One of the most common forms doing business in Spain is through, what are known as limited companies. This type of company has a minimum capital of 3,006 Euros that must be disbursed at the time of forming the company. The capital is divided in shares known as ‘participaciones’ and not ‘acciones’ like a public limited company.

In this kind of company the shareholders are not responsible for any company debts.

The setting-up of this type of company must take place before a public notary and be registered in the Mercantile Registry. Therefore the articles of association must be drawn up.

Normally the contributions to the company by each shareholder are made in money. This contribution must be certified by a bank when the company is formed. However all the capital contribution does not necessarily have to be in cash. Material assets can also be considered as contributions (vehicles, machinery, buildings, etc.) or it can be a combination of part money and part material assets. Assets that are contributed to a company must be economically valued.

Each shareholder can buy shares of other shareholders who wish to sell. Prior to selling shares to persons outside of the company all other shareholders must be informed.

The company is organised via what is known as the General Shareholders Meeting where issues are decided by a majority vote. The Administrators announce the meeting and it must take place during the first six months of the year. The shareholders themselves can also call for a General Meeting for special circumstances.

Between announcing the meeting and it taking place there must be a period of 15 days. Each shareholder must receive some form of registered communication informing them of the meeting and all shareholders have the right to attend. All of the agreements must be noted in the minutes of the meeting. However if the meeting has not been announced but all the capital is present or represented, a General Meeting can take place if the shareholders accept. The shareholders have the right to attend The agreements are decided by majority.

The administration may be carried out by one person only or by various persons (any one of them being able to sign in the company name), or by joint responsibility (all of the elected persons must sign, for example in order to pay by bank cheques. A board of Directors is also possible with a minimum of three and a maximum of twelve Directors.

It is also possible to form a limited company by a single shareholders. This single shareholder may be an individual or a legal entity (a company can be the single shareholder of another company).. It is compulsory that the Company makes it clear in all documentation (letters, bills, announcements, orders etc.), that it is an individual. It is important to know that in company consisting of a single shareholder, that if in six months the company has not been registered in the Mercantile Register this shareholder will be personally liable for any company debts incurred during the period of individual tradership.

The shareholders are not responsible for the company debts ,but the Administrators may be responsible if they do not comply with the law or the articles of association. (for example if the taxes are not paid).

The minimum amount of capital to form the Company is 3006 Euros

They must be formed before a Public Notary

They are obliged annually to keep accounts and present company tax and deposit their accounts in the Mercantile Register.

The capital that is divided in shares known as ‘participaciones’, can either be money or goods (for example, machinery, buildings, cars etc.) or both things.

The General Shareholders Meeting make the decisions of the Company. Normally the aim of the meeting is to review and approve accounts, name Administrators, change the articles of association of the Company and increase or reduce the capital.