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| Frequently Asked Questions |
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| How long does it take to set up? |
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| Once the certificate from the Companies Registry giving clearance for the Company name is available, it can be set up in a fortnight. |
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| What taxes are payable, and when? |
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We take it upon ourselves to pay the taxes; the time allowed is 30 days from the date of signing. The taxes are Stamp Duty Tax (1% of the Company capital) and the fees payable to the notary's office and Companies Registry. |
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| Is there a limit to the number of shareholders the Company may have? |
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No, there can be any number of them and moreover, they may be physical persons or legal entities.
The Company may be set up with a single founding shareholder, in which case it's known as a One-Person Company (Sociedad Unipersonal). |
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| May the Company have several company objects? |
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Yes, there's no limit. We recommend that the shareholders consider carefully what lines of business the Company is going to carry on - not only at present but also in the future; because if, later on, they decided to add a company object, it would be necessary to make a deed of modification of the company objects, and hence pay more fees to the notary's office and Companies Registry. |
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| Address for the Company |
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| It's a legal requirement that the Company have a registered address in Spain. |
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| When is the €3,005.06 deposited with the bank? |
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Before the deed of incorporation is signed a bank account needs to be opened in the name of the "company in formation" and this money deposited. The bank will issue a bank certificate of this deposit. |
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| Can non-monetary capital be put in? |
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It's possible to put in assets, or rights to which a financial value can be assigned. The founders, shareholders and whoever acquires a paid-up shareholding through putting in non-monetary capital, are jointly and severally answerable to the Company and the creditors for the reality of this non-monetary capital and its valuation, unless it's been valued by an expert. |
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| Work or services cannot be put in as capital. |
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| Can there be more than one director? |
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Yes, there can be one or several. Normally, one or two are chosen, because the director will have to pay the monthly Social Security contribution (approximately €250) in Spain. It's very important for the director(s) to have a NIE (Foreigner's Tax ID Nº). We can get it, without the director's having to come to Spain, through a notarial power of attorney. |
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| Is the job of director a paid one? |
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| The job of director is done free unless the Articles of Association specify otherwise; should there be a payment and should this consist of a share of the profits, it may not be more than 10% of the profits distributable between the shareholders. |
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| How do the Administrative Organs work? |
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The Company may be run by a sole Director; by two or more Directors acting jointly and severally, or Co-directors; or by a Board of Directors made up of a minimum of three and a maximum of twelve board members. |
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The Articles of Association may set out the different possible methods of running the Company, giving the Board the facility to opt for any of them without amending the Articles. The law expressly forbids the directors to be in the same line of business as that which constitutes the company object, except with the Board's express permission. The term of office may be indefinite, depending on what's agreed. |
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| How does the Board take decisions? |
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The general rule is that agreed decisions are adopted by a majority of the validly cast votes (simple majority). The Articles of Association may increase the number of votes required for reaching certain decisions, or require a certain number of shareholders to vote in favour of a decision. Each share confers the right to cast one vote.
All the company's agreed decisions must be minuted, and these minutes may be notarised. |
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What are the prestaciones accesorias? [(literally, "ancillary services": services rendered by the shareholders to the Company over and above their actual duties] |
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These are agreements between shareholders and the Company which are set out in the Articles of Association.
Another type of services over and above the shareholders' actual duties may be set out: the duty to perform certain trading tasks, not to carry on certain lines of business, and so forth. For example, it may be agreed that the shareholders shall not compete with the Company as individuals.The "ancillary services" may consist of: giving, doing, or not doing.
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| When may profits be distributed? |
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Before one proceeds to distribute the profits, the law requires the equivalent of 10% of the profit to be applied to the Statutory Reserve Fund, at least until that Fund reaches 20% of the company capital.
Dividends taken out of the profits may only be distributed if the net book value of the assets is not, as a result of the distribution, less than the company capital. |
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| When can the capital be increased? |
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An increase in capital has to be agreed by the Board and may be done by putting in further capital - either monetary or non-monetary - or by capitalising reserve funds or profits. |
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