Reform of commercial registry, accounting and company rules

Automatic summary, not yet reviewed

1. The rules of the Mercantile Registry in the Commercial Code are rewritten: what must be registered, where it operates, when registration is mandatory and what effects it has. The Registry is public, and businesses must state their registration details on invoices and correspondence, with fines if they fail to do so.
2. The accounting rules for businesses are rewritten: mandatory books (Journal and Inventory and Annual Accounts), how to have them legalized, a duty to keep them for six years, and confidentiality of the books except in specific cases.
3. Annual accounts (balance sheet, profit and loss account and notes) are regulated, along with valuation rules and consolidated accounts for groups of companies, including cases where consolidation is not required.
4. Much of the Public Limited Companies Act is rewritten: minimum capital of ten million pesetas, company formation, contributions, shares (including non-voting shares), capital increases and reductions, annual accounts, audits and dividend distribution.
5. Transformation, merger and demerger of public limited companies are regulated, with merger plans, independent expert reports, creditor opposition rights and nullity rules. General meetings, challenge of resolutions, directors and grounds for dissolution are also updated.
6. The Limited Liability Companies Act is adapted: minimum capital of 500,000 pesetas fully paid in, rules for directors and meetings, a members' register, annual accounts, merger, demerger and dissolution.
7. Convertible bonds are regulated, and a new additional provision covers listed shares: a 5% capital limit for buying own shares, notification to the National Securities Market Commission, and representation by book entries.
8. Existing companies must adapt their bylaws and capital to the new minimums before June 30, 1992, with fines and automatic dissolution if they fail. The Act enters into force on January 1, 1990, and the Government must approve consolidated texts of the public limited and limited liability company laws.

Who it affects

• Sole traders and commercial companies: Must register, keep orderly accounting, prepare annual accounts and adapt their bylaws and capital to the new minimums within the set deadlines.
• Existing public limited, limited liability and limited partnership by shares companies: Must raise capital to the legal minimum (ten million or 500,000 pesetas depending on the type) or convert to another form, or they are automatically dissolved.
• Parent companies of corporate groups: Must prepare consolidated accounts and have them audited when they control other companies, with some exceptions.
• Shareholders and members: They gain stronger rights: information, pre-emptive subscription, withdrawal in certain cases, challenge of resolutions and liability actions against directors and auditors.
• Creditors and third parties: They can oppose mergers and capital reductions until their credit is secured, and consult the Mercantile Registry.

Words worth knowing

Registro Mercantil (Mercantile Registry)

Official registry where businesses and companies and their key acts are recorded, making them public and enforceable against third parties.

Cuentas anuales (annual accounts)

Documents summarizing the company's yearly financial situation: balance sheet, profit and loss account and notes.

Cuentas consolidadas (consolidated accounts)

Accounts showing the financial situation of a group of companies as if it were a single company.

Dividendos pasivos (unpaid capital calls)

The part of the capital that a shareholder has not yet paid to the company.

Anotaciones en cuenta (book entries)

A way of representing shares through entries in an electronic register, without physical certificates.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries