Equatorial Guinea has updated its criminal code with the introduction of the Criminal Code 4/2022.
It offers important regulatory changes by defining specific circumstances in which the business administrators, despite their function as guarantors, are personally accountable for their actions taken for the benefit of the corporate structure. Consequently, administrators who act as guarantors are responsible to the company, its owners, and creditors for any harm brought by fraud or negligent infraction of the responsibilities and liabilities inherent in the performance of their functions.
In the past, most of the breaches by the administrators were resolved through a commercial procedure per the “Uniform Act Relative to Commercial Companies and Economic Interest Groups” of the OHADA. In actuality, there was a legal void in Equatorial Guinea due to a lack of transposition, making it almost difficult to punish administrators criminally in the absence of a law that, in addition to defining the type of crime, would also specify the consequences of its commission.(nullum poena sine lege). However, the new Penal Code 4/2022 responds to this dual necessity by transposing certain conducts that can be carried out by the company’s administrators with a significant criminal risk for them.
Several assumptions can be distinguished between the conducts. Article 389 of the Criminal Code states that the following actions constitute violations of the corporate regime, Those who:
➢ during the incorporation or restructuring of the company, declare false information such as for example in relation to the composition of the shareholding or distribution and disbursement of the shares
➢ falsify the accounts or documents that should reflect the legal or economic situation of the company
➢ fraudulently dispose of the company’s assets or incur obligations on behalf of the company
➢ abuse their majority position in the shareholders’ meeting or administrative body by imposing resolutions objectively detrimental to the company’s interests
➢ fraudulently adulterate the resolutions reached at the meetings, either by use of fictitious majorities, abuse of blank signatures, or undue attribution of voting rights to those who do not have such rights, or prevent the use of such rights by those who are legally entitled to them
➢ impede or hinder the performance of the bodies to whose supervision they are subject.
As mentioned above, the criminal consequences for the commission of these offenses are potentially relevant and in very serious cases may lead to imprisonment of up to three years and a very serious fine of up to 500 months. Therefore, the individual criminal liability included in this criminal reform seeks to protect the interests of shareholders, creditors and, third parties that in a broad sense may be harmed by the commission of these acts.
In short, companies should have quality legal advice for the implementation of compliance and risk prevention plans that hinder or prevent the abuse of functions by corporate administrators.
Author: Ana Vizcarro, Associate Attorney Centurion Law Group Equatorial Guinea- Office.