It is increasingly common in this times that in a situation of loss by a corporation, the administrator can be liable for any debts with her/his own personal wealth. The Companies Law (RDLeg 1/2010) provides in Article 363 the obligation to dissolve the company in a number of cases.
However, in this article we look at cases where losses reduce net worth less than half of the share capital unless such capital is increased or reduced to a sufficient extent, and not from the bankruptcy.
To avoid liability in social debts , the following measures shall be taken: increase, or decrease, the share capital to the necessary extent.convene within two months, since the administrator is aware of the aforementioned situation, to a General Board meeting in order to dissolve the company and, ultimately, encourage judicial dissolution or, if necessary, to declare the state of insolvency within two months from the scheduled date of the General Meeting, when it had not taken place, or from the date in which the Board did not approve the dissolution.
The fact that the manager does not take any of these measures may involve the exercise of social liability action and, therefore, the administrator will be liable for the debts from this personal assets, and to remember that the Law of Corporations presumes that the administrator is aware of the financial and economic (annual and quarterly minimum) states. In short, it is essential that corporate managers are very attentive today due to the consequences they may suffer in their own heritage.
Miguel Olmedo Zafra