Incorporation of companies in Spain by foreign companies


It is very common that in our professional practice our foreign clients ask us to advise them on the incorporation of a company in Spain.

 

Types of companies

The first question our clients will ask us is what type of company we advise them to incorporate.

The Capital Companies Act establishes and regulates three types of companies, the limited liability company (sociedad de responsabilidad limitada), the joint-stock company (sociedad anónima) and the limited partnership by shares (sociedad comanditaria por acciones).

The simplicity of the regulation of limited liability companies (S.L.), and the fact that the minimum share capital required of them is low (3,000 euros) makes them the most widely incorporated in Spain, accounting for 97% of the companies incorporated in Spain in 2018.

Joint stock companies (S.A.) are only used in practice when the law requires this type of company, for example, banks or securities companies must necessarily take the legal form of an S.A.

 

Branches in Spain of foreign companies

An alternative to the incorporation of a company in Spain is the creation of a branch of the foreign company in this country, which should have the same name as the foreign company, followed by the words “Sucursal en España“.

The procedure for forming a branch is even simpler than it is for forming a company, because it will not require the drafting of a set of articles of association.

The designation of an address in Spain and a representative with powers to manage it will form practically the only content of the deed of incorporation of the branch, in addition to identification of the parent company.

It is not necessary for branches to have share capital, so they can be incorporated without putting up any money.

However, it should be borne in mind that a branch does not limit the parent company’s liability vis-à-vis third parties, which is indeed achieved by the creation of a company, in which the liability of the members is limited to the capital they have contributed.

In the case of a Branch, the liability of the parent company will be determined by the regulations that apply to it in its country of origin.

Another aspect to take into account is the tax consequences of operating in Spain through a branch or through a company, as there may be significant differences between choosing one vehicle or another.

 

Deadline for the incorporation of a company

The second question that clients ask us is when will the company be incorporated? When will we be able to start operating?

It will depend, to a large extent, on the speed with which the client acts in preparing the documentation that we require to incorporate the Company.

 

Documentation required to incorporate a company

In addition to the certificate showing that the name chosen for the new company is available, which is issued by the Central Commercial Registry and is normally processed by our advisors, the client must provide us with the documents listed below:

  • A power of attorney from the parent company in favour of its advisors in Spain, or the person they choose, to carry out the procedures and grant the documents for the company’s incorporation, unless the legal representative of the parent company comes to Spain to sign the deed of incorporation.
  • Another necessary document is the certificate from the registry where the parent company is registered, which must state that the company exists and provide its principal details, i.e. registration information, its address and the names of the members of its governing body. That is, a document similar to the kbis form issued in France.

 

Requirements for documents issued abroad to be effective in Spain 

The aforementioned powers of attorney and certificates, if issued abroad, must be legalized in order to take effect in Spain.

Legalization is achieved in the country of origin of the documents using the Hague Apostille, if the document (power of attorney or certificate) has been issued in a country that has signed the Hague Convention of 5 October 1961, which covers almost all the countries in our economic sphere.

The alternative to an apostille is to have the document legalized by the Spanish Consul of the country where the document is issued.

 

NIE of the administrators

It should be remembered that if the administrators of the new company are foreigners, it will be necessary for them to obtain a foreigner citizen’s identity number (NIE) issued by the Ministry of the Interior.

Possession of a NIE is an indispensable requirement for the appointment of an administrator to be entered at the Mercantile Registry.

This is a procedure that can currently be delayed by a few weeks due to the fact that the services of the Ministry of the Interior have become overloaded.

 

Bank account in the name of the new company

To incorporate the company, the share capital must be paid into a bank account to be opened in the name of the company being incorporated. In order to open it, the bank will only ask for the certificate showing the company name.

The share capital is deposited in the account and cannot be made use of until the company has been incorporated. A certificate issued by the Bank certifying the deposit must be delivered to the notary who authorizes the deed of incorporation.

 

Drafting of the Articles of Association

The articles of association constitute an essential document for companies, as they regulate their operation. In the context referred to in this note (creation of subsidiaries), its content is simple and must set out only the essential elements of a company, such as its name, share capital and registered office, its activity and the way in which it is administered.

 

Incorporation of the company

Once all this documentation has been obtained, we can go to the notary and immediately execute the deed of incorporation and, in a few days, process your NIF.

From that moment on, the new company can operate and it will not be necessary to wait until it is registered at the Mercantile Registry, a process that can take up to 15 working days, although it should be borne in mind that it will be necessary to wait until the company is registered in order to obtain the electronic certificate that is essential to maintain relations with the Treasury and Social Security Departments.

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