One of the requirements for bringing a deed of incorporation of a Spanish company or the execution of an increase of share capital of an existing company into public before a notary is the full disbursement of the nominal value of the share capital (participations) for limited liability companies, and at least a quarter of the nominal value of the shares for joint stock companies – articles 78 and 79 of the Spanish Capital Companies Act (LSC).
It is common knowledge that corporate contributions may be cash or non-cash contributions (articles 61 to 72 of the LSC). For cash contributions, article 62 of the LSC (which reflects the formalities that are practically identical to those set forth in article 189 of the Commercial Registry Regulations) states that cash contributions must be demonstrated before the notary authorising the public deed of incorporation of a company or increase of share capital, or in the case of joint stock companies, the public deeds reflecting the successive payments.
The question is how should cash contributions be demonstrated and where should they be paid in.
Regarding the means of accreditation of the contributions, article 62 of the LSC requires the demonstration of a certification of the deposit of the corresponding amounts in the name of the company with a credit institution, which the notary shall incorporate into the public deed, or by way of the delivery thereof to the notary himself so that he may establish it on its behalf, which is less common.
In short, the paying in of the cash contribution with a credit institution must be demonstrated (therefore, the payment into other entities or the deposit of the contribution with the notary are not acceptable).
In order to elaborate on the meaning of “credit institution” for the purposes of the LSC, the recent resolution of the Directorate General of Registries and Notaries (hereinafter “DGRN”) dated 7th September 2016, published in the Official State Gazette (BOE) on 30th September 2016 (BOE-A-2016-8947) is of particular interest.
In this case, the resolutions adopted by the universal general meeting of a limited liability company, by which a share capital increase was decided, by means of the creation of new shares (participations), were granted in a public deed. Said shares (participations) were paid in by way of cash contributions, which were demonstrated by the certification of deposit of said amount in the name of the company with a credit institution.
However, the registration of said public deed was not allowed by the commercial and movables registrar of Madrid, on the understanding that the certificate did not comply with article 62 of the LSC, given the fact that the depositary bank was foreign. In light of the above, the public deed of increase of share capital was the object of clarification by way of another public deed which incorporated a certificate issued by the Swiss Financial Market Supervisory Authority (FINMA) indicating that the Swiss bank in question was authorised to act as a bank and securities dealer. However, the Commercial Registry maintained its refusal.
An appeal was filed against the decision of the registrar which was resolved in the aforementioned resolution dated 7th September 2016, published in the Official State Gazette (BOE) on 30th September 2016 (BOE-A-2016-8947). In said resolution, the DGRN declares that, for the purposes of article 62.1 of the LSC, the fact that the depositary bank is foreign does not invalidate the certification, issued and provided. In this way, it states that the proof legally required which should dominate any analysis of the legality of the resolution adopted for an increase of share capital for the purposes of formalisation (notary) or registration (registrar), is that the funds have been effectively paid in to the company by way of payment into an account with a credit institution in the company’s name, and that it is contrary to law to request further formalities which impose unnecessary or repetitive charges.
Finally, the DGRN concludes that the cash contributions should not necessarily be deposited in an entity entitled to operate in Spanish territory, in the absence of a rule which expressly prevents it.
In conclusion, provided that it can be demonstrated that the depositary credit entity is authorised to act as such in accordance with its nationality, the payment of the cash contributions into foreign bank accounts shall be valid for formalising the incorporation of a Spanish company or a share capital increase in an existing company in a public deed granted before a notary public.
Carla Villavicencio
Vilá Abogados
For more information, please contact:
28th October 2016
