In brief
- The offence of breach of fiduciary duty (Art. 252 of the Criminal Code) punishes anyone who manages another person’s assets and uses their powers against the owner’s interests, causing financial loss.
- It requires three elements: powers to manage another’s assets, breach of those powers by exceeding them, and financial loss; the manager need not obtain a personal benefit.
- If the loss does not exceed €400, it is a minor offence punishable by a fine of one to three months; in aggravated cases, imprisonment of one to six years and a fine of six to twelve months, which may rise to imprisonment of four to eight years and a fine of twelve to twenty-four months.
- Art. 252 does not provide for a specific negligent form: intentional conduct is required.
- A legal person cannot be criminally convicted of this offence, but it may be required to bear civil liability.
The offence of breach of fiduciary duty (administración desleal) punishes anyone who manages another person’s assets and uses their powers against the owner’s interests, causing financial loss.
It may affect companies, shareholders, investors, family estates, owners’ associations (comunidades de propietarios), foundations or any other person or entity whose assets have been entrusted to a manager.
It is therefore not limited to directors of commercial companies. It may also be committed by anyone who manages another’s property by operation of law, by appointment of an authority, or under a contract, power of attorney, professional engagement or other legal relationship.
What does the offence of breach of fiduciary duty consist of?
The offence requires three elements:
Powers to manage another person’s assets. Those powers may derive from the law, from an authority or from a legal transaction, such as a management agreement, a power of attorney or appointment as a company director.
Breach of those powers by exceeding them. It is not enough for the management to be unprofitable, debatable or simply mistaken. There must be conduct that departs from the duties inherent in the mandate and is incompatible with loyal management of the assets.
Financial loss. The damage must result from the manager’s conduct and must be quantifiable in economic terms.
The loss may arise, for example, from:
making unjustified payments;
entering into contracts on terms detrimental to the company;
assuming unnecessary obligations;
diverting business opportunities;
using company funds for purposes unrelated to its business;
taking decisions that unduly benefit a third party to the detriment of the assets managed.
The manager need not obtain a personal benefit. What is decisive is that they knowingly act disloyally and cause loss to the assets they manage. Nor is it necessary for any benefit obtained by another person to end up in the manager’s own assets.
Who can commit breach of fiduciary duty?
It is a special offence (delito especial): it can only be committed by someone with effective powers to manage the assets harmed. This may be a de facto or de jure director, an attorney-in-fact with real decision-making power, a professional manager or any other person who has legally assumed the management.
In a business context, this may include a company director, a manager with powers of disposal, an attorney-in-fact, an external manager or a person who, although not formally appointed, in practice directs the management of the assets.
The injured party may be a company, a shareholder, a natural person, an association or any owner of the assets managed. Damage to the company may also extend to its shareholders where it reduces the value of their holding or deprives them of the profits they could reasonably have obtained.
What is the penalty for breach of fiduciary duty and when is it aggravated?
Art. 252 of the Criminal Code does not provide for a specific negligent form. The criminally relevant conduct requires intent: the manager must know the scope of their conduct and accept the loss it causes to the assets managed.
Where the loss does not exceed €400, the facts are punished as a minor offence with a fine of one to three months (day-fine system). If it exceeds that amount, the penalty is determined by reference to the rules on fraud (estafa).
The penalty may be aggravated where any of the circumstances provided for aggravated fraud is present. These include:
the particular seriousness of the loss or of the financial situation in which the victim is left;
the value of the fraud exceeds €50,000;
it affects a large number of people;
the abuse of personal relationships or the exploitation of business or professional credibility.
In these cases, the penalty is imprisonment of one to six years and a fine of six to twelve months.
Where certain particularly serious circumstances are present, such as a loss exceeding €250,000 or the combination of certain aggravating circumstances provided by law, the penalty may rise to imprisonment of four to eight years and a fine of twelve to twenty-four months.
The amount of the loss must be analysed by reference to the specific transactions and the connection between them. In certain situations, several acts may be assessed together where they respond to the same plan and form a single criminal unit, although this does not automatically allow an aggravating circumstance to be applied: the legal characterisation depends on the facts proven and on how the damage occurred.
What is the difference between breach of fiduciary duty and misappropriation?
Breach of fiduciary duty occurs where management powers that the person did in fact hold are exercised abusively, against the interests of the assets managed.
Misappropriation (apropiación indebida), by contrast, refers to the permanent incorporation into one’s own assets, or those of a third party, of goods, money or effects that had been received under an obligation to deliver or return them.
The practical difference is that breach of fiduciary duty punishes the abusive use or harmful management of another’s assets, whereas misappropriation involves a permanent disposal, with no real prospect of return.
The legal characterisation depends on how the facts unfolded, the powers conferred and what was done with the property. The same business context may involve conduct of different kinds, so the mere outflow of money is not enough to conclude automatically that one offence or the other has been committed.
Can a company be criminally liable for breach of fiduciary duty?
A legal person cannot be criminally convicted of the offence of breach of fiduciary duty under Art. 252, because this offence can only be committed by someone with powers to manage another’s assets. Criminal liability will, where applicable, fall on the natural person who carried out the disloyal management.
This does not mean that the company stays out of the proceedings. A company may be required to bear civil liability if it benefited from the funds or property obtained through the offence, if it must answer for the conduct of a person dependent on it, or if any of the cases of civil liability provided by law applies. Civil liability may also be claimed from anyone who received the proceeds of the offence free of charge, up to the limit of what they actually obtained.
Civil liability and other consequences
A conviction may include an obligation to make full reparation for the damage caused. Civil liability arising from the offence comprises:
restitution of the property, where possible;
repair of the financial damage;
compensation for material and non-material (moral) losses;
damage caused to relatives or third parties, where appropriate.
In business practice, reparation may consist of returning funds, reimbursing the amount of obligations improperly assumed, paying the cost of completing a poorly executed transaction, compensating for the loss in value of assets or reimbursing the expenses caused by the disloyal management.
Voluntary reparation of the damage does not automatically eliminate criminal liability, but it may be relevant in determining its consequences. In addition, restitution or compensation may be claimed jointly against the perpetrator and, where applicable, against those with direct or secondary (subsidiary) civil liability or persons who benefited without consideration (partícipes a título lucrativo).
Practical example of breach of fiduciary duty
A company director is authorised to engage suppliers and order payments. The director uses that power to engage the services of a company related to them at a price far above market value, without any business justification and without informing the company’s other governing bodies. The company pays invoices for partly unnecessary services and suffers a proven loss of €80,000.
If it is proven that the director knew the transactions lacked justification and used their powers disloyally, the facts may constitute aggravated breach of fiduciary duty on account of the amount of the loss. Any conviction could include imprisonment, a fine and an obligation to compensate the company for the damage caused. The related company that received part of the funds free of charge could be subject to civil liability up to the amount it actually obtained.
Losses, an ill-judged business decision or a breach of contract do not in themselves turn conduct into an offence. It must be proven that there were management powers, that they were exceeded disloyally, that the person was aware of their conduct and that there was a specific financial loss.
Frequently asked questions
What is the penalty for breach of fiduciary duty in Spain?
If the loss does not exceed €400, it is punished as a minor offence with a fine of one to three months; if it exceeds that amount, the penalty is determined by reference to the rules on fraud. In aggravated cases, the penalty is imprisonment of one to six years and a fine of six to twelve months, and it may rise to imprisonment of four to eight years and a fine of twelve to twenty-four months where certain particularly serious circumstances are present.
Is a bad business decision a breach of fiduciary duty?
Not in itself. Losses, an ill-judged business decision or a breach of contract do not in themselves turn conduct into an offence: it must be proven that there were management powers, that they were exceeded disloyally, that the person was aware of their conduct and that there was a specific financial loss.
Who can commit breach of fiduciary duty?
Only someone with effective powers to manage the assets harmed: a de facto or de jure director, an attorney-in-fact with real decision-making power, a professional manager or any other person who has legally assumed the management.
Can a company be convicted of breach of fiduciary duty?
No. A legal person cannot be criminally convicted of the offence of breach of fiduciary duty under Art. 252, although it may be required to bear civil liability, for example if it benefited from the funds or property obtained through the offence.