The disposal of essential assets by the director without a resolution of the general meeting: effectiveness against third parties

Judgment of the Supreme Court No. 881/2026, of 9 June 2026, addresses a question debated by legal scholars and provincial courts: what effectiveness against third parties does an act of disposal of essential assets carried out by the company director without the required resolution of the General Meeting of shareholders have, pursuant to article 160(f) of the Spanish Companies Act (hereinafter, the “SCA”).

The Supreme Court clarifies that a breach of said provision does not automatically render the transaction null and void; rather, the rule protecting third parties acting in good faith set out in article 234(2) SCA applies by analogy. However, such protection lapses when the prevailing circumstances exclude the good faith and absence of gross negligence of the acquirer.

Facts

In the case under review, the selling company transferred, on 15 May 2019, a total of 38 properties to the purchasing company, setting the price at 500 euros per property in view of the encumbrances on the estates. The price was retained by the purchaser to cover the seller’s debts.

Those properties constituted the sole assets and the only source of income of the seller, which, following the transaction, was left stripped of assets, without income and with its business completely paralysed, such that the sale amounted to a de facto liquidation of the company.

The purchaser acted through its director, who had been a shareholder of the seller until five years before the transaction. The deed stated that the assets did not qualify as essential assets and did not exceed 25% of the value of the assets appearing in the last approved balance sheet.

Subsequently, one of the shareholders of the selling company brought an action for nullity of the sale under article 160(f) SCA, invoking the lack of a General Meeting resolution authorising the disposal and the absence of good faith on the part of the purchaser.

The Court of First Instance dismissed the claim on the grounds that the assets were not essential assets. Conversely, the Provincial Court of Santa Cruz de Tenerife found that they did qualify as such, but equally dismissed the nullity claim by applying article 234(2) SCA, considering that the purchaser had acted in good faith and without gross negligence.

Ruling of the Supreme Court

The Supreme Court, however, upholds the appeal in cassation and reaches the following conclusions:

• There is a legal gap, as the Spanish Companies Act does not expressly regulate the effects against third parties of the disposal of essential assets without a General Meeting resolution. In the face of this gap, the Supreme Court applies article 234(2) SCA by analogy, so that the company is bound vis-à-vis third parties who have acted in good faith and without gross negligence. In doing so, it consolidates the doctrine of the “implied powers” of the general meeting (STS 285/2008, of 17 April).
• A General Meeting resolution is required for disposal transactions involving essential assets and for acts of the company director that exceed the corporate purpose, as these constitute legal and external limits on the directors’ powers of representation.
• The acquirer must exercise due diligence to ensure that it is contracting with a director acting within the scope of his or her authority. The circumstances of each case are assessed to determine the acquirer’s good faith and absence of gross negligence.
• Shareholders’ interests are protected because, if the director disposes of essential assets without a General Meeting resolution and causes harm to the company, the director may not invoke the protection of the business judgment rule under article 226 SCA, as the act is contrary to law. A third party acting in good faith whose acquisition is annulled retains the individual action for liability against the director pursuant to article 241 SCA.
• The Court finds that the prevailing circumstances exclude the good faith and absence of gross negligence of the purchaser if:
• Its director had been a shareholder of the seller until five years earlier, which made it easier for her to appreciate the significance of disposing of all the assets at once without receiving any consideration, more so than a third party entirely unrelated to the seller.
• The characteristics of the transaction demonstrate the purchaser’s lack of good faith, given that it transferred all of the seller’s assets while maintaining its debts. The assumption of debt by the purchaser does not release the seller without the creditor’s consent pursuant to article 1205 of the Civil Code and article 118 of the Mortgage Act; absent such consent, a cumulative assumption of debt arises which does not discharge the transferor (STS 314/2020, of 17 June).

Consequently, the seller transferred all its assets without receiving any consideration in return, ceased to have income and stopped its business activity, yet was not released from its debts as there is no evidence that the creditor consented to the subjective novation by substitution of the debtor.

Accordingly, in this case, the purchaser is not protected by article 234(2) SCA, as it did not act in good faith or without gross negligence. Therefore, the ineffectiveness of the disposal carried out without the authorisation of the General Meeting is enforceable against it.

The Supreme Court declares the sale null and void and orders the purchaser to return the transferred properties, with a settlement of the possessory position, the seller not being required to return the price, as it was never collected.

Conclusions

• Non-compliance with article 160(f) SCA does not automatically entail nullity against third parties. The Supreme Court applies article 234(2) SCA by analogy, so that the company is bound vis-à-vis an acquirer who acts in good faith and without gross negligence.
• The General Meeting’s authority over essential assets operates as a legal and external limit on the director’s power of representation that cannot be derogated by the articles of association. The legal gap regarding its effects against third parties is filled by the regime of article 234(2) SCA.
• The protection of the third party requires diligence, as the third party must ensure that it is contracting with a director acting within the scope of his or her authority. The director’s prior connection with the selling company, the complete stripping of assets, the nominal price and the maintenance of the debts are circumstances that may exclude good faith and the absence of gross negligence.
• The assumption of the debts by the purchaser does not release the seller without the creditor’s consent; rather, it constitutes a cumulative assumption of debt that does not discharge the transferor.
• A director who disposes of essential assets without a general meeting resolution may not invoke the protection of the business judgment rule, and a third party acting in good faith whose acquisition is annulled retains the individual action under article 241 SCA against the director.