Investment in Spain through acquiring shareholdings in a Spanish company requires a series of steps in order to ensure the successful conclusion of the transaction. These are, in brief: the letter of intent, the due diligence process, the signing of the purchase/sale agreement, the closure of the transaction and the closing operations, or post-closing of the transaction.
Although the sale of assets is generally subject to Value Added Tax (IVA) and Capital Transfer and Stamp Tax (ITPyAJD), the transfer of a complete branch of activity or business in Spain has flexible taxation.
After carrying out the corresponding due diligence process to analyse the accounting, fiscal and legal situation of a business, it is vital to formalize the purchase and sale through the most appropriate legal instrument according to the characteristics of the project.
The main instruments for acquiring companies are the purchase and sale of shares and participations and the purchase and sale of company assets. The choice of each of them has its advantages and disadvantages, and entails different legal consequences.
Business cooperation and the entrance into the Spanish market are often controlled through joint venture agreements. A joint venture is not defined by Spanish law. To determine the legal requirements, general standards of the Spanish Civil and Commercial Code should be applied, particularly Article 1255 of the Civil Code.
The European Union and Spain have introduced laws that regulate cross-border mergers that occur in Europe and ensure the rightful completion of the process. This article elaborates and compares the existing laws for this type of ventures.
Venture capital (risk capital) or private equity is a financial instrument that allows receiving or participating companies to obtain the capital resources required for the development of their projects.
Venture capital (risk capital funds) can provide significant sources of funding to SMEs, in addition to prestige and credibility from gaining the support of this type of fund.
Compared to 2013, in 2014, the number of mergers and acquisitions in Spain grew to 54%. The principle factors that have motivated this growth are the improvement of the economy and the increase of foreign investment in Spain. For 2015, this upward trend is expected to continue.
The process of due diligence in the context of a transfer, merger, sale or purchase of a company in Spain includes four phases in order to ensure its correct course: preliminary, investigation, confirmation of data and the transmission of the report.
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