The administration of commercial companies in Colombia is governed by a specific legal framework that regulates the duties and responsibilities of directors. Law 222 of 1995, which is one of the fundamental regulations, establishes the basis for the liability of directors in case of breach of their obligations. They must ensure the proper development of the company’s corporate purpose, as well as compliance with legal and statutory provisions, in order to avoid serious legal and financial consequences.
Directors, who may be the legal representative, the liquidator, the factor, the members of boards or governing councils, and those who perform similar functions according to the statutes, have a great responsibility. However, there is often a lack of knowledge about these responsibilities, and a common mistake is to think that certain improper actions will not have repercussions. Our purpose is to illustrate to directors, as well as to the company’s partners, the legal consequences of failing to comply with the obligations established by Law 222 of 1995. The following is an analysis of some of the main duties and responsibilities of directors, with recommendations to avoid legal problems.
- Duties of Directors
Article 23 of Law 222 of 1995 establishes several of the key duties that directors must fulfill, including:
- Develop the corporate purpose: Directors must do everything possible to ensure that the economic activities foreseen in the company’s corporate purpose are carried out. This obligation is one of means, that is, reasonable efforts must be made to achieve it, but not necessarily guarantee a successful result.
- Comply with the law and the statutes: It is essential that directors ensure that applicable regulations are complied with in various areas, such as commercial, tax, labor, among others. In addition, they must ensure that the articles of association are respected, as they are the internal rules of the company.
- Collaborate with the statutory auditor: Directors must facilitate access to the information necessary for the statutory auditor to adequately fulfill its functions, which includes providing complete and duly supported information.
- Liability of Directors
Article 200 of the Commercial Code establishes the responsibilities of directors, which can be divided into different categories, according to the type of conduct and the circumstances surrounding the breach of duties.
- Types of liabilities that can be enforced against directors:
| Civil | Type of conduct | Competent entity |
| Derived from damages caused to the company, partners or third parties. | Intent or negligence | Judge |
| Administrative | Type of conduct | Competent entity |
| For violation of the law or the statutes | Intent or negligence | Superintendence of Companies |
- Nature of the liability of directors
The liability of directors can be:
- Personal
- Joint and several
- Unlimited
- Patrimonial
- Events exempting from liability
Directors may be exempted from liability in certain cases, such as:
| Causal | Causal | Causal |
| Due to force majeure or fortuitous event | For not having had knowledge of the action or omission that gave rise to the damages | Those cases in which the directors have voted against the decision that originated the damages, provided that they have not executed said decision. |
- Mechanism to enforce the liability of directors
There are several legal mechanisms through which the liability of directors can be enforced:
- Social action of liability: This action is promoted by the company, after a decision of the general assembly or board of partners, and its purpose is to repair damages caused to the company by an action or negligence of the directors.
For the purposes of exercising this action, the majority provided for in the second paragraph of Article 25 of Law 222 of 1995 must be taken into account, or if it is not exercised within the term indicated in the aforementioned regulatory provision, it shall be formulated as indicated in the third paragraph of said rule.
- Individual action of liability: The partners or third parties may file this action when the damages are caused directly by the actions of the directors.
- Prevention and Good Practices
Prevention is key to prevent directors from falling into situations that compromise their liability. The implementation of good practices in decision-making, consultation with legal advisors and the correct documentation of business actions are essential to minimize risks and protect the interests of the company.
Based on this premise, in a sector where regulatory and economic uncertainty is constant, having allies who understand the complexity of the system and can offer effective legal solutions through preventive and strategic litigation approaches is essential.
