By means of Law 14/2013 (“Entrepreneurs Law”), Spain has undertaken different reforms to create growth and employment and promote the initiation of entrepreneurial activities. Some of these measures include the constitution of a company by public deed, the incorporation of a limited liability company using the DUE and the CIRCE systems without using their model bylaws and the discharge and onset of the activity of individual entrepreneurs and commercial corporations.
Commercial contracts in Spain are governed by the Code of Commerce. Knowing its legislation is fundamental to carry out any operation in a secure way such as acquisitions and sales of companies, joint ventures, OPAs, OPVs, commercial sales as well as any kind of contract (representation, commercial distribution, national sale of merchandise, intra and extra EU, etc.).
The commercial measures to support entrepreneurs in Spain include simplifications for electronically legalizing corporate books, issuing electronic powers of attorney, organizing records and the requirements for economic and financial information.
Using a commercial agent’s services provides a business a profitable and efficient formula when embarking on exporting its goods and services or expanding into new national as well as international markets.
By acquiring a shelf company, a company’s start-up period can be circumvented, saving considerable time. This is a major benefit as it takes several months to establish a new company in Spain. Additionally, since shareholders bear unlimited liability with their business and personal assets during the time until the company’s entry into the Commercial Register is made, risks are reduced when the start-up period is reduced.
The new rules applicable in Spain allow sending invoices by any means without an electronic signature and give equal validity to invoices on paper.
With the reform of the Spanish Penal Code, a company is liable for offenses committed by itself or by its employees acting on its behalf, if it cannot demonstrate that it has put in place the necessary means to prevent such criminal behaviour.
In case of a business transfer, in Spain as in Germany, employees must be informed about the date of the transfer, the reasons for it, the legal, economic and social consequences, as well as planned performance measures.
Spain is a very attractive destination for foreign direct investment, not only foreign investments have helped develop high economic valued sectors as the automotive, biotechnology and agri-food industries, but also support the real estate sector, that is still very relevant.
Courts in Spain have given judgments against controversial high-risk financial products offered by numerous banks, obliging banks to pay back the investment of their clients.
This article briefly analyses the main differences between setting up a branch or a subsidiary; these differences should be kept in mind when choosing one or the other as a way of investing in Spain.