Spanish Business Structures: A Comprehensive Overview
1. Main Legal Forms of Enterprises in Spain
The Spanish legal system regulates various business forms based on characteristics and interests. These range from individual entrepreneurs to various types of corporations.
Individual / Sole Proprietorship: Involves community property.
Limited Liability Company (LLC): Includes partnerships.
General Partnership: Involves collective and limited partnerships.
Unlimited Liability Entities: Includes corporations, limited liability companies, and labor-operative societies.
2. The Individual Company
An individual entrepreneur is a natural person with legal capacity, exercising business activities regularly and independently.
Features:
- Personal: The individual’s role is crucial.
- Unlimited liability: The entrepreneur is liable with all their assets (including marital property if applicable).
- Registration: Commercial register registration is voluntary.
3. The Partnership
Partnerships depend on the partners’ capacity, both economic and personal, as they are liable for the company’s debts and participate in its management. It involves multiple individuals providing capital, labor, or both, sharing rights and responsibilities.
Features:
- Unlimited, subsidiary, and joint liability.
- Minimum of two partners.
- Name: Composed of all partners’ names followed by “y Cia.”
- Legal Procedures: Deed, Mercantile Registry registration, and Negative Name Certification. An agreement between partners (Deed) must be notarized and registered.
4. Limited Partnership and Partnership Limited by Shares
Limited Partnership: Capital comes from personal contributions of partners. It operates under a corporate name and has two types of partners: general partners (unlimited liability) and limited partners (liability limited to their contributions).
Features:
- Combines personal and capital aspects.
- General partners manage the company.
- Limited partners have liability limited to their contributions.
- Minimum of two partners.
- Name: Includes all partners’ names followed by “Limited Partnership” (S. Com.).
- Legal Procedures: Deed, Commercial Register registration, and Negative Name Certification.
Partnership Limited by Shares: Capital is divided into shares, similar to a corporation. General partners manage and are liable for debts.
5. The Corporation
A corporation is formed by one or more partners providing capital of at least 10 million pesetas, divided into shares. Partners are not personally liable for company debts.
Features:
- Contributions can be in cash or kind.
- Capitalist society.
- Capital must be fully subscribed and at least 25% paid up.
- Can be formed by one or more partners.
- Shares represent aliquots of the capital.
- Shareholders have rights to dividends, net assets in liquidation, voting at general meetings, and information.
Name: Any name followed by “SA.”
Corporate Bodies:
- General Shareholders’ Meeting: Supreme body expressing collective will, making decisions by majority vote.
- Board of Directors: Responsible for administration, management, and representation of the company.
- Auditors: Review annual accounts and reports.
Legal Procedures: Deed, Registry registration, Negative Name Certification (large corporations require public share subscription).
Unlimited Liability Company
Can be formed by one or more partners providing a minimum capital of 500,000 pesetas, divided into equal shares. Partners are not personally liable for company debts.
Features:
- Limited liability.
- Commercial, mixed, personal, or capitalist company.
- Capital must be fully subscribed and paid up.
- Capital is divided into shares.
Name: Any name followed by “Limited Liability Company” or “LLC” or “SL.”
Corporate Bodies:
- General Meeting: Supreme body expressing collective will, representing all members, deciding by majority vote. Can be ordinary, extraordinary, or universal.
- Administrators: Responsible for administration, management, and representation of the company.
Legal Procedures: Deed, Commercial Register registration, Negative Name Certification.
6. Groups, Companies, and Mutual Societies
These entities focus on community participation, aiming for the survival of members’ activities and performance benefits. Participation can take various forms:
- Co-management: Increasing motivation through participation in management.
- Self-management: Workers forming associations to create new companies.
1. The Labor Corporation
At least 51% of the capital belongs to workers permanently employed by the company.
Features:
- Capital of at least 10,000,000 pesetas, fully subscribed and at least 25% paid up.
- Divided into nominative shares.
- No member can hold more than 25% of shares.
- Can hire non-member workers (up to 15%).
- Restrictions on share transfers to increase partner participation.
Legal Procedures: Deed, Commercial Register registration, Labor Corporations Register registration, Negative Name Certification. Minimum of four partners.
Name: Includes “SAL.”
2. Cooperative Societies
Companies with variable capital structure and democratic governance, based on free membership and community service.
Features:
- Open society.
- Variable capital, increasing with new members and decreasing with departures.
- Registered securities, not negotiable.
- First-degree (minimum three members) and second-degree (cooperative unions, minimum two).
Corporate Bodies: General Assembly, Board of Governors, and Auditors.
Formalities: Deed, Cooperatives Register registration, Negative Name Certification. Minimum of three partners.
Name: Includes “Cooperative” or “S. Coop.”
3. Mutual Guarantee Societies
Purpose is to provide debt guarantees to participants. Social capital consists of member contributions and is variable, divided into shares of equal value. Minimum of 150 participating and patron members. Must be registered with a special Bank of Spain register.