The abuse of corporate assets (ABS) is a common offense in business law, particularly scrutinized in countries with strong corporate governance regulations. In both France and Andorra, ABS constitutes a serious offense committed by a manager who, in bad faith, uses the property or credit of a company for personal purposes. However, the legal treatment of this offense differs between the two countries.
Abuse of corporate assets in France: A criminal offense
In France, ABS is defined by Article L.241-3 of the Commercial Code for LLCs and by Article L.242-6 for public limited companies (SA) and other similar entities. A manager is guilty of ABS when they:
Use the company’s assets in a way that is contrary to the company’s interests,
For personal purposes or to favor another company in which they have interests,
In a deliberate and fraudulent manner.
ABS is severely punished in France with penalties of up to 5 years in prison and a fine of 375,000 euros. Additionally, supplementary penalties may be imposed, such as a ban on managing a company.
French courts strictly enforce these provisions, particularly in cases involving the use of company funds for personal expenses, embezzlement of funds, or the granting of abusive loans to executives.
The legal framework in Andorra: A different and more flexible approach
In Andorra, the abuse of corporate assets is not defined as explicitly as in the French Commercial Code. However, it is covered by the general provisions of the Andorran Penal Code, particularly regarding breach of trust and embezzlement of funds.
However, Andorran legislation places more emphasis on proving the actual damage suffered by the company, which allows for the possibility of using corporate assets when no real harm to the company exists.
Comparison and implications for businesses
While France has a detailed legislative framework and numerous legal precedents that facilitate the conviction of ABS perpetrators, Andorra adopts a much more flexible approach.
Businesses operating in these two jurisdictions must therefore ensure they adopt strong governance practices and rigorous internal controls. In Andorra, the lack of a specific qualification for ABS may provide some flexibility for executives, but caution remains essential, especially due to the evolving regulations aimed at aligning the country with international standards of financial transparency.