Legal context of the Board of Directors
The liability regime of associations is imposed by article 15 of the Organic Law of Associations (‘artículo 15 de la Ley Orgánica de Asociaciones’). There are three types of board member liability:
- Civil liability is the obligation to compensate that arises as a result of the damage caused by the breach of a contract ( contractual liability ) or to repair the damage caused to another with whom there was no prior link (non-contractual liability).
- Administrative liability is the obligation to compensate for administrative infractions, which are infractions that any Public Administration can execute by virtue of its sanctioning power (fines for example).
- Criminal liability means that a board member may be criminally liable for crimes committed on their behalf or other board members.
In general, it is highly important to point out that in all of the above explained legal liabilities, individual board members only face individual liability for debts, fines or criminal activity if they have intentionally acted in bad faith leading to any debts, fines or criminal activity.
This also means that in the case of bad governing or acting of another board member leading to debts, fines or criminal activity, with which the other board member(s) did not specifically agree on, the other board members are not liable for those actions. Only when the responsibility of bad governing cannot be attributed to any specific member or owner of the governing and representative bodies, they will all be jointly and severally liable, unless they can prove that they did not participate in its approval and execution or that they expressly opposed them.
In the event that the circumstances of fraud, fault or negligence in the conduct of the directors do not concur, the responsibility will be only of the association.
The above is the reason why adequate drafting of the minutes of the Board of Directors is guaranteed, in which not only the board agreements adopted will appear, but also the result of the votes and the attendees at the meeting. This will constitute adequate evidence to demonstrate who voted in favour and against any made agreements.
Sources: CEconsulting & CEAFA