Types of Companies: Sociedad Limitada (S.L)

Anglo-Spanish Chartered Accountants

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Types of Companies in Spain

Sociedad Limitada (S.L.)

The company name must be different from any other company (certified by the Central Mercantile Registry).

The minimum number of shareholders is one. When a company only has one shareholder it is described as a Sociedad Limitada Unipersonal (S.L.U.).

The minimum share capital required to incorporate a “sociedad limitada” amounts to €3,005.06. The full amount of the share capital must be paid out, either in cash or in property. The share capital is divided into nominal shares “participaciones nominativas”.

A limited company has its own legal status as an entity separate from its shareholders.

The shareholders enjoy limited liability, thus their personal exposure is limited to the shareholder’s funds. It must be noted, however, that directors can be liable with their personal wealth should they trade unlawfully.

The profits of the “sociedad limitada” are taxable via corporation tax.

In summary, the main advantages of this legal form are as follows:

  • Limited liability.
  • Individuals may be shareholders.
  • May have a single shareholder (S.L.Unipersonal).
  • Legislation is less strict than for S.A.s
  • It is most commonly chosen.

The main disadvantages of this legal form are as follows:

  • May not be suitable for certain businesses, such as banks and insurance companies.
  • Incorporation can be lengthy as it usually takes between 20 and 30 days.
  • There are relatively high bureaucratic burdens in terms of compliance obligations, such as preparation of annual accounts.
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