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The management of Limited Liability Companies in Spain

The management of Limited Liability Companies in Spain

Posted on by Business Advice 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.

COVID19 Limitations on foreign investment in Spain

COVID19 Limitations on foreign investment in Spain

Posted on by Business Advice Spain

The Covid19 crisis has provoked various countries, amongst which Spain, to put in place limitations on foreign investments in Spain. In other words the liberalization of the foreign investment regime is suspended until further notice.

Spain

The Spanish government requires to previously authorise the following investments that are: 1) foreign and 2) direct investments in Spain and in 3) strategic sectors.

Under “foreign” is understood coming from residents outside the European Union or European Free Trade Association (EFTA) region.

Under direct investments is understood: 1) acquire more than 10% of the shareholding and or 2) obtain the right to partcipate in management.

Affected Sectors

The strategic sectors are: Continue reading “COVID19 Limitations on foreign investment in Spain”

In need of a Spanish or international contract?

In need of a Spanish or international contract?

Posted on by Business Advice Spain

A wide variety of contracts, including franchising, distribution, agency, lease, sale, employment, executive, free lance, real estate, rental, shareholder and consultancy agreements have been drafted and reviewed by our lawyers over time.

 

B.A.S. adds value in your contractual stages as it quickly grasps your needs, understands perfectly your language and works efficiently to getting you a neat contract that will allow you to get the deal done quickly. Contact us for any kind of issue and lets discuss how we can help. Our lawyers will assist you with a quick, business and no nonsense approach.

Board or joint and several directors?

Board or joint and several directors?

Posted on by Business Advice Spain

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.