One of the hindrances an investor must face when starting a project is the term elapsing from the moment it takes the decision of incorporating the vehicle company and its registration with the Commercial Registry, a process generally involving some 3 or 4 weeks. In order to streamline the formal requirements, the Spanish Government has decided to create an abbreviated incorporation procedure.
ABBREVIATED PROCEDURE
On the 29th of May, 2015, the Spanish Government passed a Royal Decree Law regulating the essential matters affecting the telematic incorporation of limited liability companies (Sociedad Limitada). The aim is at accelerating the formalities involved in the incorporation of this type of company.
This Royal Decree Law has its roots in the 2013 Entrepreneurs’ Act, which foresaw the incorporation of limited liability companies with standard by-laws, by means of a notarial public deed and using the so called DUE (Unified Electronic Document).
In short, the incorporation of the company is carried out by means of a telematic system controlled by an administrative body in charge of regulating the incorporation of companies, named CIRCE. This system allows the incorporation of the company by means of a notarial public deed, but the novelty is that the terms for its incorporation are extremely short (12 working hours) and the process of registration of the public deed with the Commercial Registry is 6 working hours, instead of the current 15 working days.
This regulation sets forth specific issues and conditions that the notarial public deed is to contain, such as the “standard” by-laws. In this way, the notary public and the Commercial Registry may comply with the said ultra short terms, since they will not have to go through their content in depth (since the document is standard), but instead they may focus on formal matters before proceeding to the granting of the public deed and its registration.
Likewise, to materially attain a speedy incorporation process, the Government has put in place the Electronic Notarial Agenda, which should be up and running by September 2015. This Agenda will be supervised by the Ministry of Justice and will allow any interested person to learn about the availability of notaries for making an appointment for incorporating the company. The applicant will be able to get a binding appointment in a matter of minutes.
Finally a Corporate Name Data Base is created, dependant of the Central Commercial Registry, which is the body in charge of granting the exclusive right to use a given name for a new company before it is incorporated or whenever the name is intended to be changed. According to the law, the company name application can be filed electronically and the answer from the Central Commercial Registry usually comes within some 3 working days. However, the success of this application depends on the availability of the requested names, and the trouble lays with the fact that there is no data base which the applicant can consult to check the availability in advance. Thanks to the new Corporate Name Data Base, the applicant shall be entitled to consult a data base of about 1,500 corporate names, thus making sure that the selected name will be successfully granted.
Be that as it may and the apparent advantages of this new abbreviated system, it is worth pointing out that it will not suit or be advisable for all companies and in all cases, for the following reasons,
a) The system does not apply to joint stock companies or any other company different from limited liability companies.
b) The by-laws shall be those officially approved, thus the partners wishing to have a more sophisticated way of organising the company, say for instance a particular management structure or a specialised corporate object, shall not fit into this abbreviated system.
c) Given the simplicity of the system, it remains to be seen if there will be further formal requirements for the incorporation of companies formed by foreign investors.
d) There are reasonable doubts about the effectiveness and practicality of the Notarial Electronic Agenda, in as much as the availability of a given notary may prove useless for the applicant, due to geographical or locomotion reasons, especially whenever the available notary does not have its office in large cities.
Eduardo Vilá
Vilá Abogados
For more information, please contact:
5th June 2015
