Types of companies in Spain
Starting up a business involves having knowledge of the different types of legal forms or companies in Spain in order to know which type of company suits you or which is the right one for you. When starting up a business, you can do so as a self-employed person or by creating a company..
In order to know which type of companies in Spain is the most appropriate, it is important to take into account the type of activity to be carried out.
Limited company(LTD)
This is the most common type of companies in Spain for SMEs, as entrepreneurs are liable with their own assets for any debts incurred by the company and the company is limited only to the capital contributed, which must be a minimum of 3,000 euros.
If it is formed by only one person, it is called a Sociedad Limitada Unipersonal, but the partners can be either employees of the company or capital partners. In fact, it is possible to set it up in a short period of time through electronic procedures. In addition, the taxes for this type of company are lower than those of a self-employed person. However, the shares cannot be easily transferred as the partners have priority, so including new investors can be a disadvantage.
Public limited company (PLC)
This is the second most common type of commercial company in Spain. In fact, some activities such as pharmaceutical companies or banking companies, among others, require this type of company. However, it is not so easy to create due to its requirements. A minimum capital of 60,000 is required for its incorporation, with 25% of the total amount to be paid up at the time of the public deed, although it can be set up with just one person.
Although this type of company is divided into shares that are freely transferable, the partners have limited liability with respect to the capital contributed and can be listed on the stock exchange. A negative point is that the presence of outsiders cannot be controlled and the incorporation procedure is more complex than that of a limited company.
General partnership
This is a type of partnership in which the partners play a very important role. It must be formed with a minimum of two partners and does not require a minimum amount of capital. All partners must act jointly and participate in the partnership according to the agreement. In this case, each partner is personally liable in case of debt. However, the company is autonomous in terms of its assets, so that the company is liable for debts from its own assets, just as the partners are jointly and severally liable for subsidiary debts.
There are two types of partners in this company: capitalists and industrialists. The former manage the company, provide the labour and capital and are affected by both profits and losses. The latter only provides the labour value and will only have access to the profits.
Worker-owned company
A minimum of two partners is required for the creation of this company, although no partner may hold more than one third of the capital. Self-employed workers may join together to form a worker-owned company with special characteristics and certain tax benefits.
The worker-owned company is a private commercial company in which the workers provide their services through an indefinite contractual relationship. Two types can be distinguished: public limited companies (sociedades anónimas) and private limited companies (sociedades limitadas). The former have greater legal flexibility as the amount of the shareholders’ contributions is not restricted and they are 99 % exempt from Transfer Tax and Stamp Duty. In the case of limited companies, the employees who are partners have control of the company.
Limited partnership
The formation of a limited partnership requires the participation of at least two partners and there is no set maximum limit.
A limited partnership is a simple limited partnership in which the partners contribute work, but are not obliged to contribute capital. It is governed by corporation tax in tax terms, but there is no minimum capital requirement for its formation.
There is also the limited partnership by shares, which differs from the previous one in that a minimum capital of 60,000 euros divided into shares is required.
Cooperative
The cooperative society has a social character as it is created for the purpose of creating, maintaining and improving jobs for its members. Each member has the possibility of voting regardless of the capital contributed.
Cooperatives have both state and autonomous community scope depending on the applicable legal framework and must be registered in the Register of Cooperatives of the respective autonomous community. A minimum of three members is required for their creation, and none of them may hold more than 45% of the capital. There are two types of cooperative: first- and second-degree cooperatives. First-degree cooperatives have natural or legal persons as members. Second-tier cooperatives, on the other hand, have other cooperatives as members.
Cooperatives have statutes which determine the compulsory contributions and the minimum capital. Moreover, in the event that the assembly issues securities for voluntary contributions, these are freely transferable between members and associates. In fact, a member who leaves the cooperative has the right to demand an updated reimbursement of the compulsory contributions.
