False Accounts: The Offence of Art. 290 of the Criminal Code

A company's annual accounts are its official photograph: what shareholders, banks, investors and the authorities rely on. When that picture is retouched to hide losses, inflate profits or disguise gaps, we enter the territory of the offence of accounting falsification under article 290 of the Spanish Criminal Code (CP). As criminal lawyers specialising in false accounts, we explain what this offence involves, who is liable and how it is defended.

What Art. 290 CP Punishes

The provision penalises directors, whether de facto or de jure, of a company already incorporated or in the process of formation who falsify the annual accounts or other documents that must reflect the legal or economic situation of the entity, in a manner capable of causing financial harm to the company itself, to one of its shareholders or to a third party. The basic penalty is imprisonment of one to three years and a fine of six to twelve months.

The protected legal interest is the transparency and truthfulness of corporate information: the right of those who rely on these documents to receive a true and fair view of the company. It does not punish every accounting error, but the conscious manipulation of economic information.

The Typical Conduct

The offence is not limited to the annual accounts in the strict sense (balance sheet, profit and loss account, notes). It covers any document that must reflect the legal or economic situation of the company. In practice the following commonly appear:

• Cooked annual accounts: inflating assets, hiding liabilities, recognising income not yet earned or deferring expenses in order to show non-existent profits.
• Internal accounting documents that underpin decisions: management reports, interim financial statements, balance sheets handed to a bank to obtain credit.
• Information to shareholders or investors that distorts the company's true financial position ahead of a capital increase, a dividend distribution or a sale.

The Key Element: Capacity to Cause Harm

This is the most important point for understanding the offence. Art. 290 CP is an offence of danger: it does not require the harm to actually occur, only that the falsification be capable of causing financial harm. In other words, that it objectively has the capacity to mislead and trigger a damaging financial decision by the company, a shareholder or a third party.

This has two relevant defence consequences. First, a crude or harmless falsification, incapable of deceiving anyone or irrelevant to any economic decision, may fall outside the offence. Second, the assessment of capacity is made ex ante, looking at the document's potential aptitude, not at whether anyone ultimately suffered the loss.

Who Is Liable: De Facto and De Jure Directors and the Adviser

Art. 290 CP is a special offence proper: only a person holding the status of director can be the perpetrator. The law expressly equates the de jure director (the one appointed and registered) with the de facto director, that is, the person who really runs the company and takes the decisions even if they do not formally hold the office. This extension prevents anyone from hiding behind a nominee or behind the absence of registration.

And what about the accountant, the finance director or the external adviser who actually prepared the accounts? They are not directors, so they cannot be perpetrators of the offence. However, they may be liable as accessories —necessary cooperator or accomplice— where they collaborate knowingly, aware of the intent to falsify. Conversely, someone who simply prepares accounts on a technical basis, following criteria and instructions, without knowing or intending the falsification, commits no offence: intent is essential and art. 290 does not punish negligent conduct.

Penalties under Art. 290 CP

• Basic offence (falsification capable of causing the harm): imprisonment of one to three years and a fine of six to twelve months.
• Aggravated form (where the financial harm is actually caused): the same penalties in their upper half.

On top of the main penalties, civil liability arising from the offence (reparation of the harm) may follow and, on the commercial side, liability actions against the director.

Distinction from Documentary Forgery and the Accounting Offence

Accounting falsification sits alongside other figures with which it should not be confused:

• Documentary forgery (arts. 390 to 392 CP): this is ordinary forgery of public, official or commercial documents. It can be committed by any individual (art. 392), whereas art. 290 requires the status of director and concerns company documents capable of causing harm. Where both could apply, art. 290 usually prevails as the special rule over the general forgery offence.
• Accounting or tax offence (art. 310 CP): this penalises a person who, obliged by tax law to keep accounts, completely fails to do so, keeps double bookkeeping, omits entries or makes fictitious entries, with its own quantitative thresholds. Its sphere is tax, as opposed to the protection of shareholders and third parties pursued by art. 290. They may coexist depending on the facts.

Lines of Defence

1. Atypicality for lack of capacity to harm: the adjustment was not apt to cause harm or was harmless.
2. Accounting disagreement, not falsification: the treatment applied reflected a reasonable interpretation of accounting rules, not a deliberate manipulation. Here expert accounting evidence is decisive.
3. Absence of intent: there was no knowledge or will to falsify; the offence does not admit a negligent form.
4. Lack of perpetrator status: a person who is not a director cannot be a perpetrator; whether knowing participation exists must be analysed.
5. Reparation of the harm to trigger the mitigating factor of art. 21.5 CP where applicable.

In this area, the settled case law of the Supreme Court stresses the capacity to cause harm and the requirement of intent as the pillars of the offence, which leaves a technical margin for defence that should be exploited from the outset of the proceedings.