5 aspects to take into account when formalising a startup in Spain

Aspects to take into account when formalising a startup in Spain

Establishing a start-up is not only about having a great innovative business idea, but also about realising it by complying with the formal requirements at the legal level and then finding creative and strategic ways to secure the necessary funding on its way to success.

In order not to put the cart before the horse, the first step should be to ask yourself the following question: How to legally formalise an idea so that it becomes a Startup?

5 aspects to take into account when formalising a start-up in Spain

When reaching the point where it is necessary to legally formalise an idea in order to continue with the startup project, certain steps must be completed at a legal level in Spain:

1. Select the legal structure

The first step is to determine the legal structure in which the startup will operate, which not only influences the initial capital, but also future investments, profit distribution and other legal formalities. The most common options are self-employed, limited companies, civil partnerships, cooperative societies or limited companies, all with moderate initial investment requirements.

2. Selecting and reserving a name

Every company needs a company name, which will vary according to the legal structure chosen. It does not have to be the name of the future brand, but can be a different concept. A negative name certificate must be applied for at the Commercial Register, where the availability of the three alternative names submitted by the interested party will be verified.

3. Capital contribution

In order to set up a start-up , the founders must make a capital contribution. The type of contribution may be in cash or in kind and, like the amount, will depend on the legal structure chosen.

4. Drawing up Articles of Association

The Articles of Association are fundamental for the correct development of the company. Their wording must be clear and their content must provide flexibility and ease of operation, so they must be personalised in accordance with the interests and objectives of the Start-up, complying with the legally established requirements.

5. The public deed of incorporation

Once the above requirements have been met, the founders can go to a notary’s office to have the public deed of incorporation executed.

The deed must contain all the legal requirements for its subsequent registration in the Commercial Register. It is therefore of vital importance that an expert reviews and corrects, if necessary, the body of the notarial deed before it is signed, in order to avoid errors, which could lead, among other things, to a faulty classification by the Commercial Register, requiring it to be corrected and prolonging the registration process.

Particularities to be taken into account

When setting up a startup, a series of particularities must be taken into account based on aspects set out in the Startups Act and the Crea y Crece Act.

The Startups Act will apply to all startups, including new startups, and its content must be taken into account in order to benefit from its particularities.

Startups interested in the benefits of this law should apply to ENISA to assess whether their characteristics meet the required criteria, and whether their business model is innovative and scalable. This process can be long and tedious due to the need to compile a large volume of information. It is therefore advisable that you put yourself in expert hands so that you can move forward efficiently, and we can help you with this.

The evaluation criteria include innovation, market attractiveness, life stage, business model, competition, team, among others. In our blog we have already published an article detailing the requirements for the process, in which you can find more information.

With regard to the Crea y Crece Law, this aims to facilitate the process of setting up new companies and at the same time remove the obstacles that limit their expansion, in order to increase competition in favour of consumers, improve productivity in the business sector, strengthen the ability of companies to withstand challenges and encourage the creation of quality jobs in Spain.

It includes several relevant novelties, such as the modification of the minimum capital for limited liability companies and public limited companies, or the important improvements at the technological level in the context of company incorporation, by including that notaries and intermediaries involved in the creation of limited liability companies must advise founders on the advantages of using the Entrepreneur Attention Points (PAE) and the Information Centre and Business Creation Network (CIRCE) to establish their businesses and carry out other procedures related to the start-up of their activity.

More information on how to set up a startup in Spain

From Metricson, we have prepared a downloadable paper from our legal knowledge section so that you can get more information about the legal requirements when founding a startup in our country, which you can consult by downloading it right now.

In addition, if you have any questions, you can always write to us so that we can help you solve them.

 

Article by:

Guillermo J. UrbezGuillermo J. Urbez

Corporate and M&A lawyer

guillermo.urbez@metricson.com

 

 

 

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