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4Main Characteristics of Corporations and Limited Liability Companies

4.3 Company Bylaws

An S.L. and an S.A. are governed by the Capital Companies Law and by their bylaws. The bylaws should therefore be drafted in accordance with the requirements of the above law and must at least include reference to:

Mandatory References
Corporate nameThe corporate name must be included.
Corporate purposeThis should be stated in a concrete and precise manner, since:

  • It serves to establish the general framework for the activities of the company.
  • The completion of the stated purpose automatically leads to the dissolution of the company.

If the corporate purpose is modified in such a way as to be entirely different, any dissenting shareholders and non-voting shareholders can withdraw from the company and are entitled to be reimbursed for their shares.
Registered officeMust be located in Spain.
Capital stockMust indicate the capital stock, the shares into which it is divided, their par value and their sequential numbering.

In the case of a limited liability company, the bylaws must state, if they are unequal, the rights that each share confers on the shareholders, and the amount or scope of such rights.

In the case of a corporation, the bylaws must state the classes of shares and the series, if any; the portion of the par value not yet paid in and the method and deadline for paying it in; and if the shares are represented by certificates or book entries. If they are represented by certificates, it will be necessary to state if they are registered or bearer shares and if the issuance of certificates representing more than one share is envisaged.

In the case of the entrepreneurial limited liability company, the bylaws must state this circumstance (see section 4.2 above).
Managing bodyThe management of the company can be entrusted to a sole director, a number of directors acting severally or jointly or a board of directors. Listed companies must be managed by a board of directors.

The bylaws may establish different means of organizing the management, giving the shareholders’ meeting authority to choose between any of them without the need to amend the bylaws. The bylaws must also indicate the number of directors or, at least, the maximum and minimum number, the term of office and the compensation system, if any.

In the case of collective management bodies, the procedures for debating matters and adopting resolution must be specified.

Additionally, the public deed of formation, which includes the bylaws, may contain such agreements and covenants as the founders may deem fit, provided that they do not contravene any law or the fundamental principles that govern companies. Thus, the bylaws may include, inter alia, the following aspects:

  • Duration of the company. The bylaws will ordinarily stipulate that the duration is indefinite in order to avoid triggering automatic dissolution.
  • The date on which activities commence, which cannot be earlier than the date of execution of the public deed of formation (except in cases of re-registration).
  • Restrictions, if any, on share transfers and the grounds for removal of any of the shareholders.
  • Ancillary obligations, if any. If ancillary obligations are created, the bylaws must state the content of such obligations, whether or not they are remunerated, and the penalties, if any, for a breach thereof.
  • The fiscal year-end. Where not expressly indicated, the company’s fiscal year will be understood to end on December 31. The fiscal year may not exceed twelve months.
  • Special rights reserved to founders or promoters, if any.

The power to amend the bylaws lies with the shareholders’ meeting. As an exception, Royal Decree-Law 15/2017, of October, 2017, on urgent measures for the mobility of economic operators within the national territory, introduced the option of the managing body having the power to relocate the registered office within the national territory, unless stated otherwise in the bylaws (art. 285 LSC).