After negotiations, the government will approve residence permits for foreigners who purchase homes valuing € 500.000,00 or more. Initially the proposal awarded residency permits for foreigners who purchase a home worth€ 160.000 or more. Since the November 2012 proposal, after much negotiation and criticism from the European Union, the government has decided to restrict the opportunity to those who invest half a million Euros in homes.

The purchase of a residence must also be free of charge. Therefore, if someone purchases a home with a mortgage, they are not entitled to receive residency under this new law.

The new law, if approved, also grants residence permits to those who invest in Spanish companies. The requirements for investment include a minimum of € 1.000.000, 00 and the creation of two jobs or € 500.000, 00 provided that that investment is maintained yearly. The business must be of public interest which means it includes the creation of jobs and involve an investment with socio-economic effects in the area. The goal is to help the Spanish economy regionally and develop more economic activity, increase employment, increase innovation and the investment capacity.

Also considered in this reform is the approval of residence permits for investors who invest in financial assets such as stocks and bonds and investment in the Spanish government. And for those foreign researchers and masters students who plan to create a new business in Spain.

For those entrepreneurs interested in creating new economic activity in Spain the reform may provide a one year residence permit. The government will have the discretion to approve only those projects that are particularly innovative or that provide economic opportunities that interest Spain.

The law will extend these residence permits for spouses and children. It bypasses the prior 6 month residency rule. Also the resident may pay non-resident property taxes of 25% where renting a home. The new law will not be retro-active.

The law will make clear that this residence permit will not give the resident benefits such as free health-care and education, other social benefits, or the freedom to move throughout the Schengen area.

Further restrictions covered in the draft include the exception where the would-be investor has a criminal record in Spain or in their country of residence within the past five years. This time period may be extended in up to two year increments. For “resident investors” the stay may be unlimited as long as they maintain their status as an investor annually. Furthermore, the investor and his or her family must have health insurance.

Finally, in order to avoid giving residency to someone who would later become a charge of the state, they must show sufficient financial resources to support themselves.

No one knows all of the details yet about how this new law will play out and there are still many questions. But certainly we will see an increase in foreign investment in Spain as foreigners take advantage of this new opportunity.

Marina Bugallal
Mariscal Abogados, Spanish lawyers

This article is not considered as legal advice.

Legal advice on  Investments in Spain (+info)

The ordinary general meeting must be held within the first six months of each year to approve the management, accounts of the previous year, and the distribution of profits. This meeting is validly held even if called late or held later than in the time period stipulated.

The extraordinary general meeting involves all matters not previously mentioned.

Universal Board Meeting

The Universal Board Meeting is a mechanism that responds to the need to accelerate decisions within companies with few members where the formal requirements of notice of the General Meetings are often unnecessary and overly rigid.

A board meeting is universal once it is validly formed to consider any matter without prior notice as long as members owning the entire share capital are present or the entire share capital is represented and these members unanimously agree to hold the Meeting (Article 178 of the Corporations Act).

The distinct feature of the Universal General Board Meeting lies in its ability to maintain validity in formation and agreements adopted even if the notice requirements have not been fulfilled.

The presence of all members and the unanimity requirement regarding holding the Meeting ensures respect for the members’ rights of attendance, information, and voting.

Ninety percent of the agreements that are registered in the Commercial Registries are established from this type of meeting.

According to the Commercial Doctrine and the Directorate General of Registries and Notaries (“DGRN”), the following list includes necessary characteristics of a Universal Board Meeting.

a. The Universal Board Meeting must not be a convened one.

b. The Universal Board Meeting requires the personal presence or representation of all members who represent the entire share capital of the limited liability company.

c. All members must agree to the holding of the Meeting.

d. There must be agreements of the points of the Meeting’s agenda.

e. The Universal Board Meeting may entertain any kind of issue.

f. It may be held anywhere nationally or internationally.

g. Once the Universal Board Meeting is validly formed, the agreements do not have to be unanimous. Likewise, there may be votes against propositions and even challenging of agreements.

h. Once the Universal Board Meeting is validly formed, some of the members may be absent as long as there remain sufficient members present to satisfy a quorum. The absence of any of the members prohibits the adding of further points to the agenda.

i. The agenda may either increase or decrease in points discussed as long as all members remain present at the Meeting and agree. Once the Universal Board Meeting is validly formed, a member may not after the conclusion of the Meeting ask to delete or add any item to the agenda. A member may only vote against a proposition, cast a blank vote, abstain, or be absent.

j. The record shall include the identity and signature of members who attended the Meeting for subsequent registration of the Meeting agreements in the Registry.

k. The registration of the resolutions in the Registry shall express that the board meeting is universal.

l. The location of the Meeting must be specified to give context to the agreements adopted.

This article is not considered as legal advice.

Legal Advice on  Company Law in Spain (+info)

Article 6 of the LOPD establishes that:

• The processing of personal data requires the consent of the affected party, unless the law provides otherwise.
• It is not necessary to give permission when personal data is collected for the exercise of governmental functions within areas of competence when relating to parties of a contract or pre-contract of a business, employment, or administrative relationship and are necessary for maintenance or performance.  This is true (1) when the processing of data is to protect a vital interest or (2) when the data is contained in publicly available sources and treatment is necessary to satisfy legitimate interests when pursued by the party responsible for the file or by a third party to whom the data is disclosed pursues the data.  However, the parties seeking the information must not violate the rights and freedoms of the interested party whose data is sought.

However, Article 20.3 of the Statute of Workers does require consent:

“The employer may take any action it deems most appropriate for surveillance and monitoring to verify compliance by the worker of its obligations and duties, keeping in its adoption and application due regard for human dignity and taking into account the actual capacity of disabled workers, as appropriate.”

Additionally, the present case examined, among other issues, the legitimacy of the company’s use of a video surveillance system for monitoring workers’ activities and considered whether workers received advance notice that this type of system could exist for job control.

This case established that the company has a video-surveillance system and workers received notice of the purpose for which the company installed the cameras.  Furthermore, this case also established that the above requirements were met and therefore was not a breach of the LOPD.

This article is not considered as legal advice.

Legal services on IT Law in Spain (+info)

Spanish private international law provides a number of solutions for hereditary succession when it contains a foreign element.  Note the complexity of this matter and that its coexistence with different legal systems is not always amicable because of the various diverse issues related to inheritance.

We highlight areas common to the analysis of any case of private international law to provide a general understanding of the subject.

First, we address which Spanish courts have jurisdiction to hear an inheritance matter.  Then, we move on to consider applicable laws.  Finally, we underline the extraterritorial validity of foreign judgments in matters of inheritance.

International jurisdiction

First, we consider the question of which Spanish courts have jurisdiction to hear issues of hereditary succession.  Article 22 of the Organic Law 6/1985 of July 1 on the Judiciary answers this question.  This provision establishes the circumstances in which Spanish courts have jurisdiction in civil matters.

• There are cases that are not subject to the exclusive jurisdiction of the Spanish courts. Therefore, Spanish courts may have to acknowledge foreign judgments.

• Spanish courts may accept both tacit and explicit submissions.  For express submission, Article 55 of the Spanish Civil Procedure Act requires parties to nominate “precisely the constituency to which courts they will submit.”

• Judges and courts may learn of the proceedings when the defendant’s address is in Spain.

• Finally,  there are two special forums.  The first allows Spanish courts to consider the litigation when the last domicile of the deceased was in Spanish territory.  The second confers jurisdiction on the Spanish courts when at least one property of the deceased, an object of the inheritance dispute, is located in Spanish territory.

We end this introduction to international jurisdiction in matters of inheritance by pointing out the governing legal principle of Judicial Unity of Succession in Spanish law.  This principle refers to the situation where a single judge hears the entire inheritance dispute, although the above rules may allow various courts to have jurisdiction.

Applicable law

Once elucidated the basic elements of international jurisdiction of the Spanish courts, the question should then be which law applies to this inheritance litigation.  Spanish private international law refers to Article 9, paragraph 8 of the Civil Code.

The provision states:

 “Succession on the ground of death shall be governed by the national law of the decedent at the time of death, independently of the nature of the assets or the country where the assets are located.  However, testamentary dispositions and succession covenants made according to the national law of the testator or of the covenanter at the times of their execution shall continue to be valid even if a different law governs the succession, except for the legal portions, if any, which shall conform to the law governing the succession.  The law that regulates the effects of the marriage shall govern the rights of the surviving spouse granted by operation of law; however, the legal portions of the descendants shall be respected.”

From the content of this precept, we point out the following principles:

• The succession if intestate  will be subject to the national law of the deceased at the time of death, regardless of the assets that comprise the estate of the deceased or the country in which the assets are located.
• Now, if the deceased had left a will, it would be subject to the national law, and it may be different from the law applicable at the time of death.  The directive of the national law of the deceased at the time of death limits this regulation.

For example, imagine a case where a British citizen has a testament according to his national law, which does not include the system of continental European law, and he obtains Spanish citizenship and then dies.

In this case, the will of a Spanish citizen would be subject to British law, except for the portion of the inheritance over which the testator does not have free control that respects the provisions of Spanish law. The consequences in this case could mean a change that would affect two-thirds of the assets of the will, redistributing the inheritance among the children or depriving third party beneficiaries of all or part of it provided for in the will.

Finally, we would like to introduce the possibility that an additional, distinct law may apply to determine the rights of the surviving spouse.  This law is none other than the law governing the effects of marriage.  One possible outcome would be the application of three different national laws.  However, the principles of Unity of Succession and International Harmony of Inheritance temper these cases and aim to simplify this type of litigation.

Conclusion

Succession litigation of foreign nationals in Spain or Spanish nationals who have foreign real-estate assets requires an analysis to determine which jurisdictions should hear which parts of the case and which law applies while keeping in mind the possibility that Spanish judges may have to apply foreign laws and vice versa.

Nicolás Melchior
Mariscal Abogados, Lawyers in Spain

This article is not considered as legal advice.

Legal advice on Inheritance law (+ info)

Presently, an employer does not have to recognize the unfairness of a dismissal.  If a dismissal does not rest on any of the causes that the law establishes and the employer provides the employee with the adequate compensation, an unfair dismissal has taken place.

As provided in Article 56 of the Workers’ Statute, the current compensation required for an unfair dismissal is 33 days per year worked for contracts entered into after February 12, 2012.  The cap on this compensation is a total of 24 months.

According to the Transitional Provision Five of the Act 3/2012 of July 6, on Urgent Measures for Labor Market Reform, for those contracts concluded before the above date, the compensation is calculated from the employee’s start date until February 12, 2012 where the compensation payable is equivalent to 45 days per year worked.  However, as of February 12, 2012 until the date of dismissal, the calculation rate of the compensation is 33 days per year worked.

The table below clarifies the compensation and number of days per year for which the dismissed employee receives the compensation:

There are cases in which an employer may conduct a dismissal that is not unfair; for example, an employer may conduct a dismissal for objective reasons or for disciplinary dismissal.  However, the employer runs the risk that if the employee takes this dismissal to court and reaches a judicial proceeding, the judge may consider the dismissal unfair. 

In such cases, Article 56 of the Workers’ Statute provides for two options that the employer must adopt within a maximum period of five days from the date of notification of the judicial resolution declaring the unfair dismissal.

These two options are:

a) To reinstate the employee: the employee has the right in this case to the employer’s paying the salaries that the employee has not received during the procedure (except for special cases).  These salaries shall be computed from the date of dismissal until the date of notification of the judicial resolution.

b) Not to reinstate the employee: in this case, the employer must pay the employee the compensation corresponding to 33 days per year (if the hiring occurred after February 12, 2012)

If the employer appeals the decision of the unfair dismissal, the employer must provide a consignment of 500.00 Euros plus a 0.5% of the principal (these amounts by way of court fees).  Furthermore, the employer must also transfer into the court’s account the amount that the judgment has declared be paid to the employee.  This is the amount involved in the appeal.  This transfer of funds into the court’s account is an employer obligation under Article 230 of the Social Jurisdiction Act (“LJS”).

Articles 190 and those articles immediately following in the LJS regulate the employer’s decision to file an appeal of a court’s decision over payment to the unfairly dismissed employee.  The employer’s decision to file an appeal does not imply a tacit choice for compensation.

The Judgment of the High Court of the Basque Country dated February 18, 2003 states, “If five days have passed from the notification of the decision declaring the dismissal unlawful without determining the issue of reinstatement or compensation, this situation legally means that the readmission of the employee must occur according to Article 56.2 and 3 of the Workers’ Statute.

Therefore, an employer must notify the court within five days from the notification of the judicial resolution of its decision to opt for compensation.  If this is the case, then there shall be NO READMISSION of the employee.  In summary, the employer’s defaulting on its obligation to notify the court within the five-day notice period means that the employer must readmit the employee to the company.  This situation leaves the employer liable for those wages that the employee has not received during the judicial process from the date of dismissal until the date of the notification of the judicial resolution.

Monika Bertram
Mariscal Abogados, Spanish lawyers

This article is not considered as legal advice.

Legal advice on Labour law in Spain (+info)

The following are measures of support that the new law provides:

• Entrepreneurship and self-employment among those under 30 years of age by introducing payment that is compatible with unemployment benefits and the start of a self-employment or other entrepreneurial experience.

• Taxation of entrepreneurial activity at a tax rate of 15% for the first € 300,000 of taxable income and a 20% tax rate for the excess; a 20% reduction in income tax of the net income applicable to economic activity in the first positive tax period and the following one.  The new law also removes the current limit for exemption from unemployment benefits.

• Incentives for:
  • Hiring part-time employees and training them
  • Permanent hiring of youth by self-employed entrepreneurs
  • Recruiting young people to acquire their first experience in the workplace

• Funding for the payment and cancellation of debts to suppliers of local and regional governments
• Increased efficiency in the railway sector
• Stability of prices of automobile fuel

Article 62.1 of the RD 2485/1998 of the 13^th of November of the Act of Retail Trade defines franchise business activity as:

“That which is carried out under an agreement or contract by a company (franchisor) who transfers to another (the franchisee) the right to operate under the franchisor’s business system for the commercialization of products or services.”

The franchising market in Spain represents a figure of growing significance in trade, thereby claiming its important rise in efficient legal response to the problem that may arise in this market. The data of 2011 reflect the growth of this formula for business up 6.5% from 2010. Statistics about the presence of national brands in the world indicate that currently there are 271 Spanish brands in place in over 118 markets, with a total of 17,081 establishments operating, according to the data for the first quarter of 2012 from the Spanish Franchise Association. Certain advantages have influenced this growth such as providing an alternative to unemployment or reducing the risk associated with any business when it is just starting by already having the association of trade name.

The regulation of the franchise agreement in the Spanish legal system is not exhaustive; it regulates different issues that affect it. First, this figure has been legally recognized and a protection for the franchisee has been introduced, which is the weaker of the parties in the franchise business. In this sense, a series of pre-contractual duties have been established which the franchisor must fulfill to the franchisee to protect the franchisee from possible abuse. With the same purpose of protecting the franchisee, a Register of Franchisors has been created that includes useful information for the franchisee. Moreover, we must take into account the rules on competition, both Spanish and those of the European Union.

These are the only limitations that one has to bear in mind when drafting a franchising contract.  The remaining contractual issues are subject to the principle of freedom of contract established in Article 1255 of the Civil Code, with the only limitation being, of a general nature, that the agreements do not infringe on any laws or moral or public orders. This means that the franchising agreement is an atypical contract, meaning that the content is not legally regulated.

As the franchising contract is atypical in nature, its content, therefore, is of great importance. This is because the franchising contract is the basic and principal instrument to establish the rights and obligations of the franchisor and franchisee as well formally establish the content of the relationship for all purposes.  The contract should clearly contain the essential elements that every contract should have as well as a detailed regulation of the basic content of this type of agreement.

The agreement is a private document signed by both parties:  the franchisor and the franchisee. Three elements define the essential content of a franchising contract, characterize the franchise, and serve to differentiate it from other similar figures:

• The transfer of the property rights of the brand
• The know-how (or the knowledge and practical processes verified by the franchisor as a result of its experience)
• The continual support – commercial and technical assistance that the franchisor provides throughout the contract period

Moreover, we can highlight the following essential elements of a franchising contract:

• Remuneration to the franchisor:  The parties usually agree on an initial fee, and thereafter there can exist responding payments of royalties (percentage of revenues or others) and/or fixed monthly amounts.  It is also usual to include a charge for the image so that the franchisor invests in the advertising of the franchise.
• Exclusivity agreements in favor of the franchisee, which protect it to operate normally in an exclusive geographic area.
• Assumption of several obligations of the franchisee while the contract is in force:  such as compliance with the business model considering objectives that the franchisor and franchisee should establish jointly; compliance with the fundamental aspects of the image; following the franchise manual; and providing good customer service.
• Duration:  The parties usually agree on a minimum of five years for the franchisee to protect its investment.
• The franchisee has a post-contractual, non-compete obligation.
• Specification of courts with jurisdiction in case of conflict to avoid competition issues in case of hypothetical legal proceedings.

Considering the above, we recommend quality preparation and revision of the franchise contract when starting a business as a franchisee or as a franchisor.  This quality preparation and revision is fundamental to the franchise contract because the contract regulates the commercial relationship between both parties.

Marina Bugallal & Teresa del Riego
Mariscal Abogados, Spanish Lawyers

This article is not considered as legal advice

Legal Advice on Bussiness Law in Spain (+info)

The Directive aims to increase consumer protection and ensure that consumers understand credit products, thereby assisting people to make correct decisions when requesting unsecured credit.

The European Union (“EU”) Member States experienced that the implementation of Directive 2008/48/EC (April 23) for consumer credits brought attention to the issues of the Directive in Part II of its Annex I.  The EU Member States felt that the content contained in this Part II was insufficient to calculate annual percentage rates for consumer credit contracts. Moreover, the EU Member States felt as though the Directive no longer effectively addressed the current commercial-market situation.

Consequently, the EU Commission adopted the 2011/90/EU Directive of 14 November 2011, which introduced additional material to calculate the annual percentage rate for these types of contracts.

To incorporate this Directive 2011/90/EU of November 14, 2011 into the Spanish legal system, the Spanish Ministry of Economy and Competition has, using its authority under the fourth provision of Law 16/2011 of June 24, approved this order amending Part II of Annex I of the Directive 2008/48/EC.

Therefore, those lenders and intermediaries required to calculate annual percentage rates according to the Law 16/2011 of June 24 have two months from the entry into force of this new standard to adapt their systems, procedures, advertising, pre-contractual information, and contract models to the provisions of this order.

The object of the present appeal relates to a ruling dismissing the appealing party’s claim.  The appealing party, a corporation dedicated to real-estate transactions, claimed that the two defendants involved were not shareholders of the corporation.  The corporation further alleged that one of the two defendants should hand over benefits corresponding to that defendant’s role as partner of the corporation.

The Madrid Provincial Court decided that the corporation acted against its own actions by denying the Status of Partner to one of the defendants after the corporation had publicly treated the defendant as a Partner for 10 years.  However, the Court found that the corporation had never recognized the other defendant as achieving or maintaining Partner Status.  Furthermore, the Court found that the transfer of shares in the defendant’s favor did not meet the requirements for a valid transfer because no public notary had been involved as required by law.

This new patent will be less expensive and more effective than current systems in protecting the inventions of individuals and firms.  It will also provide automatic unitary patent protection in all 25 participating EU member states.  The European Commission’s hope is that when the new system is up to speed, an EU patent may cost only €4,725.  This sum is just a fraction of the cost compared to the average of €36,000 required today.
Any inventor will have the opportunity to apply to the European Patent Organisation for an EU unitary patent, which will be valid in all 25 EU member states.  Patents will be available in English, French, and German.  Interested parties must complete their applications in one of these languages or attach a translation in one of these three languages to their applications.

Renewal-fee levels will consider the special needs of small firms to ensure the firms’ benefits from lower costs.

This international agreement takes effect on January 1, 2014 or after 13 contracting member states ratify it (as long as the United Kingdom, France and Germany are among them).