Private Limited Company (Sociedad Limitada)
Activity: With the exception of certain types of activity reserved exclusively to public limited companies, private limited companies can carry out any type of activity.
Number of shareholders: Whilst the capital paid in by each member of the company is important, in the private limited company importance is given to the personal qualities of each member, which makes this type of company more appropriate for activities that work with a small membership, family or professional companies, as well as to carry out business with a low initial capital outlay.
Minimum capital: The minimum share capital for a private limited company is 3,000 €. This amount does not need to be outlaid entirely at the signing of the memorandum of association, but if it is not the company will be categorised at “company in organisation” until the minimum capital is reached.
Public Limited Company (Sociedad Anónima)
Activity: Public limited companies can carry out any type of activity, but there are certain activities reserved exclusively to them (e.g. banking, pharmaceutical, insurance, etc.). This is also the formation needed for the company to go public.
Number of shareholders: This is a strongly capitalist format, which means that greater value is placed on the capital paid in by each shareholder rather than their personal qualities, which allows for the free trade of the shares. All of this makes it suited for activities requiring a larger number of shareholders, as well as greater capital mobility.
Minimum capital: The minimum share capital for a public limited company is 60,000 €, of which at least 25% must be laid out at the signing of the deed of incorporation. The rest of the capital (capital calls) will need to be paid within the period set out in the articles of association.
How to set up a limited company in Spain
- NIE: Before you can start the process of setting up a business in Spain, all resident and non-resident foreigners with financial affairs in Spain must have a foreigner’s tax identification number (NIE). The NIE is essential for any fiscal transactions in Spain, such as incorporating a company.
- Company name certificate: Once the founding members have their identification numbers, the first step in setting up a limited company is to obtain a company name certificate (certificado de denominación social) from Companies House (Registro Mercantil Central) to verify that the company name you intend to use is not already taken, so you can select it for your new company.
- Company bank account: The company bank account will need to be opened in order to deposit the minimum capital. The bank will then issue a certificate of the deposit, needed for the registration of the company.
- Articles of association: The articles of association (estatutos sociales) will need to be drafted for your company, that is to say the rules by which the company will be run. There are certain legal minimums that these are required to contain, depending on the type of company and its activity.
- Deed of incorporation: A public deed will need to be signed before a notary public containing all the fundamental information for the incorporation of the company and its subsequent registration.
- Tax Office procedures: Next you have to make certain applications to the tax authority: a) Apply for your company’s provisional tax identification number (CIF); b) Register for Business Activities Tax (Impuesto de Actividades Económicas); c) Registration for VAT (IVA).
- Registration: The company will need to be registered with Companies House (Registro Mercantil Central).
- Obtain company tax identification number (CIF): You will need to return to the Tax Office to exchange the provisional company tax number for the permanent one.
Remember that this is a transaction that has legal and tax implications, and we do not recommend that you carry out this type of procedure without the appropriate professional advice.
Gabriella Mary Trussler Rowland
4408 Ilustre Colegio de Abogados de Almería