orderly winding up of the company under section 260 LSA. So says the STS of March 11, 2010, SR No. 1239/2005, which, however, considered capable of producing cause the termination of expiration of the appointment manager with the ending of the period for which he was appointed, although with the following clarifications are made about the relevance of evidence of registration of such termination.

About the effects of lack of registration in the Commercial Register of the termination of the administrator, the doctrine has been understood (STS of November 27, 2008, SR No. 1050/2003, cited by that of March 11, 2010 , RC No. 1239/2005) which is necessary to differentiate between material or substantive effects that follow from a failure to register the termination of the administrator in the commercial register and formal effects that affect the calculation of the limitation period. In material terms, lack of registration does not involve leaving itself stopped the manager remains liable to third parties unless exceptions from the principle of trust, or to assume social obligations for breaching duties incumbent no longer given that registration is not constitutive. A mere formal effects, and in order to determine whether the action taken or not prescribed, the approach adopted by this Court is that if it has knowledge of the person affected by the time the termination was effective by the administrator, not credited or otherwise acted in bad faith, calculating the period of four years which involves the extinction by prescription of the action may not start but from the time of registration, since only thereafter may object to the third good faith the fact of termination and, consequently, from that time entitled to bring proceedings can not deny his ignorance (SSTS of June 26, 2006, July 3, 2008 and April 14, 2009, RC n . No 1504/2004, each cited by 11 March 2010, CR No. 1239/2005, and STS of April 15, 2010, CR No. 470/2006, citing the 2 June 2009 RC No 2352/2004, and June 18, 2009, CR No. 2760/2004).

Consequence of this is that the dies a quo [opening day] of the limitation period is fixed at the time of the cessation of administration to produce any valid reason, although computing is not good against third parties faith until it is entered in the Register.


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