{"id":2641,"date":"2020-01-24T14:48:37","date_gmt":"2020-01-24T14:48:37","guid":{"rendered":"https:\/\/vila.es\/en\/?p=2641"},"modified":"2020-10-13T10:30:12","modified_gmt":"2020-10-13T10:30:12","slug":"how-to-determine-the-corporate-purpose-ii","status":"publish","type":"post","link":"https:\/\/vila.es\/en\/corporate\/how-to-determine-the-corporate-purpose-ii\/","title":{"rendered":"HOW TO DETERMINE THE CORPORATE PURPOSE? (II)"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong> I. Applicable Rules<\/strong><\/p>\r\n<p style=\"text-align: justify;\">Both article 23 of the Spanish Capital Companies Act and articles 117 (for joint-stock companies) and 178 (for limited liability companies) of the Commercial Registry Regulation require that the <strong>corporate purpose<\/strong> should be recorded in the company bylaws which determine the activities included therein.<\/p>\r\n<p style=\"text-align: justify;\">This mention is essential for the registration of the bylaws with the Commercial Registry, and hence, for the incorporation of any company.<\/p>\r\n<p>&nbsp;<\/p>\r\n<p style=\"text-align: justify;\"><strong>II. Case Law of the DGRN<\/strong><\/p>\r\n<p style=\"text-align: justify;\">The Directorate General for Registers and Notaries (DGRN) understands that <u>the determination of the corporate purpose should sufficiently delimit an <strong>economic sector or a type of commercial activity<\/strong><\/u> legally or corporately distinguished (in its Resolution dated 9<sup>th<\/sup> October 2018, among many others).<\/p>\r\n<p style=\"text-align: justify;\">Two limitations set forth by the Commercial Registry Regulation must be added to the aforementioned articles, as they prohibit the following from being included in the corporate purpose:<\/p>\r\n<ul style=\"text-align: justify;\">\r\n<li>\u201c<em>legal acts necessary for the carrying out or development of the activities indicated therein<\/em>\u201d, as this is a dispensable mention, given that the scope of the directors&#8217; power of representation extends to all acts included in the corporate purpose (in accordance with article 234.1 of the Spanish Capital Companies Act); and<\/li>\r\n<li>\u201c<em>the carrying out of any other lawful trade activities or the use of generic terms with a similar meaning<\/em>\u201d, in order to avoid the corporate purpose from being undetermined or generic.<\/li>\r\n<\/ul>\r\n<p style=\"text-align: justify;\">In this regard, the DGRN considers that activities formulated in general terms encompass more specific activities, which requires specific definition so that some of them may remain excluded from the corporate purpose, and not the other way round.<\/p>\r\n<p style=\"text-align: justify;\">The aforementioned case law, combined with the fact that the company must meet the requirements that make viable the complete development of the activities, which integrate the corporate purpose, as from the founding moment (and not when they are effectively developed in the future), involves the need to expressly exclude from the bylaws those activities for the exercise of which special regulations are required, when there is no compliance with such regulations.<\/p>\r\n<p style=\"text-align: justify;\">Thus, for example, professional activities for the performance of which an official university qualification is necessary cannot be included in the corporate purpose, and therefore falls within the mandatory scope of Law 2\/2007 of 15<sup>th<\/sup> March on professional companies, unless it is expressly stated that it constitutes a media or profit communication company or an intermediary.<\/p>\r\n<p>&nbsp;<\/p>\r\n<p style=\"text-align: justify;\"><strong>III. Conclusion<\/strong><\/p>\r\n<p style=\"text-align: justify;\">One solution, admitted by the DGRN, consists of including an exception in the bylaws, which excludes all activities, which for one reason or another, are not lawful or possible within the contemplated genre, without this implying an empty or illegal expression, but, on the contrary, contributing to the specification of the corporate purpose by way of exception.<\/p>\r\n<p style=\"text-align: justify;\">On the other hand, if the will of the partners\/shareholders is to carry out a very specific activity, then only said activity should be included in the corporate purpose, instead of including a general activity which would require specific stipulations.<\/p>\r\n<p style=\"text-align: justify;\">For more information on how to determine the corporate purpose and CNAE number (clasificaci\u00f3n nacional de actividades econ\u00f3micas \u2013 national classification of economic activities) a <span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/vila.es\/en\/blog\/determine-corporate-object-can-business-activity-changed-without-modifying-bylaws\/\">previous article<\/a> <\/span>published in May 2018.<\/p>\r\n<p style=\"text-align: justify;\">\u00a0<\/p>\r\n<p style=\"text-align: justify;\">\u00a0<\/p>\r\n<p style=\"text-align: justify;\">Carla Villavicencio<\/p>\r\n<p>Vil\u00e1 Abogados<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>For more information, please contact:<\/p>\r\n<p style=\"text-align: justify;\"><a href=\"mailto:va@vila.es\"><span style=\"color: #3366ff;\">va@vila.es<\/span><\/a><\/p>\r\n<p style=\"text-align: justify;\">\u00a0<\/p>\r\n<p style=\"text-align: justify;\">24<sup>th<\/sup> January 2020<\/p>\r\n\r\n\r\n\r\n<p style=\"text-align: justify;\">\u00a0<\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>I. Applicable Rules Both article 23 of the Spanish Capital Companies Act and articles 117 (for joint-stock companies) and 178 (for limited liability companies) of the Commercial Registry Regulation require that the corporate purpose should be recorded in the company bylaws which determine the activities included therein. This mention is essential for the registration of  [&#8230;]<\/p>\n","protected":false},"author":4,"featured_media":4734,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[73],"tags":[],"class_list":["post-2641","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>HOW TO DETERMINE THE CORPORATE PURPOSE? (II) - Vil\u00e1 Abogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/vila.es\/en\/corporate\/how-to-determine-the-corporate-purpose-ii\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"HOW TO DETERMINE THE CORPORATE PURPOSE? (II) - Vil\u00e1 Abogados\" \/>\n<meta property=\"og:description\" content=\"I. Applicable Rules Both article 23 of the Spanish Capital Companies Act and articles 117 (for joint-stock companies) and 178 (for limited liability companies) of the Commercial Registry Regulation require that the corporate purpose should be recorded in the company bylaws which determine the activities included therein. 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