Although the duties of company directors and senior managers may overlap, their rights and obligations to the company differ considerably. While the former is subject to commercial legislation, the latter is subject to labour law.
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Entries by Company Law
When a foreign company decides to start an activity in Spain through a subsidiary company, it has two ways to do so: either the incorporation or the acquisition of a shelf-company. The choice of one or the other will depend on the circumstances.
Any shareholder holding a certain percentage of the company (5 % in the case of limited liability companies, and 1 % in the case of public limited companies, unless statutory provisions have reduced these percentages) is entitled to require the administrators to have a notary present to record the minutes of the general meeting.
The Law of Capital Companies in Spain establishes that administrators are responsible for depositing the annual accounts. Failing to do this may result in the imposition of sanctions on the company and the closing of its registry, which would prevent registration of the company’s acts and documents.
Among the advantages of converting from an autonomous worker to a limited company includes professional commercial image, limited liability, easy access to banking finances and lower taxes when the benefits are high.
The new legislation extends the protection of the business secrets to the so-called “infringing goods”. This refers to those products and services whose design, characteristics, functioning, production process or marketing significantly benefit from business secrets unlawfully disclosed, exploited or acquired.
The Supreme Court, in its February 26th, 2018 decision, decided on the controversial question of the salary of administrators and its control on part of the partners. The ruling goes against the position of the General Directorate of Registries and Notaries (GDRN) and the majority doctrine.
For legal existence in Spain, companies must fulfil important formalities. The so-called “corporate housekeeping duties” include the registration of the company with the commercial register, the keeping of the minutes of all the meetings of the shareholders and management, the careful management of an accounting and the timely submission of the annual accounts.
The Corporate Enterprises Act in Spain requires an agreement on the appointment of a managing director if the executive power is vested in a board member. The appointment of the managing director shall require the favourable vote of two-thirds of the board members.
Conflicts between shareholders may be one of the main causes of the termination of many companies. The best solutions for conflicts are to prevent and avoid them. These solutions may consist of procedural protocols that include clauses or formulas of resolution in a company’s own statues, or by using extrajudicial dispute resolution mechanisms.