Tag: Corporate

The management of Limited Liability Companies in Spain

The management of Limited Liability Companies in Spain

Applicable Law

The organic power of representation of a Spanish Limited Liability Company (“Sociedad Limitada or S.L.) is regulated in: RDLeg. 1/2010 de 2 de Jul (TR. de la Ley de Sociedades de Capital), the Spanish law on companies. It concerns the management of Limited Liability Companies in Spain.

Director(s)

The power of representation of a company before third parties and the capacity of making decisions relating to the management of the company resides with the directors. The difference of the management body compared to the shareholders is that the former is a permanent body.

Bylaws

The bylaws should decide on how the company is to be managed and on how the management maybe composed. The bylaws can foresee the following possibilities:

  • A sole director, who will have the power to manage and represent the company;
  • Two or more directors who both, separately, have the power to manage and represent the company;
  • Two or more directors who jointly have the power to manage and represent the company. Jointly may mean at least two together. It does not necessarily mean all of them together;
  • Board of Directors. In this case the Board as a whole has the power to manage and represent the company. However the bylaws will often designate a few Board members to be able to manage and represent the company on their own (either separately or jointly). The Board shall consist of 3 to 12 members. The bylaws will also determine how decisions can be validly adopted, how meetings are to be organized, announced. Its decisions are to be recorded in a ledger and signed by the President and secretary of the board.

In order to be valid, management and decisions should always be taken within the scope of the social purpose of the company.

The bylaws may record the different modes of management as previously mentioned and the shareholder(s) may decide to change the mode of management without having to modify the bylaws.

Not all people or companies can be directors or board members. There are certain criteria that need to be met.

The director´s position is not remunerated unless the bylaws determine differently.

Directors have different duties towards the company they represent. A few of them are:

  • Obligation of loyalty;
  • Obligation of diligence.

Directors are responsible towards the company for the management and actions and omissions that caused damage to the company.

Contact

Would you like to know more about the management of Limited Liability Companies in Spain? Contact us at jschoevers@businessadvicespain (Jochem Schoevers is a Spanish lawyer with Dutch nationality) or dial direct 0034 610 739 364 if you would like to discuss what could be the adequate form of governance for your company.

Soft Landing Services in Spain

Soft Landing Services in Spain

Business Advice Spain has specialized in so called “soft landing” services in Spain. It concerns services that help foreign companies and individuals to establish themselves in Spain. Often a company is already doing business in Spain buts has identified the need, or the wish, to establish and grow. How to go about that?

Soft Landing Services

Generally these services consist of accounting/ tax, legal and employment & payroll. A client needs to register its presence in Spain; It will have to declare taxes and carry on accounting. In what corporate form will the company do that? That “form” might need to be legally incorporated before a notary and registered in the Companies Registry. It needs a registered address and a director or board. Then that company need to employ personnel or freelance contractors and pay them through pay roll or invoices. Continue reading “Soft Landing Services in Spain”

Establishing a Rep Office in Spain

Establishing a Rep Office in Spain

Activities of a representative office

Many American companies have doubts on whether a Representative office would be a good corporate legal form to start business in Spain. And how to establish it. A representative office is a fixed place of business set up by a foreign company. The Rep Office only pursues marketing or informational activities related to commercial matters but doesn’t  do any actual business in Spain. Of course there are alternatives to the Rep Office and all have their pros and cons.

Requisites for a Rep Office:

  1. Representative offices do not have separate legal personality from their parent;
  2. The nonresident company is liable for all debts assumed by the representative office;
  3. Representative offices are considered permanent establishments for tax purposes.
  4. Representative offices cannot themselves conduct commercial transactions;
  5. In general, no commercial requirements need to be met for a representative office to be opened, although mainly for tax, employment and social security purposes a public deed (or document executed before a foreign notary public, duly legalized with the Hague Apostille or any other applicable form of legalization) may have to be executed, recording the opening of the representative office, the allocation of funds, the identity of the tax representative (an individual or legal entity resident in Spain) and its powers.
  6. Representative offices need not be recorded at the Commercial Registry;
  7. Representative offices have no formal directors or managing bodies; the representative of each office performs the activities of the representative office by virtue of the powers granted to that representative.

It is a simple form, set up quickly without having to comply with too many legal formalities and allows investors to obtain all kinds of information on which they can base their investment decision.

A representative office serves the purpose for conducting market and competition research before investing or for example negotiating the acquisition of a local company.

Do contact us if you would like more information on the subject. Business Advice Spain is highly experienced in overseas Corporate matters. It has helped American companies for the last 15 years establish themselves in Europe.

Board or joint and several directors?

Board or joint and several directors?

Foreign companies often ask what the best form of governance/ management is for their subsidiary in Spain. A “Board of Directors or joint and several directors of a limited liability company in Spain?” Of course this depends on the trust relationship the mother company (the shareholder) has with the management of the Spanish company. Most efficient would be the joint and several director system, that director will be able to manage most the daily business of the Spanish company without having to recur to other directors (in case there are more directors. In case there is only one, it would be a “sole director” automatically having the same faculties as a joint and several director). The same can however be achieved through a board of directors appointing from their midst a managing director (a “consejero delegado” established in article 249.2 of the Spanish “Ley de Sociedades de Capital” – Law of Capital Companies). Sometimes the impression is created that a board of directors guarantees more control over the operations of the Spanish sub. That is not necessarily true.

We have set up and worked with many Boards of Directors and or joint and several directors, or sole directors. Feel free to contact us to discuss what a suitable governance body would be for your subsidiary company in Spain. It all depends on the circumstances.

You may appoint foreign directors (individuals or companies) without any problem, they will need a Spanish tax number though. A so called Numero de Identificación Fiscal (a “NIF”) and in case of foreigners, a NIE, a Numero de Identificación de Extranjeros. We can help in obtaining that number.

Next time you ask yourself, Board or joint and several directors? Contact us or dial direct 0034 610 739 364 if you would like to discuss what could be the adequate form of governance for your company. Also see this article.