The main statutory documents of a company in Spain are represented by the memorandum and the articles of association. The way in which they are drafted depends upon the legal entity of the company. In the situations in which the articles of association are required, the investors will have to state general information on the company, such as its trading name and the legal entity, as well as its main business purposes and the activities it can undertake.
Foreign businessmen who want to open a company in Spain can receive an in-depth presentation on the overall regulations that are compulsory for the articles of association from our team of company formation consultants. Our specialists may assist businessmen with advice on any of the legal aspects that have to be included in the company’s bylaws.
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The articles of association of a limited liability company in Spain
Persons who are interested in the procedures related to company formation in Spain should know that, in the case of a limited liability company, the investors will need to draw the articles of association. The applicable legislation prescribes that the articles of association of this type of legal entity will contain provisions related to the following:
- the name of the company and the legal entity under which the company operates;
- the registered address of the company and the share capital (which varies depending on the selected legal entity);
- the shareholders who can add supplementary contributions to the capital;
- if the management of the company is controlled by one director or by a board of directors;
- the act also stipulates the period in which the directors will hold their position in the company.
At the same time, it is important to know that the director can be removed from this function in the situation in which the board of directors prescribes a resolution in this sense, as the articles of association allows them to perform this action. Our team of company formation agents in Spain can offer more details on this subject.
What is the structure of the Spanish articles of association?
As mentioned earlier, the articles of association of a Spanish company must contain a set of compulsory provisions. This founding document has several chapters, referring to different aspects of the corporate structure and management. It also defines the rights and the obligations of the company’s founders and directors; our team of consultants in company registration in Spain can advise on the full structure of the articles of association, which basically refer to the following aspects:
- Chapter 1 – information regarding the company’s name, objects of activity, the company’s registered office, the beginning and the end of the company’s operations;
- Chapter 2 – information on the company’s share capital, the manner in which the investors can increase or decrease the capital, the types of shares the company has, the rights and the obligations of the persons who have the quality of shareholders;
- Chapter 3 – information on the company’s corporate governance (it refers to the types of governing bodies of the company);
- Chapter 4 – information on the manner in which the profits will be distributed amongst the company’s owners, the payment of dividends and others;
- Chapter 5 – it provides the legal framework concerning the liquidation procedure of the company.
What types of bylaws can Spanish companies have?
A company that is registered in Spain is legally required to draw the company’s statutory documents, as this represents the founding document through which the entity is recognized in this country. The procedure on opening a company in Spain became more flexible starting with 2010, through the implementation of the Royal Decree Act 13/2010.
Under this regulation, local and foreign investors had the opportunity to simplify the registration process and in the case of a limited liability company, businessmen benefit from two options, depending on the type of articles of association selected. In the case of this business form, investors can select to draw and sign the standard model for the articles of association or by using a tailored model of the articles of association.
Regardless of the option selected, the incorporation procedure will require the participation of a public notary in Spain, who is the entity legally entitled to perform specific steps of the registration. The second category of articles of association is seen as a more flexible option, as the investors can establish several provisions in accordance with their needs. Further on, the public notary will include these regulations which must comply with the provisions of the Companies Act.
What happens after the Spanish articles of association are notarized?
The legal procedures through which the Spanish articles of association become legally recognized fall under the supervision of the public notary, regardless of the model selected by the investors. After the articles of association are completed and signed, a new set of steps have to be taken, with the purpose of completing the registration of the Spanish company. Our team of specialists in company registration in Spain can provide legal representation on the following steps:
- any new legal entity formed in Spain needs a NIF number (a provisional NIF number), which must be obtained from the State Tax Administration Agency;
- the assessment of the tax system applicable to a legal structure (not all legal entities in Spain are taxed following the same tax system);
- the company needs to publish a notice of incorporation in the Spanish Official Gazette;
- the registration of the company’s articles of association with the Companies Register, alongside with the NIF number;
- the issuance of a incorporation certificate, once the investors have submitted the required documents with the Companies Registrar;
- after the company has been officially registered with the Companies Registrar, it will receive the definitive NIF number;
- other procedures, such as registering for social security, must also be conducted.
How many businesses are registered in Spain?
As a general rule, the Spanish economic environment is represented by more than 3 million companies; the number of local businesses declined once the economic crisis began in Europe, but starting with 2013, the business environment gradually revived and this had a positive effect on the Spanish incorporated companies. Investors should know the following:
- in 2017, the total number of companies in Spain accounted for 3.33 million, approaching the number of legal entities registered prior to the beginning of the economic crisis;
- in 2007, before the country was affected by the economic crisis, there were more than 3.42 million companies;
- in 2018, the majority of companies in Spain were represented by businesses without any employees (accounting for more than 1.8 million);
- companies in Spain employing 1-2 employees represent less than 1 million (910,686 companies);
- Spain had 80,860 companies hiring between 10 and 19 employees (in 2018);
- there are 13,116 companies hiring more than 50 employees (and up to 99).
When starting the procedure of company registration in Spain, the investors will be required to notarize the articles of association, operation that is performed in front of a public notary. Later on, the documents will be registered with the Mercantile Register and they will be available to a larger public. We invite you to contact our team of company formation consultants in Spain for more details related to the Spanish articles of association.