Article 290 Spanish Criminal Code: False Company Accounts

Article 290 of the Spanish Criminal Code punishes the de facto or de jure administrators of a company, incorporated or in formation, who falsify the annual accounts or other documents that must reflect the legal or economic position of the entity, in a manner apt to cause economic loss to the company, to any of its members or to a third party. The penalty is imprisonment of one to three years with a fine, imposed in the upper half where the loss actually materialises. The offence is complete on the aptitude to cause loss, so no loss need occur.

Wording of Article 290 of the Spanish Criminal Code

Elements of the offence

1. A perpetrator who is a de facto or de jure administrator. A shareholder without management functions, and an employee who prepared figures on instructions, are not administrators for this purpose.
2. Annual accounts or another document that must reflect the legal or economic position of the entity, which excludes internal working documents and projections.
3. Falsification, understood as the misrepresentation of the true position, not a debatable accounting criterion.
4. Aptitude to cause economic loss to the company, to a member or to a third party, assessed objectively.

Defence strategy

Accounting criterion is not falsification. The dividing line is between a false statement and a defensible criterion. The valuation of stock, the timing of revenue recognition, the provision for a doubtful debt and the treatment of a contingency admit more than one answer under the accounting rules. Where the treatment applied was disclosed in the notes and is defensible, there is no falsification. The defence commissions an accounting expert report, which is indispensable in this offence.

Absence of aptitude to cause loss. The article requires that the misstatement be apt to cause loss. A discrepancy of no significance to the position of the company, an item corrected in the following accounts, or a misstatement that no reader could have relied on does not satisfy it. Materiality, in the accounting sense, is the concept the defence develops.

Who administered in fact. De facto administration is a question of evidence, and prosecutors extend it readily to advisers, family members and majority shareholders. The defence establishes who actually took the decisions, who signed, who dealt with the auditor and who had access to the accounting system, since the article reaches only those who administered.

Concurrence and double counting. Where the same accounts founded a fraud on a bank, an unlawful distribution to shareholders or a tax offence, the defence addresses the concurrence rather than accepting cumulative charges. A single set of accounts used for several purposes is frequently a single act for the purposes of article 77, which caps the aggregate penalty.

• Article 252: unfair administration
• Article 250: aggravated fraud
• Internal company fraud: defence service
• Spanish-language entry

This entry is provided for information only and does not constitute legal advice. The application of any provision depends on the circumstances of the individual case and requires examination of the case file by a qualified lawyer.