Limited Liability Company (Spain)

Limited Liability Company (Spain)

It is the most common type of company in Spain, and in many countries around the world in their equivalent forms. Limited liability companies in Spain, are associations of a commercial nature between natural persons (individuals) and / or legal persons (companies), commercial, or what are called acts of legal trade. Also called "company of limited responsibility" (sociedad de responsabilidad limitada). It's a kind of private company limited by shares.

Explanation of "limited" concept

These companies are called limited because the responsibility for any debts that company may contract are limited to capital contribution, not personal possessions or assets, the partners who make up the company.

Naming

When naming the society should always be accompanied by the name of the abbreviations SL, SRL, or the words "Sociedad Limitada" or "Sociedad de Responsabilidad Limitada". It's mandatory to request a certificate to the Register, that there is no other company with that name. This certificate is called "negative certification". It should be mentioned that this certification does not imply an exact search, and therefore it is difficult to obtain negative certification relatively common names.

Laws governing Limited Liability Companies

In Spain are regulated by:

     - Spanish Law 2/1995 of 23 March
     - Royal Decree 1/2010 of July 2 (recast on the Law of Capital Companies)
     - JUS/3185/2010 Order of December 9

Capital

To form a limited liability company, partners must provide the amount of 3,005.6 € or more. This amount can be provided by cash (deposit in a bank or credit in national currency) or assets (by economic rights or property, with a corresponding assessment).

Notary is necessary to provide the necessary documentation (notification from the bank for cash capital contributions or valuation of property in the case of non-cash contributions) at the time of registration of articles of incorporation. For non-cash capital contributions the Corporations Act (Sociedades Anonimas law) applies. In any case, if not indicated otherwise, all contributions are considered a title. It is not possible to provide services or work, this contribution being restricted only to goods that can be valued economically.

Capital, in both cases, is divided into a number of indivisible shares (in many cases, and to simplify, 3,005 shares of 1 euro each) assigned to each of the partners. The shares of a limited partnership may not be called stocks or titles. This implies that the shares must be fully paid.

Formation of a Limited Liability Company

The first step is to obtain negative certification of the name at the Central Trade Registry (Registro Mercantil Central). Once this certification is ready, go to the notary to formalize the public deed, an act that should see all the founder members, who will assume all of the shares.

The deed shall include the identity of the partners, number of inputs, statutes, mode of administration and the identity of the director or directors of the company.

The bylaws should include at least the object of the company, a description of the activities that will perform the company, the capital, official address, and mode of administration of the company, and can not oppose the laws that regulate capital companies.

Once you have completed the deed, you must present it in the commercial register as an inscription.

General Board of Partners

It is the main governing body of society, which manages agreements matters as approval of annual accounts, appointment of directors and other officers of the society as a liquidators and auditors, enlargement or reduction of capital of the company, changing bylaws, company transformations, and extinctions.

Administrators of the company

It is the executive governing body, which performs the daily administrative management of the company, and its representation. To be an administrator of the company the person must be a partner of the same unless the statutes provide otherwise.

Partners

They are the people who own shares in the company, shareholders may also be called even shares are not stocks. They can participate in company decisions and to be elected as administrators in addition they have the opportunity to participate in the distribution of benefits from it. In the case of liquidation of the company they can participate in equity resulting.

Annual Accounts of Limited Companies

They are governed by the Law of Joint-Stock Companies (Ley de Sociedades Anónimas), but with some special features, the distribution of dividends to shareholders or members is made in proportion to the holding in the capital, unless the bylaws state otherwise. Furthermore, following the convening of the General Board of Partners, if the rules do not prevent it, and there is a set of one or more members representing more than 5% of share capital, they may review the documents concerning the annual accounts of the company at the registered office.

Limited Liability Company Sole Proprietorship

The single-member limited liability companies are limited companies with a single partner can be a particular (individual) or company (legal entity). They can exist with this feature from the beginning, or after a transfer or sale of shares. In any case, the acquisition or loss of soloe propietorship condition shall be contained in a public deed and inscribed in the Register, always giving the identity of the sole member. Furthermore, all documentation must indicate that business is individual (sole propietorship)

Taxes

The limited liability companies in Spain pay 35% of their profits, and 30% if their tax base is under 90,151.82 €

Limited Liability Company (Spain)

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