The Limited Liability Company and the Public Limited Company in Spain

There are many types of business entities in Spain. In this post, we will focus solely on the main differences between the limited liability company and the public limited company, two of the most widely used modalities for incorporating companies in Spain.

Limited Liability Company in Spain

The Limited Liability Company, or Limited Company (Sociedad de Responsabilidad Limitada – S.L.), is the most common type of company when starting a business in Spain. Why? Due to the ease of setting it up.

Its two main features are:

• The partners are not personally liable for corporate debts; it is the company that, as a legal person, answers unlimitedly with all its present and future assets. In general, the partners limit their liability and risk to the contribution they make towards the capital. However, there are specific cases in which Spanish regulations impose a special responsibility on the partners.
• To set up a Limited Company in Spain, a minimum capital of only 3,000 euros is needed.

The statutes of a Limited Company must be correctly drafted and presented before a Public Notary. At the same time, a Limited Company in Spain needs to be registered in the Mercantile Registry.

Keep in mind that this process requires a series of steps to be taken, such as obtaining official documents (NIE, CIF, PoA) or preparing all the notarial documents for the incorporation. Adlanter supports you on the road to creating a company in Spain.

In this post you can read extensive information about Limited Companies in Spain.

Public Limited Company/Corporation in Spain

A Public Limited Company ( Sociedad Anónima – S.A.) is a group of people or entities that are created and developed for a common purpose. The Public Limited Company must have a minimum capital of €60,000, which must be paid up by at least 25%. The liability of the partners for possible debts is limited to the capital contributed.

This type of company is intended for companies of a certain size where a rotation of their partners is expected.

The capital of the company (divided into shares) is made up of the contributions made by the partners, who answer to the company for the fulfillment of their obligation to pay the amount of the subscribed shares, but do not assume any personal responsibility for the company’s debts. However, the absence of responsibility of the partners for the company’s debts is not absolute; there are exceptions provided in the regulations that require a personalized analysis.

The shares of a Public Limited Company can be freely transferred unless otherwise established in the statutes.

The Public Limited Company is incorporated by public deed that must be registered in the Mercantile Registry. Both the Deed of Incorporation of the Public Limited Company and its Statutes must contain minimum information about the company to be incorporated (such as the name of the company, the purpose and activity of the company, a designation for the administration body, etc.).

In addition, as with the Limited Liability Company in Spain, the Public Limited Company can be constituted with a single partner (S.A.U.)

Auditing of accounts is not mandatory in all Public Limited Companies; it will depend on certain accounting magnitudes (assets/liabilities/employees), so it is advisable to contact a tax and accounting advisor to help you with all legal and accounting obligations when starting a business in Spain.

Differences between Limited Companies and Public Limited Companies

Limited Liability Company – Spain	Public Limited Company – Spain
This is the most common type of company. Suitable for SMEs or companies with few partners.	This is a type of company for large businesses.
In general they have simpler accounting operations.	They tend to have more complex accounting operations.
Their incorporation is more flexible.	Their incorporation and operation is stricter.
They require a minimum capital of only 3,000 euros. The capital is divided into shares.	They require a minimum capital of 60,000 euros (minimum initial payment of 25%). The capital is divided into stock.
The transfer of shares is restricted, not free.	The transfer of stock is free.
They cannot be listed on the stock market.	They can be listed on the stock market.
They must use the initials S.R.L. or S.L. together with their name.	They must use the initials S.A. next to their name.

 

Adlanter helps companies and individuals with the creation of companies in Spain. If you have any questions, get in touch with our team of professionals who will be happy to help you.