Spanish law recognizes the legal fiction of a corporate group, allowing companies to coordinate operations and share resources. This structure lets firms negotiate better credit terms or pool infrastructure. However, when the group demands sacrifices from a specific subsidiary, the line between necessary coordination and unfair exploitation becomes blurry. If a controlling shareholder owns 60 percent of the sacrificing company and 100 percent of the beneficiary, the exercise of group power can look like a highly selective redistribution of wealth rather than business strategy. Corporate groups exist to generate value, but they cannot legally hollow out a subsidiary to fund others without consequences.
Administrators face liability
Directors must act in the best interest of the specific company they run, not the entire group. Spanish courts have ruled that blindly following group instructions does not shield administrators from liability. In one notable case, a company selling paint to French clients was stripped of its revenue to benefit a sister company created for tax reasons. The subsidiary went from profitable to loss-making, and a minority shareholder sued. The Supreme Court upheld the conviction of an administrator, stating that any compensatory benefits must be proven, have real economic value, and bear a direct relation to the damage caused.
Not every instance results in a conviction. The Provincial Court of Biscay ruled differently in a case involving Interbox, finding that the group had provided sufficient compensatory benefits to absolve the administrators of responsibility. This legal tension highlights a gap in current regulations. While the 1995 law acknowledges the “theory of compensatory advantages,” it lacks clear definitions for when such advantages actually exist. A judge must decide if the benefits are real or merely theoretical. This creates uncertainty for minority shareholders who watch their assets used to prop up the broader group.
There is no specific Colombian precedent for this exact scenario yet. Companies considering such arrangements would be wise to document every benefit and verify its value. The special report required under Article 29 of Law 222 provides a formal channel to justify these decisions. Without concrete proof of compensation, the group’s solidarity looks more like exploitation. For any director, the warning is clear: the group does not absolve you of the duty to your own company. Law 222 of 1995 outlines these obligations.
