1- Overview of the Argentine rules that govern

the matters dealing with the liability of

directors and officers

Section 1109, Civ. Code:

“Whoever does something, which
for his/her fault or negligence
provokes harm to someone else,
is forced to repair the damage”.

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People acting as directors
can be sued for damages,
mainly, from three sources:
a) Damages to the company that
retains their services;

b) Damages to the company’s

shareholders; and

c) Damages to third parties.

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 Section 59, CCA
“The administrators and representatives
of the company must conduct
themselves with loyalty and with the
diligence of a good business man.
Those who neglect their duties are
jointly and severally responsible for the
damages resulting from their act or
omission.”
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CCA, section 274 (1st. para)
“The directors are jointly and severally
accountable towards the company, the
shareholders and third parties, for poor
performance of their role, pursuant to the
criterion of section 59, as well as for violation
of the law, by-laws or corporation rules and
for any other damage caused by willful
misconduct, abuse of attributions or gross
negligence.”
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 Executive Order 677/01
• According to para. 27, the “corporate
interest” (interés social) is to be the
“guiding principle” of the administrators’
performance. Such corporate interest to
be defined as the “common interest of
all the shareholders”, which includes the
notion of “creation of value for the
shareholders”. Para. 27 also refers to
the “duties of loyalty and diligence”.
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 Executive Order 677/01
• Section 8 lists several directives
regarding the conduct of directors,
referring among others to: loyalty and
diligence, preeminence of the common
interest of shareholders, adequate
means for conducting business, internal
controls, use of corporate assets, non-
competition, compensations, etc.
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2 - Liability of directors and officers in
other bodies of law
• Labor laws.
• Environmental laws. e.g.: Section 31 of the
National Environmental Policy Act (25,675)
• Forex market regulations. Act 19359, section
2, f.
• Tax laws. Act 11683, sections 5, 6 and 8.
• Bankruptcy. Act 24522, section 173.
• Customs Code, section 888.
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 3- Exemptions and extinctions

• Individual allocation (CCA, section 274,

second para.).
• Written objection (CCA, section 274, third
para.).
• Approval or waive by the company
(CCA, section 275).
• Statutes of limitation.

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Circumstances that do not exclude a
board member’s liability

• Executive committee (CCA, section

269).
• Appointment of managers (CCA,
section 270).
• Approval of financial statements (CCA,
section 72).
• Nominal holding of the position.
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 4- Actions by the company, its
shareholders or third parties
• Corporate liability action (CCA, section 276).
When the damage affects the common
interest of the shareholders or the corporate
assets. Removal of directors.
• Individual liability action (CCA, section 279).
When a shareholder considers to have
suffered a damage to his/her own asets.
• Third party.

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 5- Risk management

• Appointment to specify functions.

• Registering the resignation / removal.
• Corporate and accounting books up to date.
• Restrictions and incompatibilities imposed by
the CCA.
• Obtain information of other directors’
activities.
• Written objections.
• Attend board meetings.
• Indemnity letter or D&O insurance.
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