Abusive Shareholder Resolutions: Article 291 of the Criminal Code

Not every dispute between shareholders is a crime, but the Spanish Criminal Code does punish the abuse of a majority when it is used to impose resolutions that harm the minority without contributing anything to the company. Article 291 of the Spanish Criminal Code (CP) punishes the imposition of abusive resolutions by abusing a majority position, with penalties of imprisonment of six months to three years. As criminal lawyers specialising in corporate offences, we explain what the provision punishes, how it differs from related figures and how the defence is built.

What Art. 291 CP Punishes

Art. 291 CP punishes those who, abusing their majority position in the general meeting of shareholders or in the management body of any company —incorporated or in the process of being formed— impose abusive resolutions, with intent to gain for themselves or another, to the detriment of the other shareholders, and without any benefit accruing to the company. The penalty is imprisonment of six months to three years or a fine of one to three times the gain obtained.

The legal interest protected is the protection of minority shareholders against manoeuvres by the majority in forming the company's will. The offence belongs to the group of corporate offences (arts. 290 to 297 CP) and reserves the criminal response for the most serious abuses, leaving other disputes to the company-law mechanism for challenging resolutions.

The Elements of the Offence

The conduct requires the cumulative presence of several elements, which delimits an offence of strict application:

• Abuse of the majority: the offender must rely on a real majority position in the meeting or in the management body. The majority is lawful; what is reproachable is the use made of it.
• Abusive resolution: the resolution is adopted abusively, that is, departing from the proper purpose of the company's bodies in order to harm the minority.
• Intent to gain for oneself or another: the conduct pursues a benefit for the offender or for a third party.
• Detriment to the other shareholders: the resolution harms the shareholders who are not part of the majority imposing it.
• Absence of any benefit to the company: a decisive requirement. If the resolution, even if it harms a shareholder, benefits the company, the offence falls away.

The potential offenders are the shareholders or directors who control the majority and impose the resolution. Several participants may be involved with differentiated liability (principals, necessary cooperators, accessories).

Common Scenarios of Majority Abuse

Corporate practice throws up recurring situations in which the majority may act abusively to the detriment of the minority:

• The systematic and unjustified refusal to distribute dividends, retaining profits without any justifying reason, with the effect of pressuring or squeezing out the minority shareholder.
• A capital increase without genuine need, designed to dilute the stake of a shareholder who cannot take it up.
• The setting of remuneration or terms that channel the company's value towards the controlling group at the expense of the minority.

Whether one of these situations amounts to an offence —rather than a mere corporate dispute that can be challenged through the civil courts— depends on proving all the elements of art. 291 CP, in particular the abusive nature of the resolution and the absence of any benefit to the company. The characterisation is always fact-specific.

Distinction from Art. 292 and from Breach of Fiduciary Duty

Art. 291 CP must be carefully distinguished from other related figures:

• Harmful resolution by a fictitious majority (art. 292 CP): punishes, with the same penalty as art. 291, those who impose or take advantage of a harmful resolution adopted by a fictitious majority, obtained through misuse of a blank signature, improper attribution of voting rights to those who lawfully lack them, unlawful denial of the vote to those who hold it, or a similar means. The difference is structural: under art. 291 the majority is real but abusive; under art. 292 the majority is apparent because it has been manufactured by fraudulent means.
• Breach of fiduciary duty / unfair administration (art. 252 CP): punishes a person who, having powers to manage another's assets, exceeds those powers and causes loss to the assets managed. It protects the company's assets, whereas art. 291 protects minority shareholders. The same episode may give rise to a concurrence of both provisions depending on the legal interests harmed.

The Interplay with the Company-Law Route

Company law has its own instrument against these resolutions: the action to challenge corporate resolutions under art. 204 of the Capital Companies Act (Ley de Sociedades de Capital), which allows the setting aside of resolutions contrary to the law, the articles of association or the company's interest, for the benefit of one or more shareholders or third parties. The criminal route under art. 291 CP is subsidiary and is reserved for the most serious cases. The defence must assess whether to combine both routes, taking into account the time limits, the evidence and the consequences of each.

Lines of Defence

1. Benefit to the company: showing that the resolution brings a benefit to the company, or that it responded to a legitimate business reason, neutralises the offence, which requires the absence of any company benefit.
2. No abuse: demonstrating that the resolution was adopted in accordance with the proper purpose of the company's bodies and not as a tool to harm the minority.
3. Lawful majority: in the distinction from art. 292 CP, verifying that the votes counted correspond to shareholders with an effective right to vote, ruling out the existence of a fictitious majority.
4. No detriment: contesting that the resolution caused real and effective harm to the other shareholders.
5. Absence of intent: art. 291 CP is an intentional offence; a mistake as to the lawfulness of the resolution or as to its abusive nature may exclude or mitigate liability.
6. Documentary and expert analysis: the examination of the notice of meeting, the agenda, the minute book and the accounting records, supported by expert evidence, is often decisive in establishing what was resolved, with what effect and with what intent.

In this area, the settled case law of the Supreme Court stresses the restrictive nature of the offence and the need to prove all its elements, in particular the abuse and the absence of company benefit, which leaves a technical margin for defence that should be worked on from the outset of the proceedings.