Directors’ Duties in Venezuela

>> Liabilities and Penalties in Venezuela

To promote the success of the company, you need wide powers. However, exercise your responsibilities carefully as the penalties for failure to do so can be severe.

There are a wide variety of liabilities and penalties for failure to fulfil your duties, some of which have been listed below:

Director and Officer liabilities in the event of a breach of duty is generally limited to the damages caused. Additional liability may apply with regard to a breach of environment laws and even in the event of disobeying reinstatement orders issued by a Labour Inspector. The extent of this liability may lead to an arrest.

Employers have duties of safety toward their employees and when their breach causes accidents entailing bodily harm or death, administrators of the employing company may be criminally prosecuted.

Environmental laws consider it a duty to avoid pollution and establish penalties for the directors who undertake activities that gravely pollute the environment.

Directors, in general, are criminally liable for bankruptcies caused by their breach of duties.  Under Venezuelan law a bankruptcy always entails the total liquidation of the company. A simple reorganization is not possible and may only be attained in a different procedure when the company lacks liquidity but has assets enough to cover its debts.

If during the bankruptcy procedures it is ascertained that the directors did not fulfil their legal obligations, the bankruptcy may be declared by the bankruptcy court as their fault and then the directors are subjected to criminal proceedings.

If the directors have failed to register and publish the Articles of Incorporation, have falsely declared subscriptions and payment of capital, have paid dividends on earnings that did not exist, when they have paid themselves sums outside statutory allowances, or have operated fraudulently and thereby caused the bankruptcy, or have voluntarily created the state of bankruptcy for the company, the bankruptcy court must declare that the bankruptcy is fraudulent and the administrators be subjected to criminal proceedings.

Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations upon you being able to continue in your role.


Latest version updated 10th April 2018

Country Breakdown

31.57

Million

Population

Bs

Venezuelan bolívar

Currency

$ 371

Billion

GDP

916,445

km2