1. THREE DIFFERENT ATTRIBUTION THEORIES

You must distinguish, courts confuse them:

A) Direct Attribution - Director personally did the wrong
Company liable vicariously + director personally liable as joint tortfeasor / co-author of delito.
Example: Director personally signs fraudulent accounts - Art 290 CP Spain.

B) Indirect / Organic Attribution - Company acts through director, director's knowledge = company's knowledge
Used for regulatory fines. Director's intent attributed to company. But can we reverse - attribute company's liability to director? Only in specific statutes.

C) Veil Piercing / Lifting - Ignore separate personality
Exceptional. Art 1 LSC - company has own personality. Only when abused.

Most cases are A + statutory liability.

2. SPAIN - LSC ART 236-241 - MAIN REGIME

Ley de Sociedades de Capital - 4 actions:

Action 1 - Art 236 - Acción Individual - General Liability for Damages

Director liable to company, shareholders, creditors if:

1. Act or omission contrary to law or statutes or without diligence (Art 225 duty of care, Art 226 business judgment, Art 228 loyalty)
2. Damage to company / third party
3. Causal link
4. Fault - negligence (culpa) - not strict, but business judgment protection Art 226 requires informed, no conflict, good faith.

Burden: Claimant must prove.

Solidary liability: If board collegiate, all members liable unless proves did not participate, did not know, or did everything to prevent damage - Art 237.

Action 2 - Art 241 - Acción Social de Responsabilidad

Company itself (via General Meeting or minority 5% if board does not sue, or creditor if company insolvent) sues directors to restore company patrimony.

Deadline: 4 years from act.

Action 3 - Art 241 bis? Actually Art 240 - Acción Individual de Responsabilidad - Third party direct

Creditor/shareholder who suffered direct damage (not via company) can sue director directly.

Action 4 - Art 367 + Art 363 - Liability for Debts When Failure to Dissolve

If cause of dissolution exists (losses reducing equity below half capital Art 363(1)(e)), directors MUST within 2 months call General Meeting to dissolve / increase capital / file concurso. If fail, jointly and severally liable for ALL company debts incurred AFTER cause arose - Art 367 LSC. This is automatic, quasi-objective liability - most dangerous in Spain.

Other Spanish Statutes:

• Art 290-293 Código Penal: Falsifying annual accounts, disloyal administration - personal criminal liability.
• Ley General Tributaria Art 42-43: Tax liability - director liable subsidiarily if company fails to pay taxes due to his negligent conduct.
• Ley Concursal Art 455-456 (Título IV): In concurso, judge can qualify concurso as culpable and impose inhabilitación + liability to cover deficit (responsabilidad concursal) on directors who caused or aggravated insolvency.

3. UK - COMPANIES ACT 2006 + COMMON LAW

• s172 - Duty to promote success - owed to company, not personal to creditors except when near insolvency - BTI v Sequana UKSC - creditor duty shifts.[2022]
• s174 - Duty of care - liable for negligence
• s212 Insolvency Act 1986 - Misfeasance: Liquidator can claim director misapplied funds.
• s214 - Wrongful Trading: Director liable to contribute to assets if continued trading when knew or ought to have known insolvency unavoidable - objective/subjective test.
• s213 - Fraudulent Trading: Criminal + personal liability if business carried with intent to defraud.
• Lifting veil: Prest v Petrodel Resources Ltd UKSC - veil pierced only to evade existing legal obligation - very narrow.[2013]

4. INDIA - COMPANIES ACT 2013

• Sec 166 - Duties of director - similar to UK
• Sec 339 - Wrongful trading + Fraudulent trading - NCLT can order director to contribute
• Sec 447 - Fraud - personal criminal liability up to 10 years
• Sec 66 IBC - Fraudulent / Wrongful trading - NCLT can hold directors liable to make contribution
• Lifting veil: LIC v Escorts (1986) + Balwant Rai v State - veil lifted when company used as sham.

5. LANDMARK CASE LAWS - ATTRIBUTION

A) SPAIN - MOST LITIGATED IN EU

1. STS - Supreme Court - 13 Feb 2019 - 51/2019 - Action Individual vs Administrator
Doctrine: Director personally liable to supplier if: (a) Company closed without paying, (b) Director knew company insolvent, (c) Did not file concurso / dissolve. This is Art 241 individual action. Court held director liable because he continued ordering goods knowing company could not pay - disloyal.

2. STS - Supreme Court - 4 Nov 2021 - 705/2021 - Art 367 Liability
Company lost equity below half capital in 2018, directors did nothing until 2020. Creditor sued for debts from 2019. Supreme Court: Art 367 liability is ex lege - automatic, no need to prove causal link between failure to dissolve and specific debt, only that debt arose after cause of dissolution. Directors jointly liable for €800k. This is why Spanish directors must watch balance sheet monthly.

3. STS - Supreme Court - 12 March 2020 - 151/2020 - Business Judgment Rule Art 226
Directors invested in risky derivative, company lost €5m. Court held NOT liable - Art 226 protects if: informed decision, no conflict, good faith, rational belief best for company. Even if wrong. Attribution fails if business judgment rule applies.

4. STS - Supreme Court - 5 Jan 2022 - 2/2022 - Liability of De Facto Director
Person not formally appointed but gave instructions to board - administrador de hecho. Held liable under Art 236 as if de jure. Criteria: habitual, autonomous management, external recognition. Common in startups.

5. Audiencia Nacional - Banco Popular Case - 2023 - Penal - Directors
Court refused to attribute criminal liability to Board for accounts - held only CFO + CEO who signed accounts liable under Art 290 CP - not all directors - need personal knowledge.

6. Spanish Tax - STS - 25 May 2021 - Art 43 LGT
Director held subsidiarily liable for company's VAT unpaid. Court: Tax administration must prove director's negligence - not automatic. But if director did not file, liability.

7. Concurso Culpable - SAP Barcelona 2023 - Celsa
Court qualified concurso culpable, condemned directors to cover €200m deficit - Art 455 LC - for creating fictitious sales, aggravating insolvency.

B) UK

8. Salomon v A. Salomon & Co Ltd AC 22 - Foundation
Company separate personality - director not liable for company debts. Starting point.[1897]

9. Prest v Petrodel Resources Ltd UKSC 34 - Veil Piercing
Lord Sumption: Veil can be pierced only when person under existing legal obligation deliberately evades it by interposing company. Not for future liabilities. Sets high bar.[2013]

10. Chandler v Cape plc EWCA - Parent liability / Director analogy
Parent company liable for subsidiary's tort where assumed responsibility. Applied to directors: Director can be personally liable if assumed personal responsibility - e.g., gave personal assurances.[2012]

11. Williams v Natural Life Health Foods Ltd UKHL - Personal liability for negligent advice
Director gave negligent advice personally, not just as company. Held personally liable because claimant reasonably relied on director's personal expertise. Test for attribution of negligence.[1998]

12. BTI 2014 LLC v Sequana SA UKSC 25 - Creditor Duty Shift
Supreme Court: When company near insolvency, directors must consider creditor interests - s172(3). If fail, can be liable to creditors via misfeasance. Key for attribution timing.[2022]

13. Re: - R v. H - s214 Wrongful Trading - Re Produce Marketing Consortium 1989
Director knew insolvent, continued trading 4 months. Court ordered contribution £75k. Objective test - reasonably diligent director would have stopped.

C) INDIA

14. Supreme Court - Official Liquidator v. P. A. Tendolkar (1973) - Misfeasance
Director liable for misapplication - must restore funds + interest. Foundation for Sec 339.

15. NCLT - Anil Ambani - Reliance Communications - 2020 - Personal Guarantee vs Director liability
NCLT held director not personally liable for company debt unless personal guarantee or fraud. Separate personality respected.

16. Supreme Court - Iridium India Telecom Ltd v Motorola (2011) - Attribution of mens rea
Company can be criminally liable via attribution of director's intent if director is directing mind and will. Reverse attribution also possible - director liable if directing mind.

17. NCLAT - 2022 - P. Mohanraj vs Shah - IBC Sec 66
Directors carried out fraudulent transactions before CIRP - NCLAT ordered to contribute ₹50 crore - wrongful trading under Sec 66.

18. SEBI - 2023 - Videocon - Disqualification + Liability
SEBI held directors liable for misstatement in prospectus - Sec 447 fraud - personal liability + debarment.

D) US DELAWARE

19. Caremark - In re Caremark International 1996 - Duty of Oversight
Directors liable if fail to implement monitoring system - attribution of compliance failure. Now codified as oversight liability.

20. Stone v Ritter 2006 - Good faith
Failure to monitor in good faith = breach loyalty, personal liability.

21. Smith v Van Gorkom 1985 - Duty of care
Directors personally liable $23m for gross negligence - no business judgment protection because uninformed.

6. PRACTICAL TEST - WHEN WILL DIRECTOR BE PERSONALLY LIABLE?

Ask 5 questions:

1. Did director personally act / sign / give assurance? If yes - direct liability - Williams test.
2. Is there statutory automatic liability? Spain Art 367 (failure to dissolve), UK s214 (wrongful trading), India Sec 66 IBC, Tax Art 43 LGT - no need to prove fraud.
3. Was company insolvent / near insolvent? Then duty shifts to creditors - Sequana - higher risk of attribution.
4. Is director de facto / shadow? If yes, treated as de jure - STS 2/2022.
5. Is veil abused to evade existing obligation? Only then pierce - Prest.

7. HOW TO PROTECT - ATTRIBUTION SHIELD

• Minutes proving opposition - Art 237 LSC - director who voted against + recorded + did everything to prevent damage exempt
• D&O Insurance - does NOT cover fraud, Art 367, tax liability
• Business judgment file: memo of information considered, independent advice, no conflict
• Early warning: If equity < half capital or cash flow insolvent, call GM within 2 months or file concurso - avoids Art 367 + wrongful trading
• Resignation not enough - liability for acts during tenure remains, and resignation after cause of dissolution still leaves liability for debts after cause.