Corporate crime (delito societario) is a specific type of crime under the larger heading of property crimes and crimes against socio-economic order (delitos contra el patrimonio y contra el orden socioeconómico).
According to the Spanish Criminal Code, Corporate Crimes are crimes related to associations, financial entities, foundations or businesses that in order to reach their objectives are permanently trading on stock markets. All these crimes are regulated by the Spanish Criminal Code of 1995 corresponding to the organic law 10/1995 of the 23rd November. Specifically corporate crimes are regulated by articles 290 – 297.
We can distinguish several types of corporate crimes:
Falsification of financial statements or other documents
Article 290 of law 10/1995 penalises the administrators who falsify annual accounts or any other documents reflecting the legal or economical situation of a business with the intent to prejudice the economical expectations of the business, or shareholders. Spanish law treats both legally appointed administrators and the acting administrators equally, as the legal administrators should exercise a control function over the whole administration of the company. This crime is penalised with a prison sentence from 1 to 3 years and a fine. If however there was in effect a financial loss, the sentence will be from 2 to 3 years.
Illegal control of company assets by administrators
The administrators or shareholders of any business taking advantage of their position for the illegal control of company assets and thus creating economic loss for the shareholders are punishable by Art. 295 of law 10/1995. The penalty will be a prison sentence from 6 months to 4 years and a fine of up to 3 times the corresponding benefits.
It is important to differentiate this crime with misappropriation (apropiación indebida) where the administrator is effectively stealing assets from the company.
Imposition of abusive arrangements
Art. 291 of law 10/1995 punishes anyone who takes advantage of his majority position in a shareholders or board meeting to impose abusive practices with the intent of gaining personal economical benefits in prejudice of the other shareholders. The penalty will be a prison sentence from 6 months to 3 years and a fine corresponding to 3 times the economical gain.
Harmful agreements to the company and its shareholders
This crime regulated by Art. 292, is similar to the previous one but in this case the majority has been reached by illegal deceitful ways e.g.: falsifying signatures, improper allocation of voting rights or unjust denial of voting rights. The penalty will be same as the previous crime and with possibly an additional penalty for fraud.
Preventing shareholders from exercising their rights
Art. 293 considers the administrator (legally appointed or acting) of a company who without legal reasons prevents a shareholder from exercising any of his corporate rights e.g.: being informed, participating in management or having preferential subscription to shares. The penalty will be a fine from 6 to 12 months.
The EU context
If we compare the penalties for comparable crimes in the different EU members we can see that Spain is rather lenient. Interestingly Corporate Crime was not affected by the criminal code updates of 2003 and 2010 that increased penalties against company crimes.
Probably the next criminal code update, will contain more severe punishments for corporate crimes considering the situation of economical crisis and the harmonisation trend of criminal laws in the EU.