In Spain it is now possible to set up a limited company for just one euro. On 19 October, Law 18/2022, of 28 September, on the creation and growth of companies, better known as the “Crea y Crece” (Create and Grow) Law, came into force. This law, passed in the summer in the Spanish Congress of Deputies, seeks to promote the creation of companies and encourage their expansion through regulatory improvements, the elimination of obstacles to economic activities, the fight against commercial delinquency and financial support for business growth.
The most important measure included in this law is the incorporation of a Limited Liability Company with a share capital of €1. Until now, the legal minimum required was €3,000. This measure is incorporated with two safeguards to protect the interest of creditors:
- A figure at least equal to 20% of the profit will be allocated to the legal reserve until this reserve reaches three thousand euros.
- In the event of liquidation, voluntary or compulsory, if the company’s assets are insufficient to meet the company’s obligations, the shareholders will be jointly and severally liable up to €3,000.
The law seeks to boost the digitalisation of the public administration, promoting the creation of companies telematically through the Information Centre and Business Creation Network (CIRCE). This would reduce incorporation times, registration and notary costs.
Fight against late payments
The regulation includes measures to combat late payment in commerce, one of the main causes of the liquidity and profitability problems of many Spanish companies, especially SMEs.
- It promotes electronic invoicing, extending the obligation to request it within the framework of a supplier-customer relationship. This provides traceability and control of payments between companies, obtaining reliable and agile information to ascertain effective payment deadlines, an essential requirement for effectively reducing late payments.
- Incentives to reduce payment periods. For example, they will be taken into account when assessing the granting of a public subsidy.
- Creation of the National Late Payment Observatory, which will be in charge of monitoring and developing payment data.
Improvements for business financing
The law incorporates measures to improve the instruments for financing business growth as an alternative to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.
National regulation is adapted to European regulations, introducing more flexibility for these platforms to provide their services:
- Possibility of offering individualised loan portfolio management service.
- Single individual investment limit per project for retail investors.
- Project limit of €5M.
- Possibility to create pooling mechanisms for investors.
Collective investment and venture capital
The type of companies in which Venture Capital Entities can invest is extended:
- SMEs: The maximum number of employees of invested companies is extended: from 250 to 499.
- Financial companies with a high technological component are included
European long-term investment funds (ELTIFs) are incorporated.
- Both SGIICs (Sociedades Gestoras de Instituciones de Inversión Colectiva) and SGEICs (Sociedades Gestoras de Entidades de Inversión Colectiva de Tipo Cerrado) may be SLs and may administer, represent, manage and market ELTIFs.
- Closed-ended Loan-type Collective Investment Undertakings whose main purpose is to invest in invoices, loans, credit and commercial papers commonly used in the course of trade are created.
- The minimum initial paid-up share capital of the ECR is now 25% (€300,000 for ECRs; €225,000 for SME ECRs). The remaining 75% must be paid up within 12 months of registration with the CNMV.