Establishing A Business Entity In Spain (Updated) | International Lawyers Network

1. TYPES OF BUSINES ENTITIES –

1.1 Description of the types of entities available in each jurisdiction through which to conduct business –

Limited companies: Corporation and Limited Liability Company –

When setting up a business in Spain, either foreign or local investors generally incorporate a company. There are two kind of mercantile companies usually incorporated to operate a business in Spain: (i) Corporations or public limited companies (“Sociedades Anonimas” or “SA”) having their capital represented by shares, which are securities; and (ii) Limited Liability Companies or private limited companies (“Sociedades de Responsabilidad Limitada” or “SL”) having their capital represented by participation units (“participaciones sociales”), which are not securities (hereinafter referred to both of them as “shares”). In both cases, companies have a legal personality distinct from their partners, which are not liable for the company’s debts. Shareholder’s liability is limited to their contribution to capital. Only in exceptional cases, based on a fraudulent use of the legal personality, the shareholders shall be liable for the debts or obligations of the company.

Branch –

Branch is a secondary establishment operating as a representative of its parent company, but without being a separate legal entity even though it keeps certain level of autonomy management. So, the parent company is liable for its obligations and debts. Branch develops, totally or partially, the activity of the parent company.

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