A Supreme Court judgement dated 29 September 2021 (652/2021) ruled that the failure to deposit the annual accounts with the Mercantile Registry does not determine the existence of cause for dissolution but may allow a reversal of the burden of proof in cases of the liability of directors under article 367 of the Capital Companies Act (LSC). The ruling also stated the date on which the guaranteed obligation is attached must coincide with the date of payment, even if promissory notes that are due to be paid later by a third party have been issued.


The following were stated as proven facts in the judgment:

  • Between September 2013 and November 2013, a company requested for some works to be carried out.
  • The company received three invoices in relation to said works, the first was dated 16 November 2013 and the other two were dated 31 December 2013; only the first invoice was paid. Promissory notes were issued by a third party for the other two invoices, expiring on 12 January 2014 and 5 February 2014, respectively; however, these were dishonoured and not accepted when they were presented for collection.
  • The company failed to deposit its annual accounts with the Mercantile Registry from 2014 onwards, and the accounts for 2013 (the last ones that were filed) revealed substantial losses that reduced the net worth to an amount of less than half of the share capital (ie, there was cause for dissolution under article 363(e) of the LSC).


The Supreme Court upheld the judgment handed down by the provincial high court, whereby it had ordered the company and its sole director to jointly and severally pay the amounts that had been claimed, considering that:

  • the issuance of promissory notes by a third party did not alter the consideration of the company as a debtor;
  • in order to prove that the capital deficit constituted cause for dissolution, other elements could also be considered, including the failure to deposit the annual accounts; and
  • the losses incurred as revealed in the accounts for 2013 proved the existence of cause for dissolution where the director had not carried out the legally stipulated actions to remedy such a situation.

First statement on grounds of appeal
With regard to the first statement on the grounds of appeal (ie, the failure to deposit the annual accounts), the Court clarified that the company was subject to the grounds for dissolution provided for in article 363(e) of the LSC due to the existence of significant negative share capital. However, the Court declared that the failure of the directors to comply with the obligation to deposit the accounts with the Mercantile Registry did not in itself determine any liability for the company's debts, and it did not suggest that the company was therefore inactive, as articles 282.1 and 283 of the LSC foresee only the closure of the registration sheet and the imposition of fines on the company as a consequence of non-compliance with its obligations.

However, the failure to deposit annual accounts leads to a reversal of the burden of proof regarding the existence of negative equity or inactivity. Therefore, the company and the directors were responsible for proving that this was not the case. This is because failure to deposit the accounts in the Mercantile Registry makes it impossible for third parties to be aware of the economic and financial situation of the company.

Second statement on grounds for appeal
With regard to the second statement on the grounds of appeal (ie, the moment of attachment of the payment obligation and whether it was prior or subsequent to the cause of dissolution for the purposes of establishing the existence of joint and several liability of the directors, as stated in article 367 of the LSC) the Court clarified that:

  • the company's debt was not generated by the failure to pay the promissory notes payable by a third party, since the obligation expressed in said promissory notes did not replace the primary obligation, but rather reinforced it by granting a new means of paying off the debt. Thus, the delivery of promissory notes did not constitute payment (ie, the original obligation is not discharged, but rather placed in abeyance); and
  • the criteria that was necessary to determine if an obligation was prior or subsequent to the occurrence of the cause for dissolution was the attachment of the obligation, rather than its enforceability. Accordingly, the obligation attached when the works were delivered was when the payment was due according to the contract (ie, in November 2013) and not on the date that the promissory notes were due.

Nevertheless, the Court pointed out that the obligation to proceed with an orderly dissolution of the company begins when the directors are aware or should be aware of the asset imbalance. In this specific case, the Court understood that it must be presumed that the company was aware of the asset imbalance some time prior to the company getting into debt, as it could not have been unknown to the director or considered as surprising or sudden. In view of the above, the Court upheld the judgment under appeal.

For further information on this topic please contact Macarena Méndez at CMS Albiñana & Suarez de Lezo by telephone (+34 91 451 9300) or email ([email protected]). The CMS Albiñana & Suarez de Lezo website can be accessed at www.cms.law.