Since the amendment to Art. 4 of the Ley de Sociendades de Capital came into force on October 19, 2022, it has been possible to set up a Spanish limited liability company, known as a Sociedad Limitada (SL), for just one euro. The aim of the amendment is to promote the formation of companies and make it easier to get started.
According to Art. 4 of the Ley de Sociendades de Capital, a prerequisite for the establishment of a €1 SL is the payment of a reserve totaling €3,000. To this end, the SL is obliged to pay in 20% of its annual profit as a reserve each year until the minimum capital of a "normal" SL reaches €3,000. Until the reserve of € 3,000 is reached, the shareholders are jointly and severally liable with their private assets for the difference between the reserve reached and a maximum of € 3,000. The option of setting up a €1 SL is therefore worthwhile for people with limited financial resources.
However, a €1 SL does not offer the business partner any security, as there is no obligation to disclose the value of the mandatory reserve to third parties. This could deter companies and potential investors, customers and business partners from doing business with the €1 SL. Another disadvantage is that it could be difficult to obtain government subsidies and support due to doubts about its financial stability and performance.
Business partners of the 1€-SL therefore only have the option of securing themselves through contractual arrangements in the form of advance payments or collateral, such as a guarantee in accordance with Art. 1822 Código Civil.
Author:
Dr. Dominic John Patrick Porta, LL.M.
Attorney at Law (Düsseldorf Bar Association n° 52954)
Abogado (ICAIB n° 6645)
dominic.porta@anwaltmallorca.eu
www.anwaltmallorca.eu
Do you need the support of a German lawyer in Mallorca?
Porta & Associates is a law firm in Palma de Mallorca. Dr. Dominic Porta advises you as a German lawyer in Mallorca on all matters relating to house purchase, rental and licenses. The modern law firm in Palma also represents its clients in corporate law, inheritance law, contract law and tax law.
More information and contact can be found at www.anwaltmallorca.eu
