Legal entities or companies in Spain are governed generally by two regulations: (i) Royal Decree 28 August 1885 the Commercial Code; and (ii) Royal Legislative Decree 1/2010 of 2 July which approves the consolidated text of the Capital Companies Law.
This is a complex area and one where it is well worth a sit down with a lawyer to go through questions you may have on all aspects of corporate law if you have a company or are thinking of establishing one.
There are many other regulations affecting companies and codes, such as the Code of Corporate Governance of listed companies approved in May 2006.
As in the UK, all companies must have articles of association establishing the terms and conditions for the operation of the company and including corporate rules. Shareholder’s agreements are very common in Spain to regulate matters not strictly related to the governance or ownership of a company. These have to be recorded in a Registry.
Spanish companies have a legal entity and can acquire rights and assets and assume liability. There are two main types, which together with
Spanish companies have legal personality and thus can acquire rights and assets and assume liability.
There are two main types of companies (Public limited companies – Sociedad Anónima or SA and Sociedad Limitada or SL, which, together with limited shareholders partnerships are regulated.
Public limited companies or SA’s have a minimum capital to establish them of EUR 60,121 (which must be fully subscribed and at least 25 per cent paid up upon incorporation). The issue of non-voting shares is also allowed.
Private limited companies or SL’s, the partner liability is generally limited to the investment in the equity and the minimum capital required to establish it is EUR 3,000 (which also must be subscribed and fully paid up upon incorporation). SLs are now the most popular and common type of business organisation for companies.
There are also three main types of partnerships in Spain, but they are not very popular as the members have unlimited liability.
– General partnerships (sociedad colectiva), simple limited partnerships (sociedad comanditaria) and limited shareholders partnerships (sociedad comanditaria por acciones). These are semi corporate entities and need a notarial deed of incorporation.
There are other types of business organizations that usually do not have a separate legal existence to that of their members; temporary business associations (UTE), joint account contracts, joint ownership (communidad de bienes) and civil law partnerships (sociedad civil).
As you can see this is a very complex area, and it is best to take professional advice before setting up a company or considering various aspects when you have one. If you need to obtain advice on this issue, please contact us.