Setting up a company is easy, quick and cheap

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.

Crowdfunding

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.

Entrepreneur Service Points

Bureaucracy reduced to a minimum. Carrying out all the administrative procedures for opening a company is increasingly simple thanks to the Entrepreneur Service Points, a series of in-person and telematic offices that handle the processing of almost all the documents required to set up a company for the first time. Through this one-stop shop, the entrepreneur can carry out the necessary procedures for the start, exercise and termination of his or her business activity.

The Entrepreneur Service Points (PAE) are responsible for facilitating the creation of new companies through the provision of information services, processing of documentation, advice, training and support for business financing. Specifically, they focus their work on two pillars:

Providing face-to-face information and advice services to entrepreneurs in the definition and telematic processing of their business initiatives.
Initiating the administrative process of incorporating the company through the Single Electronic Document (DUE).

Specifically, the information that can be provided by a PAE is related to the characteristics, the legal framework, the most important commercial aspects, tax advantages, accounting aspects, processing systems and applicable regulations of the most common commercial companies.

They can also provide guidance to entrepreneurs on the aid and incentives for which their business may be eligible, the applicable social security system and, in general, any doubts that may arise during the opening of their business.

The PAE can depend on public or private entities, professional associations, business organisations or chambers of commerce. These centres must sign an agreement with the Ministry of Industry, Trade and Tourism in order to operate as such.

Madrid Region manages three face-to-face Attention to Entrepreneurs offices: two in Madrid and one in Getafe.

  • PAE CENTRO DE EMPRENDEDORES GETAFE
    Avenida de Arcas del Agua, 2, GETAFE
    Horario: de 9:00h a 14:00h
    Contacto: 91 276 11 66 / emprendedores@madrid.org
  • PAE E-Social HUB:
    Calle Reina Mercedes 1-3, MADRID.
    Horario: Lunes a Jueves de 09.00 a 14.00 y de 15.00 a 18.00 y Viernes de 09.00 a 14.30.
    Contacto: 91 737 51 57 / esocialhub@esocialhub.es

In addition, the Directorate General for Industry and Small and Medium-sized Enterprises of the Spanish Ministry of Industry, Trade and Tourism offers, on its CIRCE portal, a telematic Support Point for Entrepreneurs where you can access all the information available for entrepreneurs, as well as the telematic processing of many documents.