To determine whether an asset is essential, it is necessary to analyze whether the operation substantially affects the legal or economic position of the partners, or the structure of the company. In the same sense, it is necessary to analyze whether the operation should be the responsibility of the general meeting.
As a director of the company, you may have a false sense of total control of the company. In particular, the feeling may lead you to think that you can buy or sell anything in the company, if you consider it appropriate. But there are limits to the position of director, and one of them is the essential assets.
The general meeting of a company has detailed powers in the Capital Companies Act.
Everyone knows that the general meeting must approve accounts, corporate management, appoint or remove administrators, liquidators or auditors. In the same way, it is the general meeting that modifies the bylaws, or increases or reduces the share capital.
In the same way, it is the meeting that decides on dissolution, merger, spin-off, approves the final liquidation balance sheet or eliminates or limits the right of preferential acquisition. But there is one competence that is sometimes forgotten: the acquisition or disposal of essential assets.
Sale of essential assets
An essential asset is when the amount of the transaction exceeds 25% of the value of the assets appearing on the balance sheet. Although our courts have set new criteria in the last two years.
Specifically, to determine whether an asset is essential, it is necessary to analyze whether the transaction substantially affects the legal or economic position of the shareholders, or the structure of the company. In the same vein, it is necessary to analyze whether the transaction should be within the competence of the general meeting.
In the end, the idea is quite intuitive: if, as administrator, I want to sell an asset that is essential for the company itself, that decision should be taken by the general meeting. That would be logical when a car manufacturing company sells its own factory. Or if a company manages a hotel, the hotel and the hotel license are sold. After all, in some cases it will be intuitive, but in others not so much.
We must then ask ourselves: is this operation leading to the liquidation or dissolution of the company? We could also ask ourselves: could financing operations fall under this aspect? The Supreme Court has ruled them out.
Interestingly, the DGRN has established that there is a notarial filter for this type of transaction: if the notary becomes aware that the asset is an essential asset, the notary must not authorize the deed, unless the authorization of the general meeting is on record.
Finally, we wonder: what happens if an essential asset is sold without the authorization of the general meeting? Our criterion is that the operation is null and void and must go back to the previous moment. However, there is no doctrinal or jurisprudential consensus.
For further information, please consult with Legal advice
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