LESSON 5: ON COMPANIES

1.- INTRODUCTION. 1.1. Types of Business Companies. 1.2. Characteristics of Spanish

Companies. 1.3. Basic Legislation on Companies. 2. FORMATION OF COMPANIES. 3.
EFFECTS OF INCORPORATION. 3.1. Legal personality. 3.2. Company Name, Registered
Office, Nationality. 3.3. Lifting the veil of legal personality.

1. INTRODUCTION

A business company is an organization created by a contract by which two or more

persons reach a covenant to place goods, an industry or any of these things in a common
fund, to obtain a profit.

In the notion of company we can see a double aspect: the contract, which is the
origin and the organization, which is the consequence.

Once the company is formed it shall have legal personality in all its acts and
contracts.

1.1 Types of Business companies

Only the types of companies specifically recognized by the law can be business
companies. The Commercial code permits that business are incorporated by
adopting one of the following forms:

a) General partnership (sociedad colectiva);

b) Limited or limited liability partnership (sociedad comanditaria);
c) Public limited company (sociedad anónima);
d) Private Limited Company (sociedad de responsabilidad limitada).

Traditionally, the Private Limited Company – or Corporation - (“S.A.”) has been

by far the most commonly used form, whereas the limited partnership has been rarely used.
However, the limited liability company (“S.L.”) has gained popularity as a result, among
other reasons, of its comprehensive regulation under Law 2/1995 and a lower minimum
capital requirement than that for S.A.’s.

As variations on the above corporate forms of S.A. and S.L., we find

a) the new limited liability company (Sociedad limitada nueva empresa, S.L.N.E.), as
a variation on the S.L., specially intended for small and medium-sized companies
that simplifies the requirements for its formation;
b) the European public limited-liability company (sociedad europea, S.E.) as the
possibility offered by EU legislation to companies that operate in various Member
States to create a single company capable of operating in the EU in accordance with
a single set of rules and a unified management system

Lastly, the professional services firm (sociedad profesional, S.P.) the purpose of
which is the common pursuit of a professional association activity, which may be formed

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in accordance with any of the corporate forms legally established under their specific legal
provisions

From the above we can understand that the Spanish legislation envisages the
following types of business companies

a) General Partnership (sociedad regular colectiva, abbreviated as SRC or SC)

b) Limited Partnership (Sociedad en comandita, abbreviated as S en com o S.Com)
c) Limited Partnership by shares (Sociedad en comandita por acciones, abbreviated as
S.Com. p. A)
d) Corporation or company (Sociedad Anonima, SA)
e) Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L
f) New Limited Liability Company (Sociedad Limitada Nueva Empresa, abbreviated
as S.L.N.E)
g) European Public Limited Liability Company (Sociedad Anónima Europea, or
S.E.)
h) Professional Services Firm (“Sociedad Profesional”, abbreviated as “S.P.”)

1.2 Characteristics of Spanish companies

Both the S.A. and the S.L. are companies with capital in which the liability of
shareholders is generally limited to the amount of capital contributed by each.

i) Liability is not limited in a general partnership (S.R.C.). General partners are

personally jointly and severally liable with the whole of their net worth for the debts
of the partnership. General partners are personally jointly and severally liable with
the whole of their net worth for the debts of the partnership.
j) A limited partnership (S. Com.) is a partnership in which there is at least one general
partner and one or more limited partners. Limited partners are only liable for the
amount of capital they contribute or promise to contribute to the partnership. The
capital of limited partnerships may be divided into participation units or shares.
k) Lastly, as regards the professional services firm (S.P.), without prejudice to the
liability of the members in accordance with the rules of the corporate form adopted,
the professional members will be jointly and severally liable with the firm for its
professional acts, and they will be subject to such general rules on contractual and
non-contractual liability as may apply.

1.3 Basic Legislation on companies

The basic sources of law in this field are:

The Commercial Code (Código de comercio);

Capital Companies Law, (Real Decreto Legislativo 1/2010, de 2 de julio, por el que
se aprueba el texto refundido de la Ley de Sociedades de Capital), constitutes the basic
legal text that regulates the various legal forms of capital companies envisaged in Spanish
law, i.e., the corporation (S.A.), the limited liability company (S.L.), the partnership limited
by shares, the new limited liability company(S.L.N.E.) and the European company (S.E.),
as well as the special features of listed corporations;

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 Law on Structural Changes in Trading Companies (Law 3/2009, de 3 de abril, sobre
modificaciones estructurales de las sociedades mercantiles.) which regulates business
restructuring processes under current commercial law practices, including changes in
corporate form, mergers, spin-offs, global transfers of assets and liabilities and
international transfers of registered offices;

Law on Professional Services Firms (Ley 2/2007 de 15 de marzo, de sociedades

profesionales), which regulates the formation of commercial undertakings by members of
professional associations;

Regulation on Commercial Registry (Real Decreto Legislativo 1784/1996, por el

que se aprueba el Reglamento del Registro Mercantil).

1.4 Statistics (last page)

2. FORMATION OF COMPANIES

Art. 119 Cco reads that before commencing their operations, all business companies
must record their incorporation, terms and conditions in a public deed that shall be
presented for inscription at the Business Registry, pursuant to the terms of Article 17. That
means that all companies should be registered.

However, even though a company is not registered it can exists. The question is that
only certain types of companies require to be registered (incorporated) for its legal
existence in their specific type. If one company has failed to fulfil the full incorporation it
still exists as a company but will only be recognized as an “irregular” partnership and its
regulation will be that of the general partnership.

The absence of full incorporation may be due to the fact that the incorporation
process is not yet finished. When this happens, the law provides a solution (in arts. 32 to
38 for SA and SRL and in art. 120 Cco for SC and SCom) in order to establish the legal
regime of liability for the company and for partners and shareholders and whosoever has
performed acts or conclude agreements on behalf of the company.

3. EFFECTS OF INCORPORATION

3.1 Legal personality

Once the business company is incorporated, it shall have legal personality in all its
acts and contracts (art. 116 Cco). The separate legal personality means that the company is
recognised as a distinct person from its members: it is a legal person.

The effects of the legal personality are:

The company created is a new subject of rights and obligations with full legal
capacity in both internal aspects of the company and external relationships with third
parties.

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 The company is recognized as being a trader or business. From this moment it will
have all the rights and duties of a trader. All companies must state in their documents and
commercial correspondence the identification data resulting from registration in the
Mercantile Register.

The company is the owner of the businesses assets and has economic autonomy
from its members. However the Spanish system makes a distinction between companies.
While capital companies have full autonomy and partners and shareholders won’t be
responsible for the debts of the company, partnerships members can be liable if the
company assets are not enough to pay its debts.
Legal personality works in a different way in other law regimes. In England the legal
personality is obtained after incorporation and it has always the effect of absolute separation from
its members, who are never responsible for the debts of the company, while partnerships and limited
partnerships are treated simply as a group of individuals trading collectively.

3.2 Company name, registered office, nationality

Different types of companies have different rules for the composition of their name.
However there are some general rules included in arts. 395 to 408 RRM.

Companies may only have one name (art. 395 RRM).The company name must not
be the same as any other previously existing (art.407 RRM) neither shall suggest
connection with others by using terms or expressions leading to confusion (art.406 RRM).
The name cannot be similar to those used by official institutions, government or local
authorities (art. 405 RRM). Obviously the name cannot include terms or expressions that
are contrary to law, public order or morality (art. 404 RRM).

The registered office is the company’s legal address. The company is free to choose
the legal address within the Spanish country and it can be either the main place of business
activities or the place where the administration is held (art.9 LSC).

The nationality determines the law governing the company. The main rule for the
attribution of nationality are arts. 15 Cco (the place of the company formation) and 8 LSC
for corporate enterprises that establishes that “All corporate enterprises with registered
offices on Spanish soil, irrespective of the place of formation, shall be Spanish and subject
to this act”.

3.3 Lifting the veil of legal personality

The principle of a company having its own legal entity, separate from its members,
means that only the company is responsible for its liabilities and shareholders are protected
by the veil of incorporation. The shareholders are hidden from view and protected from
incurring liabilities. However, there are circumstances it is necessary to lift the veil and
treat the business as if it were being run by its individual members. Lifting the veil may be
authorised by a court that will look behind the façade in a number of different
circumstances, including if the company is being used for a fraudulent purpose to evade
legal responsibilities. It is important to notice that lifting the veil of personality is
exceptional and shall be used only in exceptional occasions.
SsTS 19.10.2010, RJ 2010/614, 01.03.2011, RJ 2011/456, 28.02.201 RJ 2014/1423.

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Estadística Mercantil 2022

Constituciones NACIONAL Ejercicios 2020-2022

Capitales en euros (€)

AÑO Totales ANONIMAS LIMITADAS OTRAS

Número Capital Suscrito Capital Desembolsado Número Suscrito Desembolsado Número Capital Suscrito Capital Desembolsado
2022 100.197 416 281.138.073 229.645.365 98.720 4.956.990.532 4.956.990.532 1.061 37.683.213 25.198.713
2021 102.135 404 451.498.519 334.782.216 100.803 4.640.185.702 4.640.185.702 928 9.304.415 8.031.915
2020 80.134 311 230.275.906 189.687.629 79.067 4.783.915.154 4.783.915.154 756 19.035.118 18.389.518

Número de constituciones por forma social en los 3 últimos años Porcentajes de constituciones por forma social en el último año

2022

ANONIMAS
OTRAS OTRAS 0%
1%

LIMITADAS 2020
2021
2022

LIMITADAS
ANONIMAS 99%

0 20.000 40.000 60.000 80.000 100.000 120.000

Capitales medios en euros (€)

AÑO Totales ANONIMAS LIMITADAS OTRAS

Número Capital Suscrito Capital Desembolsado Número Suscrito Desembolsado Número Capital Suscrito Capital Desembolsado
2022 100.197 416 675.813 552.032 98.720 50.213 50.213 1.061 35.517 23.750
2021 102.135 404 1.117.571 828.669 100.803 46.032 46.032 928 10.026 8.655
2020 80.134 311 740.437 609.928 79.067 60.505 60.505 756 25.179 24.325

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Estadística Mercantil 2022

Constituciones ANÓNIMAS NACIONAL Ejercicios 2020-2022

Distribución de capitales en sociedades anónimas al constituirse (miles de euros)

2022
1800-3000 >3000
2% 3%

600-1800
22%
60
54%

300-600
3%

120-300
6%

60-120
10%

2021 2020
1800-3000
1800-3000 >3000
>3000 1%
2% 3%
4%
600-1800 600-1800
14% 17%
300-600 300-600
2% 2%

120-300 120-300
7% 8%

60
60 57%
56%
60-120
15% 60-120
12%

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Estadística Mercantil 2022

Constituciones LIMITADAS NACIONAL Ejercicios 2020-2022

Distribución de capitales en sociedades limitadas al constituirse (miles de euros)

2022
60-300 300-600
30-60 3% 1%
12-30 2% >600
4% 1%
3-12
20%

3
69%

2021 2020
30-60 60-300 300-600 30-60 300-600
3% 1% >600 2% 60-300 1% >600
2% 12-30
12-30 1% 3% 1%
4%
4%

3-12 3-12
23% 24%

3 3
66% 65%

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