How limited liability companies work in Spain

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1. In a limited liability company (sociedad limitada), the owners are not personally liable for the company's debts. The minimum capital is 500,000 pesetas and it must be fully paid in from the start.
2. The company name must include "Sociedad de Responsabilidad Limitada" or the abbreviations S.R.L. or S.L. The capital is divided into ownership units (participaciones), which are not shares and cannot be traded on the stock market.
3. The company is created through a public deed before a notary and its registration in the Mercantile Registry (Registro MercantilRegistro Mercantil The official registry where companies and their key information are recorded so it is public.). It can only be declared void for very specific reasons, such as an illegal purpose or capital not fully paid in.
4. Selling ownership units to outsiders follows set rules: by default, the company can refuse consent if it names buyers. The company's bylaws may restrict these sales, but they cannot make them completely free.
5. Decisions are adopted by majority vote, and major decisions, such as amending the bylaws or merging the company, require higher majorities, of more than half or two thirds of the votes.
6. A company may have a single owner, from its creation or later. If the single-owner status is not registered within six months, that owner is personally liable for debts incurred during that period.
7. The company is dissolved for reasons such as the end of its set term, losses that reduce its assets below half its capital, or paralysis of its governing bodies. Dissolution opens a liquidation period to pay debts and distribute what remains.
8. The law takes effect on June 1, 1995 and applies to all limited liability companies, existing or new. Older companies have three years to adapt their bylaws.

Who it affects

• Owners of limited liability companies, current and future: They must know they are not personally liable for company debts, that capital must be fully paid in, and that there are rules for selling their ownership units.
• People who want to start a business: They must create the company through a public deed, register it in the Mercantile Registry within two months, and keep a Register of Members.
• Directors of limited liability companies: They must manage diligently, call general meetings, and are personally liable if they fail to seek dissolution when required.
• Creditors of the company: They can demand guarantees before capital is returned to owners, and have information and objection rights.

Words worth knowing

Participación social

Each of the units into which the capital of a limited liability company is divided. It is similar to a share in a public limited company, but it cannot be freely traded on the stock market.

Estatutos

The company's internal rules: its name, its business purpose, its registered office and how it is organized.

Registro Mercantil

The official registry where companies and their key information are recorded so it is public.

Junta General

The meeting of all the owners where the company's major decisions are made.

Prestaciones accesorias

Work or other obligations that the bylaws may impose on some owners, in addition to contributing money.

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