Spanish LLCs: Structure, Law, and Key Features

Limited Liability Companies in Spain: Key Aspects

To understand the significant economic importance of limited liability companies (LLCs) in the current economic system, it's crucial to recognize that the vast majority of Spain's industrial fabric consists of small and medium-sized enterprises (SMEs) structured as limited companies.

Legal Framework for Spanish LLCs

The regulation of Limited Liability Companies in Spain is primarily governed by two key legal instruments:

1. It is regulated, first and foremost, by its own specific law: Law 2/1995 of March 23 on Limited Liability Companies. As stated in its preamble, this law provides flexible rules, allowing its provisions to be adapted to the specific needs and conveniences of partners in each case.

2. Secondly, the Commercial Registry Regulations, specifically Articles 175 to 208, contain important provisions concerning not only the registration but also the functioning and organization of limited liability companies.

Defining a Limited Liability Company (LLC)

In a limited liability company, the capital is divided into shares and must be integrated by the contributions from all partners, who are not personally liable for the company's debts beyond their initial capital contribution.

Key Characteristics of Spanish LLCs

1. Hybrid Nature: The hybrid nature of the limited liability company means it cannot be classified solely as a small corporation or as a collective partnership with limited partner liability.

2. Closed Structure: The closed nature of the Spanish limited liability company is primarily manifested in that its shares are not freely transferable, and representation in general meetings is restrictively granted.

3. Capital Division: The limited liability company's capital consists of partner contributions and is necessarily divided into shares.

4. Limited Partner Liability: Partners are not personally liable for company debts; their financial responsibility is limited strictly to their capital contributions.

5. Commercial Object: A limited liability company can have any commercial object, which must be clearly defined in its articles of association.

6. Restrictions on Securities and Loans: By its very nature and characteristics, the limited liability company cannot issue bonds or other marketable securities. Furthermore, it cannot grant credit, guarantees, technical assistance, or advances of funds to its own members or managers unless approved by a board resolution.

7. Legal Personality: A legally constituted limited liability company is a legal person entitled to a unique name (which cannot be identical to another existing company), a registered office established in Spanish territory (at the company's address or principal place of business), and nationality.

8. Flexible Legal Regime: The flexible nature of its statutory legal regime allows for significant autonomy, enabling partners to adapt the company's structure to their specific needs and preferences.