Within the corporate legal framework, there exists a judicial mechanism aimed at uncovering and legally exposing the shareholders and/or partners of a company, provided that they have used the legal entity for criminal purposes, mainly in situations of fraud or where their actions have caused harm to third parties, known as "piercing the corporate veil" or commonly as "lifting the corporate veil." However, this special situation has been a source of debate for judges and entities responsible for inspection, surveillance, and control, indicating that this action imposes an extraordinary burden on those who seek to enforce their rights.
This action is generally found in Article 42 of Law 1258 of 2008 and other similar regulations governing the regime of administrators, and it states, among other things, that "When the simplified stock company is used to defraud the law or to the detriment of third parties, the shareholders and administrators who have carried out, participated in, or facilitated the fraudulent acts shall be jointly and severally liable for the obligations arising from such acts and for the damages caused." Additionally, it allows those directly affected to seek compensation for the damages caused to them, being able to pursue the shareholders or administrators of the company jointly and severally.
To this end, it is important to note that the judicial action of "piercing the corporate veil" is structured as a means of protection for third parties who have been directly affected by the actions of a company. This action entails a series of requirements and demands to be successfully pursued, which are not satisfied merely by demonstrating that the allegedly "fraudulent" company has consistently or intermittently breached its contractual or labor obligations, to automatically consider that fraudulent acts have occurred, as indicated in Judgment No. 2021-01-561264 dated September 16, 2021, issued by the Superintendence of Companies.
On the other hand, it must be taken into account that the joint and several liabilities arising from Article 42 of the aforementioned norm do not arise objectively, but rather stem from activities, attitudes, and intentions aimed at using the company for illegal, criminal, or fraudulent purposes, as (subjective liability) was expressed in Judgment SC1643-2022-2016-158 of the Supreme Court of Justice, Civil Chamber, by the reporting judge Aroldo Wilson Quiroz Monsalvo, "(...) In this order, the requirements of this mechanism are envisioned as (...): I) The use of the company to execute fraudulent legal transactions; II) and that this act causes harm to any third party, a concept that involves, in its broadest sense, all affected parties, including the State itself.(...)" and that, consequently, the plaintiff or whoever asserts their rights before the competent authority must have sufficient evidence to disprove, in any case, the principle of good faith, and demonstrate that the actions of the shareholders or administrators were aimed at affecting and increasing their personal assets or those of a third party, to the detriment of the affected third party's assets.
Therefore, we see that in the decisions made by the Superintendence of Companies and the Supreme Court of Justice, Civil Chamber, it has been determined that this action requires proof that the actions were executed by a company for criminal or fraudulent purposes, that these acts directly caused harm to third parties, but that these circumstances cannot solely involve situations of mere breach of contractual obligations, but must go further and demonstrate that there was bad faith in the development of the corporate purpose or in the activities carried out by the company subject to the piercing of its veil.
Luis C Ramirez. – AZC CONSULTING ATTORNEY