A limited liability company (L.L.C.) is the most common company form in Spain given its balance between regulatory oversight and freedom to contract and the simplicity of its formation.
Choice of name
It is mandatory that the name of the company be followed by the letters L.L.C. (or L.L.U. if the company is unipersonal). In addition, the name of the company must be available. Its availability can be confirmed while applying for the registration of the company’s name with the Commercial Registry.
Opening a bank account and social capital
There can be no company without contributions. The company must have a bank account in Spain, opened before the formation of the company and in which the capital of the company is deposited. The law sets the minimum of 3,000 euros of share capital for a L.L.C., which must be fully cleared at the time of formation. The bank then issues certificates of deposit that are indispensable in order to incorporate the company. The capital may also be of contributions in kind.
Determination of a corporate domicile
A company is Spanish if it establishes its domicile on Spanish territory. A company may be domiciled at the address of a retained law firm during the time it is acquiring its own premises.
Drafting of articles of incorporation
The articles of incorporation must include, not only information about the company such as its name, address, amount of capital and the distribution of shares, but also its operating procedures (management system, voting rules, transfer of shares , etc.).
Writing a deed
The deed of incorporation of a company, signed by a notary, is required to register the company with the Commercial Registry.
First, the company must obtain a tax identification number (TIN), and second, it must be registered, for tax purposes, to liquidate taxes on economic activities.
Registration in the Trade Registry
Within two months of the signing of the deed, the company’s corporate domicile must be registered with the Commercial Registry; which confers legal status.
Declaration of foreign investment and Foreigner Identity Number (FIN)
The shareholders of a L.L.C that are non-Spanish residents must complete a declaration of foreign investment (modelo D-1A) with the Ministry of Economic Registry within a month of the completion of their investment. Furthermore, the foreign shareholders and directors must be issued a Foreigner Identity Number (FIN).
The administrative procedures can be performed from abroad if the shareholders retain a law firm. It is recommended to seek legal advice for the formation of a company, including the drafting of the articles of incorporation, the petition of the corporate name, filing tax forms, and the preparation of the deed.
Clément-Henri Girardot & Nicolás Melchior
This article is not considered as legal advice