The formation of a commercial company is a fundamental step for entrepreneurs and businesses, outlining its legal and operational structure. This article breaks down the process, from initial requirements to registration in the Commercial Registry, offering a clear guide for its formation.
Before continuing, we must mention that it is possible to form commercial companies in Spain online. To do so, you should contact our experts at notario.org to begin the procedures.
Definition and Types of Commercial Companies
Commercial companies are legal entities formed by one or more persons who contribute capital to fulfill a common objective, generally of a commercial nature. These companies are characterized by having capital divided into shares, with the liability of partners limited to the capital contributed. This type of legal structure offers clear benefits, such as protection of the partners' personal assets against debts or claims against the company.
Main Types of Commercial Companies:
- Public Limited Company (S.A.): Characterized by the division of share capital into shares, it allows partners to freely transfer their shares and limits their liability to the amount invested. It is ideal for large business projects, requiring a minimum capital for its formation.
- Limited Liability Company (S.R.L. or S.L.): In this type, the share capital is divided into ownership interests, which cannot be incorporated into negotiable securities, making their transfer more difficult. The liability of partners is limited to the capital contributed, and it is suitable for small and medium-sized enterprises (SMEs).
- Simplified Stock Company (S.A.S.): It offers great flexibility in its organizational structure and in the transfer of shares, allowing a customized configuration according to the needs of the partners. Liability is limited to the capital contribution, being an attractive option for entrepreneurs looking to simplify the formation process.
Each type of commercial company has specific requirements for formation, operation and management, adapting to different business needs. The choice between these types will depend on factors such as business size, number of partners, the need to attract investments and the long-term vision of the company. Understanding these differences is crucial for making informed decisions and establishing a solid foundation for business success.
Legal Requirements for Formation
The formation of a commercial company must comply with a series of specific legal requirements, established to guarantee transparency, legal security and the proper functioning of these entities in the commercial sphere. These requirements are fundamental for the validity of the company before third parties and for its registration in the Commercial Registry, an essential element for acquiring legal personality.
Common General Requirements:
- Public Deed: The formation of the company must be formalized in a public deed, a document that contains the company's bylaws, the identity of the partners, the share capital, the distribution of interests or shares, and the administrative bodies.
- Minimum Share Capital: Depending on the type of company, a minimum share capital is required for its formation. This capital must be paid up at a specific percentage at the time of formation and deposited in a bank account in the name of the company in formation.
- Registration in the Commercial Registry: After signing the public deed, it is mandatory to register the company in the Commercial Registry of its locality. This step is crucial for the company to acquire legal personality, be able to operate legally and be subject to taxes.
- Obtaining Tax ID: The company must apply for the provisional Tax Identification Number (NIF) to be able to carry out any type of operation. Once registered in the Commercial Registry, the definitive NIF will be obtained.
- Specific Licenses and Permits: Depending on the economic activity the company will develop, it may be necessary to obtain specific licenses and permits that authorize its operation in certain regulated sectors.
Specific Aspects by Type of Company:
- For Public Limited Companies (S.A.), the minimum share capital is generally higher than in limited liability companies, and the subscription and integration of shares at a significant percentage is required before its registration in the Commercial Registry.
- In Limited Liability Companies (S.R.L. or S.L.), the process is similar, but with a more accessible minimum share capital, seeking to facilitate the formation of small and medium-sized enterprises.
- Simplified Stock Companies (S.A.S.) usually have a more flexible formation process, allowing greater freedom in defining bylaws and company administration.
Complying with these requirements is not only fundamental for the legality of the company but also protects partners and third parties, ensuring a clear and safe framework for the development of commercial activities.
Steps for the Formation of a Commercial Company
The formation of a commercial company is a structured process that requires following a series of detailed steps to ensure its proper formalization and registration. Although it may vary slightly depending on the specific type of company and jurisdiction, it generally includes the following stages:
Decision of the Partners and Choice of Company Type:
- The future partners must agree to form a company, choosing the type that best suits their needs (S.A., S.L., S.A.S., among others).
Drafting of the Bylaws:
- Drafting a document that will govern the internal functioning of the company, including name, corporate purpose, registered office, share capital, distribution of interests or shares, and administration structure.
Negative Name Certificate:
- Obtaining a certificate that confirms that the name chosen for the company is not being used by another entity, issued by the Commercial Registry.
Opening a Bank Account and Paying Up the Share Capital:
- Opening a bank account in the name of the company in formation to deposit the minimum required share capital.
Signing the Deed of Formation Before a Notary:
- The partners must sign the deed of formation, which includes the bylaws, before a public notary.
Application for Provisional Tax Identification Number (NIF):
- Necessary procedure to carry out operations on behalf of the company before its definitive registration in the Commercial Registry.
Registration in the Commercial Registry:
- Presentation of the necessary documentation, including the deed of formation, to register the company in the Commercial Registry. This step is crucial for the company to acquire legal personality.
Obtaining the Definitive NIF:
- Once the company is registered, the definitive NIF must be requested from the corresponding tax agency.
Legalization of Official Books:
- Legalization of the minute books, shareholders/partners books, and accounting books in the Commercial Registry or before a notary.
Communication of Opening to the City Council:
- Depending on the activity and location of the company, it may be necessary to communicate the opening and obtain specific licenses or permits.
Registration in the Economic Activities Tax (IAE):
- Registration in the census of entrepreneurs, professionals and withholders, obtaining registration in the IAE, necessary for the start of commercial operations.
Registration with Social Security:
- If the company is going to have employees, it must register as an employer with Social Security and register its employees.
These steps represent the general framework for the formation of a commercial company in most jurisdictions. It is essential to carry out these procedures with attention and compliance with applicable regulations to guarantee the legality and solidity of the new entity.
Required Documentation and Its Preparation
The formation of a commercial company requires the preparation and presentation of a series of essential documents. These documents not only serve to legally formalize the company but also establish the operational, administrative and tax bases of the company. Below, the necessary documentation and how to prepare it properly is detailed:
Negative Name Certificate:
- Preparation: Request from the Commercial Registry the certificate that confirms that the name chosen for the company is not already in use by another entity. This step is prior to any other formation procedure.
Bylaws:
- Preparation: Draft a document that details the company name, corporate purpose, registered office, share capital, value of interests or shares, administrative bodies and internal operating rules. The bylaws must comply with current legislation and clearly reflect the structure and operation of the company.
Deed of Formation:
- Preparation: The public deed of formation must be signed before a notary and include the data of the founding partners, the will to form the company, the amount paid up as share capital, the distribution of interests or shares, and the bylaws.
Provisional Tax Identification Document (NIF):
- Preparation: After signing the deed of formation, apply to the Tax Agency for the provisional NIF, necessary to carry out any operation on behalf of the company until obtaining the definitive one.
Registration in the Commercial Registry:
- Preparation: Present the deed of formation, the negative name certificate, and the proof of deposit of share capital in a bank account in the company's name. Once approved, the company will be registered and will acquire legal personality.
Official Books:
- Preparation: Acquire and legalize the minute books, shareholders or partners books and accounting books. These must be presented to the Commercial Registry for legalization or done electronically, according to current regulations.
Activity Licenses and Permits:
- Preparation: Depending on the type of economic activity the company will develop, it may be necessary to obtain specific licenses and permits. This process involves identifying local or sectoral requirements and presenting the corresponding documentation to the competent authorities.
Registration in the Economic Activities Tax (IAE):
- Preparation: Register the company in the census of entrepreneurs, professionals and withholders to obtain registration in the IAE. This procedure is carried out before the Tax Agency and is essential for the start of commercial activities.
Communication of Opening to the City Council:
- Preparation: According to the location of the company, it may be necessary to communicate the opening of operations and, if applicable, request the opening license for the commercial or industrial establishment.
The correct preparation and presentation of this documentation are fundamental steps to ensure the legal and effective formation of a commercial company. It is advisable to have professional advice during this process to ensure compliance with all applicable regulations and avoid possible inconveniences or delays.
Registration and Legal Formalization
The registration and legal formalization of a commercial company are crucial stages that grant the entity its legal personality and the capacity to operate in the market under a defined legal framework. This process involves a series of steps and requirements that must be meticulously fulfilled to ensure the validity and official recognition of the company. Below, how to carry out this process effectively is detailed:
Presentation of the Deed of Formation Before the Commercial Registry:
- Process: After signing the public deed of formation before a notary, it must be presented to the Commercial Registry corresponding to the company's registered office. The documentation will include the deed of formation, the negative name certificate, and proof of the deposit of share capital.
- Objective: Registration in the Commercial Registry is the final step that confers legal personality to the company, allowing it to operate legally, issue invoices, and carry out commercial activities.
Obtaining the Definitive Tax Identification Number (NIF):
- Process: With the company already registered in the Commercial Registry, the definitive NIF must be requested from the Tax Agency. This number is essential for all tax and administrative transactions of the company.
- Objective: The definitive NIF is the company's tax identification before the State and is necessary for tax filing, opening business bank accounts, and formalizing commercial contracts.
Legalization of Official Books:
- Process: The minute books, shareholders or partners books, and accounting books must be legalized in the Commercial Registry. This process can be done physically or electronically, depending on local legislation.
- Objective: The legalization of these books ensures transparency and proper monitoring of the company's operations, complying with legal and accounting obligations.
Communication of Opening and Obtaining Specific Licenses:
- Process: Depending on the type of economic activity and the location of the company, it may be necessary to communicate the opening of operations to the city council and request specific licenses or permits to operate.
- Objective: These licenses and permits ensure that the company complies with local and sectoral regulations, allowing it to carry out its activities within the corresponding legal framework.
Registration with Social Security:
- Process: If the company is going to have employees, it must register as an employer with Social Security and register its workers.
- Objective: This step is fundamental to comply with labor and social security obligations, guaranteeing workers' rights and proper contribution to social protection systems.
Registration in the Economic Activities Tax (IAE):
- Process: The company must register in the census of entrepreneurs and obtain registration in the IAE before the Tax Agency.
- Objective: Registration in the IAE is necessary for the official start of commercial activities and for the proper taxation of the company.
Registration and legal formalization are fundamental steps that consolidate the existence of the company within the legal system, allowing it to develop its activities with full legal security and transparency. It is advisable to have the advice of professionals in commercial and tax law to successfully navigate this process.
Importance of Share Capital in Formation
Share capital constitutes one of the fundamental pillars in the formation of a commercial company. It not only represents the initial economic contribution of the partners for the start of operations but also fulfills key functions in the structure and credibility of the company before third parties. Below, the importance of share capital in the company formation process is explored:
Financial Base for the Start of Activities:
- Share capital provides the economic resources necessary to cover initial expenses and investments required to start the company. This includes the acquisition of goods, services and the coverage of initial operating costs.
Determination of Corporate Participation:
- The contribution to share capital defines each partner's participation in the ownership of the company. This influences the distribution of profits, voting rights and important decision-making within the company.
Limitation of Liability:
- In commercial companies, the liability of partners for corporate debts is limited to the capital contributed. This means that, in case of insolvency, the personal assets of the partners are protected up to the limit of their contribution to share capital.
Credibility and Trust Before Third Parties:
- Adequate share capital reflects financial solidity and generates trust among suppliers, clients, banks and other stakeholders. This facilitates access to external financing, credits and establishes a positive image of the company in the market.
Legal Requirement for Formation and Registration:
- The law requires minimum share capital for the formation and registration of a commercial company. This requirement varies according to the type of company and ensures a minimum of solvency for the start of activities.
Base for Future Growth and Expansion:
- Share capital is not just an initial requirement; its increase over time can finance expansion, the development of new products or services and improve the competitive capacity of the company.
Compliance with Regulatory Obligations:
- The proper formation and maintenance of share capital are essential for compliance with tax and commercial obligations. This includes the presentation of annual accounts, payment of taxes and maintenance of good corporate reputation.
Prudent management of share capital from the formation phase is crucial for the success and long-term sustainability of the commercial company. It represents not only an economic commitment by the partners but also a foundation on which the company is built and developed.
Common Challenges and Solutions
The formation and initial management of a commercial company can present various challenges for entrepreneurs and founding partners. Below, some of the most frequent obstacles are identified and practical solutions to overcome them are proposed:
Choosing the Right Type of Company:
- Challenge: Determining the legal form that best suits the needs of the business, considering aspects such as partner liability, taxation, and the ability to attract investments.
- Solution: Conduct a detailed analysis of the advantages and disadvantages of each type of commercial company, possibly with the assistance of a legal or tax advisor, to make an informed decision.
Initial Share Capital:
- Challenge: Securing sufficient share capital to meet initial legal and financial requirements, without compromising the partners' personal resources.
- Solution: Evaluate various sources of financing, including partner contributions, bank loans, angel investors or venture capital, and government subsidies.
Compliance with Legal Requirements and Bureaucracy:
- Challenge: Navigating the complex legal framework and bureaucratic procedures necessary for the formation and registration of the company.
- Solution: Hire an expert in commercial law to guide the process, ensuring compliance with all legal obligations and optimization of time and resources.
Documentation Management:
- Challenge: Properly preparing and managing all documentation required for formation and registration.
- Solution: Use administrative management services or document management software to organize, present and track the status of necessary documentation.
Defining the Bylaws:
- Challenge: Drafting bylaws that accurately reflect the organizational structure, the rights and obligations of the partners, and the operating rules of the company.
- Solution: Collaborate with lawyers specialized in corporate law to develop customized bylaws that fit the needs and expectations of the partners.
Agreements between Partners:
- Challenge: Establishing clear and fair agreements between partners on management, profit distribution, and conflict resolution.
- Solution: Develop a shareholders' agreement complementary to the bylaws, detailing specific agreements on the operation and decision-making in the company.
Start of Operations and Regulatory Compliance:
- Challenge: Starting commercial operations ensuring continuous compliance with tax, labor and commercial obligations.
- Solution: Establish internal management systems that include accounting, tax compliance and human resources management, supported by technology and professional advice.
Overcoming these challenges requires careful planning, the support of specialized professionals and efficient management. By addressing each obstacle with clear strategies and practical solutions, entrepreneurs can establish a solid foundation for the success and sustained growth of their commercial company.
