Legal Framework for Business Activity in Spain: Regulations and Principles

T.4: Legal Framework Governing Business Activity

One of the functions of the public administration is to establish the legal framework governing economic activity. Through this framework, the state regulates the activity of economic agents and seeks to foster their development, thereby promoting a structure of certainty and clarity needed for economic relations.

Defining the Employer in Commercial Law

This regulatory structure is determined by a set of rules and principles that constitute Mercantile Law (or Trade Law), a special right that applies only to employers and their acts. A primary aspect of this regulation is defining who is legally considered an employer. The status of employer is acquired by:

• All natural persons conducting economic activity in a professional, regular, and proper name.
• All commercial companies in any legal form (S.A., S.L., cooperatives, collectives, etc.).

Key Legal Provisions: The Commercial Code

Among the main legal provisions regulating business, the Commercial Code stands out. This law, created in 1885, has undergone constant modifications to align its contents with the reality of each moment through complementary laws governing specific employer activities (e.g., the Law of Antitrust, the Law of Corporations, etc.).

Basic Legal Principles of Spanish Commercial Law

Given their importance, some principles are not only found in Commercial Law but have acquired the category of constitutional principles in Spain. The most important are:

1. Free Enterprise
2. Property Right
3. Freedom of Contract

Other Aspects of the Legal Framework for Enterprises

Exclusive Rights and Industrial Property

In order to maintain a company's investments in technological research or commercial activity, the law guarantees the exclusive use, for a certain time, of inventions and innovations applicable to the business (patents), as well as trade names and marks that serve to distinguish one product from others. To secure these rights, a title to Industrial Property must be obtained through its registration in the Spanish Office of Patents and Trademarks.

Competition and Market Regulation

To develop and maintain free market competition in the interests of both enterprises and consumers, the Law of Defense of Competition has created an independent institution: the National Competition Commission (CNC). The CNC is responsible for monitoring anti-competitive practices, preparing case files, and establishing penalties. Furthermore, the Unfair Competition Law seeks to prevent unfair business conduct. Examples of such conduct include:

• Acting with fraud.
• Omitting or distorting the features of a product.
• Denigrating the image of other companies.
• Violating trade secrets.

Comprehensive Regulatory Obligations for Businesses

The regulatory role of the state involves a broad set of obligations affecting the company in its different areas, including:

• Commercial regulations (Trade)
• Fiscal regulations (Tax)
• Labor regulations (Work)
• Accounting regulations
• Environmental regulations