A valuable immovable property belonging to our corporate client was transferred by a former member of the management board to another company owned by the same member of the management board at substantially below market value. As this transaction was not in the interest of our client, it was illegal and subject to cancellation. The court clarified several important issues relating to the transfer of company assets:
- a company may cancel the sale of immovable property if it is against its interests and the buyer knew this;
- selling an immovable property is presumed to be against the company’s interests if it is sold below market value;
- an immovable property does not lack value merely because it is subject to mortgages, especially if it is used for commercial purposes.
According to Chirag, this is an important ruling for businesses concerning the sale of assets to related parties. If a company sells its assets to a related party for less than the market price, the transaction is presumed to be voidable because it is not in the interests of the company.