The new law introduces important new features and amendments in the corporate field
On 19 October, Law 18/2022, of 28 September, on the creation and growth of companies (Crea y Crece Law) came into force, which aims, among other things, to improve business by promoting the creation and growth of companies through the adoption of measures to speed up the creation of companies.
what are the measures adopted by the Crea y Crece Act?
As far as the corporate sphere is concerned, the Crea y Crece Act has adopted a number of really important measures, which are listed below:
- The incorporation of limited liability companies with a minimum share capital of €1, instead of €3,000, is permitted. However, the incorporation of such companies for an amount of less than €3,000 means that (i) the company must allocate at least 20% of the profit to the legal reserve until this reserve together with the share capital reaches the amount of €3,000, and (ii) in the event of liquidation, if the assets are insufficient to meet the company’s obligations, the shareholders will be jointly and severally liable for the difference between the amount of €3,000 and the amount of the subscribed capital. The introduction of this measure implies, consequently, the elimination of the successive formation procedure for limited liability companies, establishing a transitional period for their conversion. We understand that this measure is the jewel in the crown of the Crea y Crece Law, the purpose of which is to promote the creation of companies. However, it should be remembered that the Capital Companies Act establishes as a cause for dissolution that the company incurs losses that leave its net worth reduced to less than half of the share capital, with the administrator being jointly and severally liable for the company’s debts if he or she does not promote such dissolution. Thus, if it is decided to incorporate a limited liability company with a capital of €1.-, it could easily fall under the aforementioned cause for dissolution, so that before incorporating the limited liability company it is necessary to carefully weigh up the amount to be contributed to the share capital.
- Limited liability companies may be incorporated by telematic means. In this sense, companies can be incorporated from the Entrepreneur Service Points (PAE) by using the Single Electronic Document (DUE) and through the telematic processing system of the Company Creation Information and Network Centre (CIRCE). To this end, notaries must provide information on the advantages of using these telematic means, which implies, among other things, a reduction in time, notary and registry costs.
- The figure of Benefit and Common Interest Companies is recognised, defined as those whose activity has a social and environmental commitment and objectives. However, the criteria, requirements, methodology and scope of this type of company are still pending regulatory development.
- Civil companies whose purpose is not commercial may be registered in the Mercantile Register, which will offer greater legal certainty to third parties interested in doing business with this type of company.
At AddVANTE, we stress the importance of taking appropriate advice before embarking on the incorporation of a limited liability company with a share capital of €1.-, since, although it has a visibly attractive component, we must not forget the degree of liability assumed by the partners and the management body.