B Law & Tax
28 February 2024

The Supreme Court Establishes a New Prescription Period and Criteria for Director Liability Actions regarding Social Debts

The Supreme Court (TS), in a recent decision, has outlined new parameters for the prescription and action of liability against directors regarding social debts. This resolution, of paramount importance in the corporate legal field, clarifies the regulatory framework applicable to director liability in situations of social debts.

Previous doctrinal debate revolved around the prescription period of directors’ joint liability for social debts, derived from Article 367 of the Companies Act (LSC). It was questioned whether this period should be governed by Article 241 bis of the LSC or by Article 949 of the Commercial Code (CCom), both options establishing a prescription period of four years.

However, TS judgment number 1512/2023, issued on October 31, introduces a different perspective. The TS concludes that neither Article 241 bis of the LSC nor Article 949 of the CCom are applicable to liability for social debts under Article 367 of the LSC. Instead, the prescription period will depend on the nature of the guaranteed obligation.

Therefore, actions against directors for social debts will prescribe depending on the type of debt in question. For example, a social debt of extrajudicial origin will prescribe in one year, while a contractual debt could prescribe in five years, in accordance with the guaranteed obligation.

The TS bases this new interpretation on the nature of the director’s liability in case of social debts, equating it to that of a guarantor. Additionally, it argues that neither Article 241 bis of the LSC nor Article 949 of the CCom are applicable to this type of liability.

This TS decision has significant implications for directors susceptible to lawsuits and for third-party creditors contemplating actions of liability for social debts. Henceforth, determining the viability or prescription of an action of liability will require a detailed analysis of the nature of the debt, the applicable prescription period, and the initial calculation date.In summary, the Supreme Court’s judgment marks a paradigm shift in determining the prescription and applicable criteria to director liability for social debts, which will have significant practical implications in the corporate and business sphere.

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