Jordi Grau i Bosch
ADMINISTRATIVE LAW DIVISION
Law 31/2014, of 3 December, amending the Companies Act to improve corporate governance, introduced a new power of the general meeting of shareholders into Article 160 of Royal Legislative Decree 1/2010, of 2 July, approving the consolidated text of the Spanish Companies Act (the “LSC”). This power consists of deliberating and resolving on the acquisition, disposal or contribution to another company of essential assets.[1]
Supreme Court Judgment 881/2026, of 9 June (Appeal No. 6349/2023), has addressed one of the most controversial issues arising from Article 160(f) LSC, on which there is a legislative gap: whether a disposal of essential assets carried out by the management body without the mandatory approval of the general meeting — whether such approval should have been obtained before the transaction or subsequently by ratification — is effective vis-à-vis third parties who have acted in good faith and without gross negligence. The Supreme Court answers this question in the affirmative: the company remains bound vis-à-vis such third parties, as Article 234.2 LSC applies by analogy.
The First Chamber of the Supreme Court identifies a significant similarity between, on the one hand, a director carrying out disposals of essential assets without the approval of the general meeting and, on the other, a director who, likewise without such approval, carries out acts falling outside the corporate purpose defined in the articles of association, since approval of the latter also falls within the powers of the general meeting. In both cases, the director’s actions exceed the scope of their representative powers, as they are subject to a statutory and external limitation on their authority to represent the company.[2] The Chamber further notes that disposals of essential assets generally entail a de facto replacement or alteration of the corporate purpose. This reinforces the underlying similarity between the two situations and, consequently, supports the analogous application of Article 234.2 LSC.
One of the principal objections raised by those who have criticised this interpretation of Article 160(f) LSC — and which the Supreme Court seeks to rebut — is based on the wording of Article 10.1 of Directive 2009/101/EC of the European Parliament and of the Council of 16 September 2009 (the “Directive”),[3] which provides that: “The company shall be bound vis-à-vis third parties by acts done by its organs, even if those acts are not within the objects of the company, unless such acts exceed the powers that the law confers or allows to be conferred on those organs.”
The Supreme Court considers that Article 10.1 of the Directive is intended to ensure that Member States legally define, on a mandatory basis, the scope of directors’ representative powers, without this precluding the existence of statutory limitations that cannot be invoked against third parties who have acted in good faith and without gross negligence. This conclusion carries particular weight where, as in the case of disposals of essential assets, the transactions concerned do not correspond to the corporate purpose or, at the very least, de facto alter or replace it.[4]
In our view, the Supreme Court’s ruling may help reduce the transaction costs associated with this type of operation. This does not, however, mean that parties contracting with a company should dispense with the necessary precautions — or, in the words of the First Chamber, take the appropriate steps — having regard to the circumstances of each case, to verify that the director with whom they are contracting is acting within the scope of their powers and thereby avoid a finding of bad faith or gross negligence. It will be necessary to await further rulings from the First Chamber in order to establish more precisely what constitutes good faith and the absence of gross negligence and, in particular, the extent of the duty of inquiry incumbent on a third party when determining whether the asset that is the subject of the transaction qualifies as an essential asset.
[1] The innovative nature of this power should be qualified, since, on the one hand, the provision is rooted in the doctrine of the implied or unwritten powers of the general meeting, which had already been recognised by the case law of the First Chamber of the Supreme Court, and, on the other, similar rules allocating powers to the general meeting can also be found in other legal systems.
[2] From a doctrinal perspective, both types of conduct may be classified as ultra vires acts by company directors. Thus, according to some commentators, disposals of essential assets may be ultra vires as far as the directors are concerned, but not as far as the company itself is concerned, given that legal persons have general legal capacity under Spanish law.
[3] The aforementioned Directive was repealed by Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017, Article 9.1 of which reproduces the same wording.
[4] Dr Luis Fernández del Pozo takes a similar view, considering that: “For the purposes of protecting the third party — which is the ‘useful effect’ pursued by the Community legislature — it is not possible to rationally or logically distinguish between an ‘ordinary’ exceeding of the corporate purpose and an ‘extraordinary’ exceeding arising from a breach of the rule allocating powers under Article 160(f) LSC.”
