Corporate Law

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Corporate law in Spain

At Dr. Höhne, we help international entrepreneurs and companies doing business in Spain or wanting to do so.

In corporate law, you can count on expert advice on:

  • setting up and registering a company in Spain
  • drafting bylaws or articles of association of Spanish companies
  • the appointment and termination of directors or administrative bodies
  • holding of shareholders’ meetings

In case of disputes between companies or corporate entities, we develop the litigation strategy with you and represent you in and out of court.

Our clients benefit from our over 25 years of experience and in-depth knowledge of Spanish and Catalan corporate law. They also appreciate that we can support them in English, Spanish, German, and Catalan.

Corporate law has many interdependencies with other areas, and tax law is one of the most challenging. As an international legal and tax law firm, we advise you not only in corporate law but support you in all tax matters.

Partnerships

There are different legal forms a business can take in Spain.

The Corporate Enterprises Act (Ley de Sociedades de Capital) regulates the following types of corporations:

  • Public Limited Liability Company or Joint-Stock Company (Sociedad Anónima, S. A. for short)
  • Limited Liability Company (Sociedad de Responsabilidad Limitada, S.L. for short)
  • Limited Partnership by Shares (Sociedad Comanditaria por Acciones, Com. for short).

Incorporating a Spanish civil law company, the so-called Sociedad Civil, is also an option for people who want to do business in Spain. However, this company type has significant disadvantages compared to corporations such as the S.L. or the S. A.

The following key points are relevant for deciding on which legal form to choose:

  • In the case of Public Limited Liability Companies (S. A.), the partner’s liability for the company’s debts is generally limited to the capital contribution. In civil partnerships, the partners are personally liable for the partnership debts.
  • Compared to Central Europe, the minimum share capital for a Spanish Limited Liability Company (S.L.) is low since it is only €3,000.
  • Incorporating a Limited Liability Company is quick and easy in Spain. It usually takes 2 to 3 weeks between the decision to establish a company and its entry into the Mercantile Registry.
  • The S.A., L., and S. Com. have the advantage that it is easier to separate and differentiate the areas of equity between the corporation and the shareholders.
  • When it comes to the S.A., L., and S. Com., if not all shareholders are residents in Spain, the company’s residence and its tax treatment raise questions that are sometimes difficult to clarify.

The Spanish Limited Liability Company (S.L.)

Of the three legal forms mentioned above that corporations can adopt, the Spanish S.L. is usually the first choice. It entails a significantly lower liquidity requirement compared to the Spanish S.A. The minimum share capital of the S.L. is €3,000 compared to €60,000 for the Spanish S.A.

Incorporating an S.L. is fast and offers a high degree of flexibility in terms of internal organization, representation rules, and form of decision-making (shareholders’ meetings).

We can advise you from the beginning and throughout the entire process of founding a Spanish corporation. After establishing it, we also support you with accounting, payroll, and tax law.

Appointment and dismissal of managing directors

Managing directors (administradores) of corporations are appointed or dismissed by the shareholders’ meeting. As corporate bodies, they are not employees within the meaning of Spanish labor law since they act as administrators for the companies they manage.

The managing director obtains their position by means of the corresponding resolution of the shareholders’ meeting. This decision must be registered in the Mercantile Registry and be executed in a public deed.

The appointment of the first managing director of a Spanish S.L. already takes place when founding the S.L.

Shareholder dispute

Shareholder disputes can arise from misunderstandings or simply different ideas in corporate management.

There is a lot at stake for the shareholders or managing directors involved, and disputes can have serious consequences.

Prospective drafting of bylaws can help avoid conflicts or reach an acceptable agreement with all parties involved. This is especially true in two-person partnerships, where voting deadlocks may arise.

Restructuring and conversion/merger

Another area covered by Spanish corporate law is the conversion or restructuring of existing companies or legal entities. This involves mergers, demergers (split-off, spin-off), asset transfers, and changes of legal form.

Such conversions can take place within Spain and across borders within the European Union. Conversion processes are characterized by a high degree of complexity resulting from the tax implications.

Expert knowledge of Spanish & international tax and corporate law is indispensable here.

In Spanish corporate law, we can support you in all areas, in particular:

  • Incorporation of all Spanish company forms
  • Advice on the choice of legal form
  • Organization of shareholders’ meetings
  • Preparing resolutions of shareholders’ meetings and registering them in the Mercantile Registry
  • Challenging resolutions of the shareholders’ meeting
  • Representation in shareholders’ disputes
  • Forfeiture of shares
  • Shareholders exclusion
  • Appointment and dismissal of managing directors
  • Changes in corporate purpose and registered office.
  • Conversion or restructuring
  • Acquisitions and corporate transactions
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