Limited Liability Company Legal Framework and Features

Limited Liability Companies (Sociedad de Responsabilidad Limitada) are businesses created to have fewer partners, often maintaining a family character.

Key Features of Limited Liability Companies

According to Law 2/1995, both limited liability companies and anonymous (public limited) companies can be established with only one partner or more. The responsibility of the partners is limited to the capital contributed.

Capital Requirements and Share Structure

The capital is divided into shares, which are equally cumulative and indivisible. These shares represent the capital of a limited liability company; they cannot be joined, are not negotiable, and are not freely transferable. The minimum capital must be €3,005.06 and must be fully subscribed and paid, as capital calls are not supported. Contributions may be in cash, property, or rights.

Company Name and Share Transmission

The name must consist of the chosen name followed by Sociedad de Responsabilidad Limitada, Sociedad Limitada, or the abbreviations SL or SRL. For the transmission of shares, the intention to transfer must be reported to the administrators. If a partner wishes to acquire shares, the remaining partners have preferential rights. This transmission must be executed in a public document.

Formation, Registration, and Taxation

This type of society is taxed under the Corporate Tax (IS). To establish this company, a public deed must be created and registered within two months in the Commercial Register. It should include the company statutes, which are the rules agreed upon by the partners.

Management and Administrative Bodies

The management and administration of the society are entrusted to a corporate body consisting of:

The General Board (JG)

The General Board is the deliberative and decision-making body. All partners, including those who did not participate in the meeting, are subject to the agreements of the General Board. The board shall be validly constituted without any formal call if the entire capital is present and the assembled attendees decide to hold the meeting. This scenario is known as a Universal Board.

Role and Duties of Administrators

Company administration may be entrusted to a single administrator or a Board of Administrators. Administrators must meet certain legal requirements. They are also required to convene the General Board within the first six months of each year. If they fail in their duty to call the meeting, any interested party may request the Court of First Instance to make the call.

Rights of the Company Members

Among the rights of the members are:

• The right to participate in profit sharing.
• The pre-emptive right to acquire the shares of members who are leaving.
• The right to participate in social decisions.
• The right to be elected as administrators.
• The right to information within the periods set out in the public deed.