I.- INTRODUCTION
Employee-owned companies are companies in which the majority of its share capital belongs to employee shareholders of the company. This type of company is regulated in the Employee-owned companies Act 4/1997, and in Royal Decree 2114/1998, regarding the registration of joint stock employee-owned companies.
II.- MAIN CHARACTERISTICS
– Company types. Employee-owned companies may be incorporated (or converted) as a limited liability company (“employee-owned limited company” or “ELC”), or a joint stock company (“employee-owned joint stock company” or “EJSC
– Share capital. Minimum share capital varies depending on whether the employee-owned company is incorporated as an ELC (3.000 €) or an EJSC (60.000€), said share capital being in turn divided into participations or nominative shares, respectively. Likewise, the participations or shares may take on one of two forms: employee, which are subscribed by the employee shareholders of the company and must represent more than 50% of total share capital; and general, which are property of shareholders who do not work in the company. The majority of the share capital must belong to the employee shareholders of the company and no shareholder must hold more than one third thereof (except in cases of the public administration or a non-profit entity, in which case said percentage may be exceeded, without reaching 50% of the share capital).
– Employee shareholders. This type of shareholder must work for the company personally and directly with a permanent employment contract (whether full or part time).
– Non-employee shareholders. The number of hours per year worked by permanent employees who are not shareholders of the employee-owned company may not exceed 15% of the hours per year worked by the employee shareholders (when the company has 25 or more employee shareholders), or 25% (when the company has less than 25 or more employee shareholders).
– Financial regimen. Employee-owned companies are obliged to allocate 10% of the liquid profits of each financial year to a special reserve fund. If they wish to enjoy tax benefits, the percentage of liquid profits allocated to said fund is 25%.
– Tax regimen. Employee-owned companies, which fulfil legal requirements, are entitled to rebates of 99% in certain operations subject to transfer tax (Impuesto de Transmisiones Patrimoniales y Actos Jurídicos Documentados). Likewise, in certain circumstances, they are also free to redeem certain elements of company assets in their Corporate Tax declarations.
III.- CONCLUSION
In practice, employee-owned companies are advisable for small and medium-sized companies or family businesses, who have a corporate object related to basic industry.
Vilá Abogados
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17th May 2013
