Offences of fraudulent administration

The offense of unfair administration is regulated under Article 252 of the Spanish Criminal Code and is designed to protect third-party assets. This criminal provision imposes penalties on administrators who, by exceeding their authority, cause harm to the assets they manage.

Interpretative Challenges in the Offense of Unfair Administration
‍The legal definition of unfair administration highlights several key elements to understand its scope and nature:
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1. Authority to Manage Third-Party Assets
The offender must have authority to manage third-party assets. This includes both de jure administrators (those formally holding the title) and de facto administrators (those acting as administrators in practice without formal designation). Individuals who, without holding a formal title, manage third-party assets and cause harm to them may also be considered offenders under this provision.
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2.Exceeding Administrative Authority
For this offense to be established, the offender must exceed their authority in the management of assets. This excess involves actions or omissions that go beyond the scope of their entrusted duties, either acting unreasonably or improperly exercising their conferred functions.
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- Such excesses may take various forms, including misappropriation of assets for personal use or decisions that unjustifiably harm the managed assets.
- However, the lack of clarity in the legal definition has sparked debates over what specific actions constitute an excess and when a breach of fiduciary duty occurs.
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3.Harm to Managed Assets
The exceeding of administrative authority must result in harm to the managed assets. This harm may include loss of property, resources, or missed opportunities for profit.
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- Assets can be static (existing resources) or dynamic (subject to fluctuations due to legal transactions and financial prospects). Harm also encompasses frustrated expectations of benefits or incurred losses.
- Not all harm is criminally relevant; only harm directly attributable to the administrator and exceeding the permitted risks within a reasonable ex-ante evaluation and global management plan constitutes an offense.

Serious Offenses and Criminal Penalties
‍Not every breach of an administrator's duties constitutes the crime of unfair administration. According to case law and legal doctrine:
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- Only serious infractions that exceed ordinary business management and result in measurable harm can lead to criminal sanctions.
- Even if an administrator fails to meet their obligations, if the breach is not serious or does not cause evaluable harm, the offense does not arise.

Decisions harmful to the entity are not automatically punishable. Each case must be analyzed considering the administrator's duties, whether the harm was justified within the scope of the entity’s risk tolerance, and the broader context of the facts. The assessment focuses on the overall situation rather than the isolated decision.

Differences Between Unfair Administration and Misappropriation
‍The distinction between unfair administration and misappropriation hinges on the type of abuse of authority by the administrator:
1. Misappropriation
Occurs when the administrator acts beyond their authority and disposes of assets they should not handle. This disposition is typically definitive and directly infringes upon static property rights.

2.Unfair Administration
Involves significant abuse of authority that conflicts with the interests of the managed entity. The act may not involve permanent disposition but includes harm caused knowingly, often with eventual intent (dolus eventualis). The harm is tied to dynamic asset management, focusing on lost profits or frustrated expectations.

The nature of the act—whether definitive or reversible—also distinguishes the offenses. For instance, if the act allows asset recovery, it may constitute unfair administration. If the disposition is irrevocable, it is more likely misappropriation.

Capital Companies Act and Criminal Implications
‍The legal framework governing the administration of certain entities, such as commercial companies, plays a pivotal role. Spain's Capital Companies Act outlines specific duties for corporate administrators, including:
- Duty of Diligence: Requires the implementation of proper control measures and regulatory compliance.
- Duty of Loyalty: Demands abstention from decisions involving conflicts of interest or that benefit the administrator or third parties to the detriment of the company and its shareholders.

Breaches of these duties, as stipulated under the Capital Companies Act, may lead to criminal liability and constitute the offense of unfair administration, provided the elements of the offense in the Criminal Code are met.