Commercial Legislation in Spain: A Comprehensive Overview
The objective of commercial legislation is to regulate the activity of companies through the Commercial Code, which is the main legislative framework for business operations in Spain.
Assets dealt with trade laws include company legal forms, employer accounting, advertising, competition, and industrial property and consumer protection.
Accounting Regulations or Laws Regulated in Articles 25 to 49 of the Commercial Code:
- Proper accounting must be kept
- The balance sheet should be periodically calculated
- A book inventory and the annual accounts a diary book should also be kept updated
Accounting will be managed by employers or people authorized without prejudice to the responsibility of employers. For example, accounting agencies. Companies should take minutes which should include agreements from special or general meetings and dates of days.
Competition and Advertising: Punishes behaviors that would prevent, restrict, or disturb competition in the domestic market. It forbids companies abusing others from dominant positions. As for behavior considered unfair, the law points out especially omission or falsification of the truth about the product itself or actions that disparage the products of competitors. For example, price-fixing between competitors. The general law of advertising tries to keep the publicity under a fair framework. It prohibits or forbids misleading advertising, unfair, and subliminal advertising.
Industrial Property and Consumer Protection: The state has created rules that protect industrial property in order to protect the creators of new inventions and techniques that can be applied to industrial processes. A patent recognizes who has made a new invention. This right belongs to the inventor who can sell, donate, bequeath, or use exclusively for a time. Any patents are published in the Intellectual Property Registry. The consumer is also protected by the law for the defense of consumers and users. This law recognizes the right of consumers and users to be compensated for damages in breach of consumer rules.
Trade Registry: A government agency under the Ministry of Justice. It aims to enroll companies at the time of its constitution, legalize the company books, publish, and deposit the accounting register. The registry is divided into territorial registers and a central register. We can say that the central trade register is an official institution of advertising that allows access to market information provided by the provincial trade registers.
Tax Legislation: Taxes are mandatory public revenues aimed to obtain the resources needed to finance public spending and control the country’s economic activity. They are regulated by the General Taxation Law. Types of taxes include fees, contributions, and taxes. Direct taxes are those that fall directly on people or companies, such as personal income tax, corporate income tax, economic activities tax, and property tax. Indirect taxes are levied on the purchase of goods and/or services, such as capital transfer tax and value-added tax. Special taxes are those that are imposed on specific consumptions, such as alcohol, tobacco, and electricity.
Types of Companies
According to the size: Starting on 01/01/2005, the definition of micro companies and SMEs has been in effect. The criteria to be considered in this category are the number of employees, annual turnover, and total assets.
According to their activity: Referring to the three major sectors: The primary sector includes companies engaged in activities related to natural resources. The secondary sector includes companies engaged in processing or industrial activities. The tertiary sector includes commercial companies that do not transform but are involved in selling products or services.
Under the ownership of capital: Private company, public company, local company, regional company, national company, international company, and multinational company.
According to the destination of the profits: Profit company and non-profit company.
According to its legal form: Individual entrepreneur, society, limited liability company, and public limited company by shares.
Individual entrepreneur or self-employed: This is an individual who performs in their own name and through a company, a commercial, industrial, or professional activity. They have absolute control of the company and oversee its management. Their liability is unlimited, and no minimum capital is required to establish the company.
Limited liability company: Capitalist society suitable for companies with few partners who do not need a large amount of capital. The number of partners for its establishment is one or more, and the liability of partners is limited to the capital contributed. The minimum capital must be €3,000.
Public limited company by shares: It is a purely capitalist society best suited for large companies. The number of members for the constitution may be one or more, and the minimum capital of constitution is €60,000.
Constitution: As to be constituted by public deed. The constitution deed must include the society statutes, and they must contain at least the name of the company, the social object, the registered office, the social capital, the number of shares into which the share capital is divided, its nominal value, class, and series, and the method or methods of organizing the administration.
Society bodies: General Meeting and administrators.
Shareholders: Shareholders are owners of one or more shares of the company.
Shares: Types include ordinary and privileged shares, and according to ownership, they can be nominative or bearer shares.
Basic concepts: Nominal value, actual value, and theoretical value.