Company Formation in Spain: Legal & Tax Procedures

Company Formation: Legal & Tax Procedures

When creating a company, promoters should consider market testing their idea, planning, and analyzing their operations after the necessary investments and sources of financing. If this decision is positive, and once the legal form and name of the company are chosen, a series of actions and formalities must be conducted for it to become legally constituted and start carrying out its activity. The incorporation process requires a series of formalities before various government agencies. Private entities such as administrative agencies, consultancies, and business associations can also perform preliminary work for a fee. Information can also be found in specialized publications addressing these issues.

Commercial and Tax Procedures for Company Establishment

For a company to be established and commence business, commercial and tax procedures, detailed below, must be completed.

Negative Certification of the Company Name

The first step when creating a company is naming it. Key considerations for the company name include:

• The company's name must necessarily include an indication identifying its type.
• Do not adopt a name identical to an existing company.

To comply with this last requirement, it is necessary to contact the Central Mercantile Registry, located in Madrid, and request a certificate of name non-identity.

Memorandum of Incorporation and Its Execution

Once the name is determined, the memorandum of incorporation must be drafted. It should include the following details:

1. The names and ages of the grantors (natural persons) or corporate name (legal persons), including nationality and residence in both cases.
2. The grantors' willingness to establish the corporation.
3. The amount in cash, property, or rights each partner contributes or agrees to contribute.
4. The aggregate amount, at least approximately, of the established payments, both satisfied and merely provided, as well as those to be established.
5. The statutes governing the company's operations. These statutes shall contain:
   • Name of the company
   • Purpose
   • Duration of the company
   • Commencement of its operations
   • Registered Office
   • Share Capital
   • Number of Shares
   • Organizational Structure
   • Closing date of the financial year
   • Any special rights reserved for the company's founders or promoters.
6. The names, ages, domicile, and nationality of the individuals initially responsible for administration and legal representation.