The Spanish Companies Act (LSC): A Guide for International Investors (I)

The Spanish Companies Act (LSC)b has been revised and is the fundamental legal framework regulating the operation of companies in Spain, such as limited liability companies and public limited companies. In this article, we will approach this law with a particular focus on international investors interested in establishing a presence in Spain.

Giambrone and Partners: Corporate Law Services

At Giambrone and Partners, we offer a wide range of corporate law services, advising both domestic companies and international clients. Our team of commercial lawyers specialises in company formation, mergers and acquisitions advisory, regulatory compliance, and other crucial aspects for the success of your business in Spain.

Company Formation

Forming a company entails the creation of an entity with its own legal rights and obligations; that is, an institution with its own legal personality and separate assets, the level of regulation depends on the type of company chosen. In this sense, one of the most important decisions an investor must make is the choice of entity to suit the business model, as this will affect the liability of partners, operating costs, and investment and divestment possibilities.

Legal Personality and Separation of Assets

The recognition of a company's legal personality depends on it operating as an independent entity with genuinely separate assets. In partnerships, there is less separation between the company's assets and those of the partners compared to corporate entities (limited or public companies).

Registration and Articles of Association

To be formally recognised, commercial companies must be registered in the Commercial Register. Properly registered companies maintain the separation of assets. The articles of association, granted by the founders or partners, constitute the company's legal framework and must be included in the act of incorporation.

Types of Companies and Shareholders' Meetings

The limited liability company (S.L.) is the most commonly used corporate form due to the minimal initial investment required and the flexibility of its legal regime. It is ideal for small and medium-sized businesses where the personal qualities of the partners are paramount.

The shareholders' meeting is the most important event relating to a company, and is responsible for making major decisions. There are three types of meetings: general, universal, and special. General meetings can be ordinary or extraordinary, while universal meetings require the attendance of 100% of the share capital and unanimous acceptance of the agenda.

Right to Dividend and Shareholders' Agreements

The right to a dividend can be challenged if the refusal to distribute is deemed unjustified. It is crucial for companies to have shareholders' agreements to properly organise the relationships between partners and the company, avoiding conflicts that could lead to loss of value or dissolution.

Management Body

The management body can be organised through a sole director or a board of directors. The board acts collegially and its main functions include the ordinary management and representation of the company. In public limited companies, the board has more scope for self-regulation, whereas in limited companies, major issues must be included in the articles of association.

International Advisory

At Giambrone and Partners, we understand the complexities of Spanish corporate law and can assist our international clients navigate this environment. We offer comprehensive advice on the creation and management of companies, ensuring your business complies with all local regulations and is positioned for success.

The Spanish Companies Act is fundamental to understanding the legal framework governing companies in Spain. With the right support, such as that offered by Giambrone and Partners, international investors can establish and operate their businesses efficiently and in accordance with the law. Do not hesitate to contact us for more information on how we can help you achieve your business goals in Spain.

Giambrone and Partners Legal Firm is here to advise you at every stage of the investment and corporate management process. Contact us today for a consultation and discover how we can help you establish and grow your business in Spain.