In Spain you can now create a company with one euro of capital, be active in hours, all online and without a notary

Last Thursday, the Congress of Deputies approved the Create and Grow Law, with which Spain is among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and promoting restructuring and business viability, among the key milestones of the Recovery Plan. They will be sent to the Senate to complete their parliamentary process.

The Business Creation and Growth Law (“Crea y Crece”) promotes the creation of companies and facilitates their growth and expansion, especially for SMEs. Improvement in the process of business growth is essential, according to recent evidence, to increase productivity, the quality of employment and internationalization.

With this objective, the law reduces and speeds up the procedures and conditions for the constitution of a Limited Liability Company, promotes its growth through regulatory improvement, generalizes the use of electronic invoicing, establishes measures to fight against late payments in operations and promotes alternative financing by promoting mechanisms such as crowdfunding, collective investment or venture capital.

Creating a company will be easier and faster

The Create and Grow Law facilitates the creation of a company, by reducing the economic cost and simplifying the procedures for its constitution. With this objective, the possibility of establishing a Limited Liability Company with a share capital of 1 euro is established, compared to the legal minimum of 3,000 euros established up to now, allowing companies to use these resources in alternative uses and facilitating the creation of new business.

In this way, Spain aligns itself with a large part of the countries in our environment in which a minimum capital is not required, thus favoring entrepreneurship.

Likewise, the telematic constitution of companies is facilitated through the single window of the Information Center and Network for Business Creation (CIRCE), which guarantees a reduction in the terms for its creation and in notarial and registry costs.

Measures to promote business growth

Additionally, the bill improves the efficiency of the regulatory framework for economic activities by simplifying existing legislation, eliminating unnecessary regulations and establishing more agile procedures.

The Trade Liberalization Measures Law is amended, expanding the catalog of license-exempt economic activities. Activities that have been considered innocuous by at least one autonomous community are incorporated into the list of basic state regulations.

Likewise, the Market Unity Guarantee Law is modified to strengthen cooperation between the different Public Administrations and the mechanisms for the protection of companies and consumers against measures that do not respect the principles of proportionality and necessity.

Reinforcement of financing

The standard incorporates measures to improve financing instruments for business growth that are alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

In the field of crowdfunding, the Create and Grow Law adapts national regulations to European regulations, introducing more flexibility for these platforms to provide their services in Europe. In addition, the protection of investors is reinforced and the creation of vehicles to group investors and thus reduce management costs is allowed. To expand the universe of eligible business projects, the investment thresholds per project are raised (from 2 to 5 million euros) and the investment limits per project for retail investors are modified, which become the highest between 1,000 euros or 5% of wealth.

The venture capital industry is promoted, expanding the type of companies in which these entities can invest, including financial companies with a high technological component.

Lastly, the recognized figures for closed-end funds are expanded, including structures with extensive experience in other neighboring countries. These are debt funds that can invest in loans, invoices or commercial paper, contributing to and improving the business financing of companies whose financial structure has deteriorated as a result of the pandemic.

In relation to Collective Investment Institutions, the mandatory nature of the quarterly report is eliminated, telematic means are established as the default means of communication and the investment diversification regime of venture capital entities is made more flexible.