It is the notarial document by means of which one or more persons decide to create a company by contributing their own funds so that it can develop a certain economic activity in the market with the main objective of obtaining an economic benefit from it.
This is a merely informative and non-binding estimate. This estimate is calculated based on two criteria: 1) our knowledge of the Notarial Tariff and 2) our daily experience in the preparation of this type of notarial document. (Royal Decree 1426/1989, November 17, 1989). and 2) our daily experience in the preparation of this type of notarial document. However, any variation (upward or downward) will be duly justified at the time of issuing the final invoice for the notarial service rendered.
It is an undeniable fact that for thousands of years man has used trade as an activity for the exchange of goods and services to satisfy human needs and, consequently, to create wealth. This activity, from the first barter exchanges of primitive man, has undergone a great and complex expansion and sophistication over the centuries, until it has reached the global dimension and scale that economic and commercial activity on a global scale presents today.
In order to provide adequate answers and instruments to this human activity, which is so necessary for the creation of value, the legal system has developed a multitude of institutions aimed at promoting and facilitating economic and commercial activities, among which we can include companies, which, following in the wake of the Civil Code, can be defined generically as a contract whereby two or more persons undertake to pool money, goods or industry, with the intention of sharing the profits between them.
These companies will have a commercial nature when their purpose is to obtain a profit and their incorporation is carried out in accordance with the provisions of the Commercial Code and, in turn, they will be considered capital companies when they adopt any of the forms provided for in Article 1 of Royal Legislative Decree 1/2010, of July 2, which approves the revised text of the Capital Companies Act (hereinafter, LSC), namely, limited liability companies, public limited companies and limited partnerships by shares.
At present, and given that most of the capital companies take the form of limited liability companies and corporations, these will be the ones that will be the focus of our analysis in this entry.
As has just been indicated, capital companies (in our area of study, limited liability companies and corporations) are legal instruments that allow two or more persons (in practice, it is possible with only one nowadays, as we will see) to create an entity with its own legal personality through the pooling of money, goods, or means of production, the purpose of which will be the development of an economic activity determined by its risk and chance, being all this aimed at obtaining a profit or benefit.
The main characteristic of limited liability companies and corporations is that their partners will not be personally liable for corporate debts (Article 1.2 and 1.3 LSC), since all the money, goods or productive means contributed by the partners will constitute a separate and independent patrimony from their own (which will be called corporate capital) which will be liable for the debts and liabilities that the company may generate, and these cannot be satisfied with the personal patrimony of the partners.
This defining characteristic of capital companies is the key to their expansion, since this limitation of liability only to the capital contributed minimizes the risk that the partners assume when starting the economic activity, since they do not risk their personal assets in the company, which facilitates and significantly encourages entrepreneurship and the development of economic activity, resulting in the creation of value and wealth for the whole of society.
As has just been indicated, the capital stock of a company is all the money, goods and productive elements that its partners contribute to the company for the development of its economic activity. From a legal point of view, capital stock can be considered to be all the contributions made by all the partners to the company, which is divided into shares, in the case of limited liability companies, and into shares, in the case of corporations (Articles 1.2 and 1.3 LSC).
As regards the minimum share capital of a limited liability company, it is necessary to bear in mind that in accordance with Article 4 of the LSC, the share capital of a limited liability company may not be less than one euro (€1.00).
However, when an SL is incorporated with a share capital of less than 3,000 euros, until the company's share capital reaches 3,000 euros, it is necessary to know that:
In the case of corporations, this minimum capital stock may not be less than sixty thousand euros (€60,000.00).
These amounts must be taken into account since no deeds of incorporation of capital companies with a capital figure lower than that legally established may be authorized (Article 5 LSC).
Undoubtedly, the answer to this question is not unique, because depending on the nature of the activity to be developed, as well as the specific characteristics of its partners and their possibilities, it will be better to opt for one modality or another.
Thus, the first obvious difference is in relation to the minimum capital stock for its incorporation, since, as has been indicated, to create a limited liability company, 1€ is enough, but to create a corporation, 60,000€ will be needed, which undoubtedly constitutes a great difference, depending on the economic possibilities of the partners and the need for financing that the business project may or may not have.
Thus, from practical experience, for the beginning of small business ventures, a limited liability company is undoubtedly much more advisable, since its incorporation and management is much easier and more agile, while corporations are usually used for larger, more ambitious business projects whose capital requirements are much higher.
Pursuant to the requirements of Article 20 of the LSC, the incorporation of capital companies will necessarily require a public deed, which, in turn, must be registered in the Mercantile Registry. Thus, in order to incorporate a limited liability company or a public limited company, the partners must go to a Notary Public to execute the corresponding deed of incorporation and must also proceed to register it in the Commercial Registry of the territorial demarcation in which they have established their registered office.
This deed of incorporation must be executed by all the founding partners, whether they are individuals or legal entities, and they may do so in person or duly represented by a power of attorney. In this act, the founding partners must assume all the shares in the case of limited liability companies, or subscribe all the shares in the case of corporations (Article 21 LSC).
The articles of incorporation (Article 22 LSC) must include at least the following mentions:
If the company is a limited liability company, the way in which the administration is initially organized (i.e. whether the company is governed, for example, by a sole administrator, two or more joint or several administrators, etc.) will also be determined if the bylaws provide for different alternatives.
If the company is a corporation, the total amount, at least approximate, of the incorporation expenses must also be stated.
The company's bylaws can be defined as the pact or contract reached by the partners by virtue of which the internal rules of the company are established, which determine its basic characteristics (name, purpose, domicile and capital stock, etc.) as well as the rules that are to govern its activity and governance.
Pursuant to Article 23 LSC, the bylaws governing the operation of capital companies shall state:
Likewise, in relation to the bylaws, the following issues must be clarified:
Finally, both in the bylaws and in the articles of incorporation, the partners may include, under the principle of free will, all the covenants and conditions they deem appropriate, provided that they do not oppose the laws or contradict the principles of the type of company chosen (Article 28 LSC).
In any case, those interested in incorporating a capital company should bear in mind that the founders will be jointly and severally liable before the company, the partners and third parties for the recording in the articles of incorporation of all the matters required by the aforementioned law, for the accuracy of all statements made therein and for the adequate investment of the funds destined to the payment of incorporation expenses (Article 30 LSC).
In this sense, the best way to ensure that the Bylaws of the new company respond adequately to the needs of its partners, is to turn to a lawyer specialized in commercial matters who will draft them in view of the characteristics and specific particularities of each case, since only in this way will we ensure that they truly respond to the particular needs of each company.
If, on the other hand, our company, in our opinion, does not present great particularities and we do not want to take this step, the Notary's office can provide us with standard corporate bylaws, with a basic content, which will allow us to complete this procedure.
As already indicated in previous sections, the registration of the articles of incorporation of a company in the Commercial Registry corresponding to the district in which it has established its domicile is an indispensable requirement for its valid incorporation, otherwise the company may become irregular (a figure that will be explained in a later question) with the serious consequences that this may entail.
In relation to this registration, it is necessary to specify that in accordance with Article 31 LSC, the founding partners and the administrators of the company will be empowered to file the deed of incorporation with the Commercial Registry, as well as to request or practice the liquidation and make the payment of the corresponding taxes and expenses, It should be borne in mind that this registration is a legal duty for the founding partners and administrators, as established in Article 32 LSC, granting them a period of two months from the date of granting to do so, being jointly and severally liable, as the case may be, for the damages and losses caused by the failure to comply with this obligation.
This registration, as we have tried to point out, is of utmost importance, since with it the process of creation of the company will be concluded, since its registration determines the acquisition of the full legal personality corresponding to the type of company chosen (Article 33 LSC). Likewise, another sign of this is that until the registration is not verified, it will not be possible to transfer corporate participations or shares (Article 34 LSC).
In any case, upon registration of the articles of incorporation, the Mercantile Registrar will publish the same in the Official Gazette of the Mercantile Registry (Article 35 LSC).
Finally, we would like to point out to those interested that, if they wish to know more details about the requirements and characteristics of the articles of incorporation of a capital company and its registration, they can consult articles 114 to 128 of Royal Decree 1,784/1996, of July 19, 1996, which approves the Regulations of the Mercantile Registry (hereinafter, RRM) for corporations and articles 175 to 188 of the RRM for limited liability companies.
In the period that elapses from the time a company is incorporated in a public deed until it is definitively registered in the Commercial Registry, it is called a company in formation.
During this period, for the acts and contracts entered into on behalf of the company, those who have entered into them will be jointly and severally liable, unless their effectiveness has been conditioned to the registration and, if applicable, subsequent assumption of the same by the company (Article 36 LSC). However, for the acts and contracts indispensable for the registration of the company, for those carried out by the administrators within the powers conferred on them by the deed for the phase prior to registration and for those stipulated by virtue of a specific mandate of all the partners by the persons designated for this purpose, the company in formation will be liable with the assets it has (Article 37.1 LSC).
In any case, unless the articles of incorporation or bylaws provide otherwise, if the date of commencement of operations coincides with the execution of the articles of incorporation, it shall be understood that the directors are empowered to fully carry out the corporate purpose and to perform all kinds of acts and contracts (Article 37.3 LSC).
This is undoubtedly a very relevant issue that all those interested in incorporating a company should be very clear about, since, as indicated at the beginning of this explanation, one of the main characteristics of capital companies is their capacity to limit the liability of the partners to their contribution to the capital, without them having to respond personally with their equity for the company's debts.
However, as an exception to this general rule, if a company is incorporated but is not duly registered in the corresponding Commercial Registry within one year, it will be considered as an irregular company, which will imply that the rules of the partnership or, as the case may be, those of the civil partnership will apply to it, if the company in formation had started or continued its operations, which means that the partners will lose this asset protection, becoming personally liable for the debts and liabilities of the company (Article 39 LSC).
In these cases, as a protective measure, the legislator establishes that any shareholder may request the dissolution of the company before the Commercial Court of the place of the registered office and demand, after liquidation of the corporate assets, the corresponding quota, which will be satisfied, whenever possible, with the restitution of the contributions (Article 40 LSC).
In relation to corporate contributions, i.e., as indicated above in generic terms, the set of money, goods or productive elements that the founding partners contribute to the company to make up its capital stock, it is necessary first of all to be clear that only assets or property rights susceptible of economic valuation (such as money, computer equipment, industrial machinery, etc.) may be the object of contributions, so that, on the contrary, in no case may contributions of work or services (Article 58 LSC) be contributions of labor or services.
On the basis of this equity of the contributions, it is necessary to differentiate between the two main types of contributions, which are cash contributions (specific amounts of a current currency) and non-cash contributions (specific assets or rights).
Monetary contributions:
Monetary contributions, i.e., in certain amounts of money in current legal tender, must be made in euros. They may also be made in another currency, but their equivalence in euros must be determined in accordance with the law (Article 61 LSC).
In the event that the shareholders opt for this type of contribution, the Notary Public authorizing the deed of incorporation will be obliged to accredit the reality of the monetary contributions by means of certification (which will be valid for two months) of the deposit of the corresponding amounts in the name of the company in a credit institution, which the Notary Public must include in the deed (Article 62 LSC).
Thus, in case the founding partners choose to pay the capital stock of the company created by means of monetary contributions, they must go to a financial entity and open a current account depositing the amount of the capital and requesting that a certificate of ownership and balance of the same be issued, to be presented at the act of incorporation before a Notary Public.
That said, it is no less true that the law establishes as an exception that, in the case of limited liability companies, it will not be necessary to prove the reality of the corporate contributions if the founding partners state in the articles of incorporation that they are jointly and severally liable before the company and creditors for the reality of the contributions (Article 62.2 LSC).
Non-cash contributions:
On the other hand, the partners of the company may choose to incorporate the company by contributing to it, in the form of capital, certain assets or rights of a non-monetary nature (such as computer equipment, capital goods, factors of production, raw materials, vehicles, etc.).
In these cases, the deed of incorporation must describe the non-monetary contributions with their registry data, if any, the valuation in euros attributed to them, as well as the numbering of the shares or holdings attributed (Article 63 LSC).
Likewise, it is necessary to take into account that in the case of a corporation, non-monetary contributions must be, as a general rule (in certain cases, see Article 69 LSC, this will not be necessary, in which case it will be replaced by a report from the directors under the terms of Article 70 LSC), the subject of a report prepared by an independent expert appointed by the Mercantile Registrar of the registered office, which will contain a description of the contribution and the valuation thereof (Article 67 LSC).
In any case, the founding partners must take into account their liability in relation to the non-cash contributions, since they will be jointly and severally liable to the company and to the company's creditors (Articles 73 to 76 LSC for limited liability companies) and also to the shareholders and third parties in the case of partnerships (Articles 77 LSC) for the reality of the company's contributions and the valuation of the non-cash contributions.
The founding partners, when incorporating the company, must choose a name for the company, by which it will be presented and identified in the legal-commercial traffic.
This name must be unique and not coincidental, since in accordance with Article 7 of the LSC, capital companies may not adopt a name identical to that of any other pre-existing company.
In order to ensure that this is the case, the Commercial Registry Regulations have established in Articles 409 to 419 a mechanism whereby any interested party may file a request with the Central Commercial Registry proposing a name for the company it wishes to incorporate, The Central Mercantile Registry will respond by issuing within three days a certificate (which will be valid for three months) stating whether the name is registered or not, taking into account that if it is not registered, the name will be reserved for a period of 6 months so that the company can be incorporated. This certificate must necessarily be included in the deed of incorporation.
It is also necessary to take into account that, for limited liability companies, their name must necessarily include the indication "sociedad de responsabilidad limitada", "sociedad limitada" or its abbreviations "S.R.L." or "S.L." and in the case of corporations, the indication "sociedad anónima" or its abbreviation "S.A." (Article 6 LSC).
Finally, it should be pointed out that this procedure can be carried out by the interested parties themselves or, if they wish, they can delegate it to the notary's office itself.
The founding partners of the capital company must choose a registered office for the company, which, in accordance with Article 9 of the LSC, must be located within Spanish territory in the place where its effective administration and management center is located or where its principal place of business or operation is located.
Such domicile shall be stated in the bylaws of the limited liability company or corporation to be incorporated, and in the event that it is desired to modify it, the corresponding deed of transfer of corporate domicile must be executed (see in this respect the section dedicated to this instrument).
Those interested in the incorporation of a limited liability or joint stock company should bear in mind that as partners the law recognizes a series of rights. Thus, in accordance with Article 93 LSC, the partners will have, as a minimum, the following rights:
As the main right of the shareholders, it is undoubtedly worth mentioning the possibility of attending and voting at the general meetings, which is the highest governing body of the company where the most important decisions concerning the company are adopted.
This is established in Articles 159 et seq. of the LSC, which recognize that the shareholders, meeting in a general meeting, shall decide by legal or statutorily established majority, on the matters within the competence of the meeting, all of them being subject to such resolutions. Thus, the general meeting, the body that represents the shareholders, i.e. the owners of the company, may deliberate and agree on the following matters (Article 160 LSC), which can certainly be considered as the most relevant ones that may affect the life of the company. Thus, they may resolve on the following matters:
Likewise, unless otherwise provided in the bylaws, the general meeting of a capital company may issue instructions to the management body or submit for its authorization the adoption of decisions or resolutions on certain management matters (Article 161 LSC).
Pursuant to Article 209 of the LSC, the directors of the company shall be responsible for the management and representation of the company under the terms established by the LSC.
Thus, in practice, the Board of Directors is responsible for the day-to-day management of the company's affairs, taking ordinary decisions affecting economic activity (management of sales and purchases, personnel, treasury, compliance with legal and tax obligations, etc.), as well as the strategic orientation of the company and its positioning in the market (design of new products and services, opening of new markets or business opportunities, etc.).
Regarding the different ways of organizing the administration of the company, those interested in the incorporation of a company should bear in mind that in accordance with article 210 LSC, the administration of the company may be entrusted to a sole administrator, to several administrators acting jointly or jointly and severally or to a board of directors, it should also be noted that:
In relation to the administrators, in addition, those interested in the incorporation of a company and/or in the assumption of the position of administrator, must also take into account:
As has been indicated from the beginning of this presentation, traditionally partnerships arise from a contract by which two or more persons undertake to pool money, goods or industry, with the intention of dividing the profits between them. However, the evolution of the law nowadays allows the incorporation of a company by a single partner, which will be known as sole proprietorships.
Thus, in accordance with Article 12 of the LSC, a sole proprietorship is defined as a limited liability company or a corporation:
In the event that the company is originally created by a sole shareholder, the deed of incorporation shall state such circumstance, which shall be duly recorded in the Commercial Registry (Article 13 LSC) so that such circumstance has the necessary registry publicity.
Likewise, in cases of supervening sole proprietorship (i.e., when the company is formed by two or more partners but subsequently, as a result of a derivative transfer, all the shares or holdings end up being owned by a single partner), the interested parties must take into account that after six months have elapsed since the company acquired its sole proprietorship without this circumstance having been recorded in the Commercial Registry, the sole partner will be personally, unlimitedly and jointly and severally liable for the corporate debts incurred during the period of the sole proprietorship.
With regard to the operation of a sole proprietorship, it should be noted that the sole shareholder will exercise the powers of the general meeting, whose decisions will be recorded in the minutes, under his signature or that of his representative, and may be executed and formalized by the shareholder himself or by the company's administrators (Article 15 LSC).
Pursuant to Article 11 bis LSC, capital companies may have a corporate website (which will be mandatory for listed companies). The creation of such website must be agreed by the general meeting of the company and such agreement must be recorded in the company's registration sheet at the competent Mercantile Registry and will also be published in the Official Gazette of the Mercantile Registry.
In any case, the company must guarantee the security of the website, the authenticity of the documents published on it as well as its free access and the possibility of downloading and printing what is posted on it (Article 11b LSC).
Pursuant to Article 19 of Royal Legislative Decree 1/1993, of September 24, 1993, approving the Revised Text of the Law on Transfer Tax and Stamp Duty, the incorporation of companies is a taxable event for this tax in the form of corporate transactions.
However, by virtue of Article 45.I.B).11 of the aforementioned regulation, the incorporation of companies will be exempt from the tax, which means that it will not be necessary to pay this tax when incorporating a company.
In order to execute a deed of incorporation of a capital company, it is only necessary to contact the notary's office (by calling our contact telephone number or email address mercantil@jesusbenavides.es) and make an appointment on the day and time most convenient for the grantors.
On the agreed date and time, the grantors must simply go to the notary's office with the necessary documentation (see section on necessary documentation) to sign the corresponding deed, which will be drafted based on the minimum legal content required and the forecasts and needs of the clients in question.
If the interested parties so wish, in this type of instrument, in order to facilitate the task for the incorporating partners, it is possible to entrust the notary's office to obtain the certification issued by the Central Mercantile Registrar to certify that the chosen name is not registered, as well as the subsequent registration of the deed granted in the Mercantile Registry corresponding to the domicile of the constituted company, which will greatly facilitate the bureaucratic procedures for the granting partners, since the Notary Public can manage all these procedures telematically in a fast and safe way, saving time and money to the interested parties.
In addition to everything indicated so far, which is a detailed explanation of how to incorporate a company in a traditional way, those interested should know that currently, there is a regulation that allows to incorporate limited liability companies in a much faster way, which receives the common name of "express incorporation", as long as a series of requirements are met (such as using a basic standard corporate statutes, among others).
This regulation can be found in Law 14/2013, of September 27, 2013, to support entrepreneurs and their internationalization.
To this end, the entrepreneur who wishes to opt for this route must go to a PAE (Entrepreneur Service Point) and fill out a document called DUE (Single Electronic Document) by means of which he/she will be automatically assigned an appointment at a Notary's Office included in this system for the signing of the deed of incorporation, after which, telematically, through the CIRCE system, it will be sent to the Commercial Registry for the purpose of registration, all with much shorter deadlines than the ordinary ones.
The signing of the deed of incorporation of the company before the Notary Public must be attended by the partners founding the company, either in person or represented by a third party by means of a power of attorney.
Likewise, if the parties so wish, the person to be appointed as administrator of the company may also attend in order to accept his position in the same act.
If the interested party so wishes, he can be given a certified copy of the deed of incorporation of his company on the same day of the signing, but in such case, he will have to go to the Commercial Registry to register it, since this is a necessary step for its valid incorporation, as has been indicated.
Of course, if so desired, it is possible to entrust this management to the notary's office itself, which will telematically send the deed to the Commercial Registry in order to obtain its registration.
Once this has already taken place, the authentic copy of the deed will be delivered to the grantors, which will be much more useful, since from that moment on the document will be able to have all its effects.
It is enough that the person or persons who wish to formalize the incorporation of the mercantile society go to the notary's office with their DNI. In case any of the partners is a foreigner, he/she must present to the notary his/her original and valid passport. In addition, it will be essential to present the NIE together with the mentioned passport. Important! If in the new company, one of the partners or administrators was in turn another mercantile company, the deeds of incorporation, of appointments of positions of its representative and the deed of real ownership of this company must also be provided.
The negative denomination certificate must be issued by the Central Mercantile Registry. It serves to certify that the name of the new company is not in use by another company. It should be noted that, in order for this certification to be valid, the application must be made by one of the partners of the new company to be incorporated. The interested parties can make the request directly through the web page of the Central Mercantile Registry, or they can do it through the notary's office itself. Once the application has been filed, the Central Mercantile Registry usually replies within approximately 24 hours as to whether or not the requested company name is available.
When incorporating a company, each partner must make the corresponding contribution. This contribution can be in money or other goods (real estate, furniture, computer equipment, etc.) What is really important is that this contribution is duly accredited before the notary. Therefore, if it is:
a) A contribution of money, it will be necessary to provide a certificate issued by a bank certifying the opening of a bank account in which the monetary contributions of each partner are deposited (bear in mind that this document will be valid for a maximum of two months from its issue until the execution of the deed).
b) A non-monetary contribution will be necessary a document subscribed by the partners containing a description or specification of these and assigning them their corresponding economic value (for example, a computer is contributed, model MAC PRO, serial number "x" valued at 1,500 euros).
The bylaws of the new company must be provided, detailing all the elements that define it, the way in which it is organized and the persons who make the relevant decisions within it (such as its corporate name, its corporate purpose, its registered office, the duration of its corporate year, the type of administrative body it has, the remuneration of these, the way in which the General Meetings are held, the quorum for the adoption of resolutions, etc.). If the interested party does not have a model of standard corporate bylaws, the notary's office can provide them at no extra cost.
