4Formation of a company
4.1. Legal formalities
The ordinary steps and expenses involved are similar for both legal forms and are detailed in the following tables.
STEPS FOR THE INCORPORATION OF A SPANISH LIMITED LIABILITY COMPANY| Requirements | Applicable to any kind of limited liability company or corporation. |
|---|---|
| 1. Clear name search certificate | Application to the Central Commercial Registry by the interested party or anyone authorized by it (may contain up to 3 alternative corporate names, in order of preference)15. The Central Commercial Registry will issue a name reservation certificate for the new company. Names are reserved for a period of six months as from the date of issue of the certificate. However, the clear name search certificate will be valid for three months for the purposes of executing the deed, reckoned from the date of its issue by the Central Commercial Registry. Once the certificate has expired, an application may be submitted for its renewal with the same name. The expired certificate must be attached to the application. |
| 2. Application for provisional N.I.F. | See section 3.3 above. |
| 3. Opening of a bank account | Opening of a bank account in the entity’s name for payment of the capital stock. Once the founding shareholders have paid in the capital, the bank must issue payment certificates. |
| 4. Document containing representations by the beneficial owner | The founding shareholders must execute a document containing representations by the beneficial owner in accordance with Law 10/2010, of April 2816. |
| 5. Execution of deed before a notary | The founding shareholders must execute a public deed before a notary, containing:
|
| The deed must be executed within the three months following the issue of the clear name search certificate by the Central Commercial Registry. | |
| 6. Application for registration of the registered office at the Commercial Registry | The deed of formation will be submitted (i) telematically by the notary; or (ii) in person by the interested party. |
| 7. Period for assessment and registration in the Commercial Registry | Fifteen (15) days as from the date of the entry recording the filing of the deed, unless there is just cause, in which case the period will be thirty (30) days. |
| 8. Obtainment of definitive N.I.F. | See section 3.3 above. |
| 9. Opening formalities for tax and labor purposes | Registration for the purposes of the Tax on Economic Activities: submission of Form 036. Companies being set up must describe the activities they are going to pursue and the reason why they are exempt from this tax. The following, among others, are exempt from this tax:
This step must be completed before the company commences operations. Registration for the purposes of Value Added Tax (VAT). Obtainment of an opening/operating license, or sufficient enabling instrument for pursuit of the activity, from the relevant municipal council19. For labor purposes, please see Chapter 5, section 10. |
As a general rule, setting up a corporation or limited liability company using the ordinary procedure takes between 6 and 8 weeks (for aspects relating to labor formalities and authorizations, see Chapter 5).
For additional information please visit www.investinspain.org.
In addition, Law 14/2013, of September 27, on support to entrepreneurs and their internationalization (the “Entrepreneurs Law”) provides an express regime for the telematic formation of limited liability companies, with and without standard bylaws, the content of which is implemented by Royal Decree 421/2015, of May 29 (regulating the standard bylaws and standard public deed forms for limited liability companies, approving the standard bylaws form, regulating the Notarial Electronic Agenda and the Exchange of reserved business names) and by Order JUS/1840/2015, of September 9 (approving the public deed form in standard format and codified fields of limited liability companies, as well as the list of activities that can be included in the corporate purpose20). This notwithstanding, according to the provisions of the Entrepreneurs Law, the regime will consist of the following steps:
A. Formation of a limited liability company with standard bylaws:
| Nº | STEPS |
|---|---|
| 1 | At the Entrepreneur Service Point (PAE):
|
| 2 | The notary will:
|
| 3 | The Commercial Registrar, on receiving via (CIRCE) (a) an electronic copy of the deed of formation together with the provisional N.I.F. assigned, and (b) evidence of the exemption from transfer and stamp tax, will:
|
| 4 | The tax authorities will:
|
| 5 | The formalities for commencement of the activity will be performed at the PAE, which will send the information contained in the DUE to:
|
B. Formation of a limited liability company without standard bylaws:
| Nº | STEPS |
|---|---|
| 1 | At the Entrepreneur Service Point (PAE), the founding shareholders may:
|
| 2 | The notary will:
|
| 3 | The Commercial Registrar, on receiving the electronic copy of the deed of formation, shall initially register the company at the Commercial Registry within a period of 6 business hours, solely indicating the data relating to: (i) name; (ii) registered office; (iii) corporate purpose, (iv) capital stock; and (v) managing body. Definitive registration will take place within the ordinary assessment period. Once registered, the Commercial Registrar will notify the competent tax authorities of the registration of the company, requesting the definitive N.I.F. |
| 4 | The tax authorities will:
|
| 5 | The formalities for commencement of the activity will be performed at the PAE, which will send the information contained in the DUE to:
|
It should be noted that according to the Entrepreneurs Law:
- Entrepreneur Service Points (PAE) are: Offices belonging to public and private organizations, including notary offices, which will be tasked with facilitating the creation of new businesses, the effective commencement of their operations and their development, by providing information, processing, documentation and advisory services.
- The Single Electronic Document (DUE) is the document containing the data that must be sent to the legal registries and to the competent public authorities for:
- The formation of limited liability companies.
- The registration at the Commercial Registry of the Individual Entrepreneur.
- Fulfillment of the tax and social security obligations on commencement of the activity.
- The performance of any other formality on commencement of the activity with the state, autonomous community and local authorities.
As a general rule, the telematic formation of limited liability companies takes approximately 15 business days.
15Applications for clear name search certificates may be made:
- Directly at the offices of the Central Commercial Registry with a printed application form.
- By mail, by sending an application or letter to the offices of the Central Commercial Registry. The Registry will issue the certificate in return for payment on delivery to the address indicated in the application.
- By telematic means, by filling the application form on the website: www.rmc.es. (http://www.rmc.es/Deno_solicitud.aspx?lang=es).
16Law 10/2010, of April 28, on the Prevention of Money Laundering and Terrorist Financing requires the founders of a company to provide a declaration by the “beneficial owner”, that is, by the individual(s):
- On whose behalf it is intended to establish a business relationship or take part in transactions.
- Who ultimately owns or controls, directly or indirectly, more than 25% of the capital or voting rights of a legal entity, or who otherwise exercises control, directly or indirectly, over the management of a legal entity. An exception is made for companies listed on a regulated market in the European Union and subject to disclosure requirements consistent with EU law or with equivalent international standards that ensure that the information on ownership is suitably transparent. It is interesting to note that in the case of fideicomisos or fiduciary arrangements, such as common law/Anglo-Saxon trusts, all the following persons will be considered beneficial owners: 1. settlor, 2. trustee or trustees, 3. the protector, if any, 4. the beneficiaries or, where they have yet to be designated, the category of persons for whose benefit the legal structure has been created or acts; and 5. any other individual who exercises ultimate control over the trust by means of direct or indirect ownership or by other means. In the case of legal instruments similar to a trust, such as fiduciary arrangements or the “Treuhand” under German legislation, the obliged entities must identify and adopt the appropriate measures to verify the identity of the persons who hold positions equivalent or similar to those listed in numbers 1 to 5 above.
- Individuals who are considered beneficial owners must provide the following identifying particulars: first and last names, birth date, type and number of identity document, country that issued the identity document, country of residence, nationality, criteria by which he/she is classified as a beneficial owner, and in the case of beneficial ownership by direct or indirect ownership of shares or voting rights, percentage holding, including, in the case of indirect ownership, information on the interposed legal entities and their interest in each of them.
- Information relating to beneficial ownership must be kept for 10 years after beneficial owner status ends.
17There are two main procedures for such legalization:
- Execution of the powers of attorney in the presence of the Spanish Consul in the foreign investor’s home country. The foreign investor appears before the Spanish Consul, provides evidence of his identity and grants the related powers of attorney. If a company, rather than an individual, is the foreign shareholder, apart from his identity, the person appearing before the Spanish Consul must provide evidence of his capacity to grant the powers of attorney to the designated person in the name and on behalf of the shareholder. The Spanish Consul may demand any documentation he considers necessary and will proceed to grant a deed of power of attorney, in Spanish, to the designated person. This power of attorney may be used directly in Spain.
- Execution of the power of attorney in the presence of a foreign public authenticating officer. The foreign investor appears before the authenticating officer, provides evidence of his identity and grants the related power of attorney. If the foreign investor is a company, its representative shall execute the power of attorney in the presence of the public authenticating officer, who will certify the document as well as the identity and capacity of the representative of the foreign investor to grant the power of attorney. The signature of the foreign authenticating officer would also require subsequent legalization (either by the “apostille” procedure approved by The Hague Convention of October 5, 1961, or by a Spanish Consul abroad). Under this second procedure, the power of attorney would normally be issued in the language of the authenticating officer who attests to the act, meaning a sworn translation into Spanish would also have to be provided.
18It will not be necessary to evidence the reality of the monetary contributions in the case of entrepreneurial limited liability companies (see Annex 1, section 4.2).
19In this connection, in accordance with the provisions of Law 12/2012, of December26, 2012, on Urgent Measures to Deregulate Trade and Certain Services, permanent establishments used for commercial retail purposes and the provision of certain services provided for in the Schedule to the Law with a useful sales and display area not to exceed 750 m2 will not generally be required to obtain an opening and operating license beforehand, but rather to submit a solemn declaration or prior communication. However, when the planned commercial activity implies the establishment of a large retail outlet, it will be necessary to hold industry authorization or an equivalent instrument granted by the competent body of the regional government.
20For these purposes, it is established that the standard form of public deed will be used to form a limited liability company with and without standard bylaws (art. 6 Royal Decree 421/2015, of May 29).
21It will not be necessary to evidence the reality of the monetary contributions in the case of entrepreneurial limited liability companies (see Chapter 2, section 4.2).
22It will not be necessary to evidence the reality of the monetary contributions in the case of entrepreneurial limited liability companies (see Chapter 2, section 4.2).
