Misuse of corporate assets

Misuse of corporate assets (abus de biens sociaux — ABS) is a criminal offence in French law whereby a director uses company funds, credit or assets for personal purposes contrary to the company's interest. It is one of the most prosecuted corporate offences in France, carrying up to 5 years imprisonment and CHF 375,000 fines. In financial due diligence, detecting potential ABS is critical: past occurrences generate criminal liability for directors, restate historical results and may trigger warranty claims. Detection methods include related-party transaction analysis, management expense review and bank account reconciliations.

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Example: due diligence on a French SME identifies CHF 85,000 of company credit card expenses used for personal travel and CHF 35,000 of false expense claims by the managing director over 3 years. These constitute potential ABS — a finding that triggers a specific warranty in the SPA requiring the seller to indemnify against any future criminal or civil claim arising from these facts.

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Hectelion detects potential misuse of corporate assets in financial due diligence through systematic related-party transaction analysis and management expense reviews.