On 20 July 2023, the Ministry of the Presidency approved Order PCM/825/2023, which regulates the certification procedure for start-ups, provided for in Law 28/2022 on Startups. It came into force the following day, 21 July 2023, following its publication in the BOE.
If you do not know if your company is eligible for certification, you need help to obtain the documentation or to write the necessary reports, or you simply have doubts about the process and you would like to start it with all the guarantees, you can contact one of our specialists, who will guide you through the whole process. You can contact us here.
Below you can find a summary of the requirements foreseen in the Order PCM/825/2023 and the certification process managed by ENISA.
What is Order PCM/825/2023 for?
Order PCM/825/2023 establishes the requirements and procedures necessary for a startup to obtain certification as an emerging company, as provided for in Law 28/2022, on emerging companies, popularly known as the Startups Law.
The approval of the Ministerial Order is the requirement set out in this regulation for ENISA to open the certification procedure, which will allow Spanish startups to benefit from the advantages set out in the regulation, including an improvement in the taxation of stock options, access to capital for foreign investors and entrepreneurs and the simplification of incorporation procedures.
What documentation do I need to start the procedure?
The initial documentation provided for in Article 7 of the Law is as follows:
- a) Documentation accrediting the applicant company.
- b) Tax identification number.
- c) Public deed of incorporation.
- d) Closed annual accounts for the last financial year.
- e) Certificate of being up to date with payments to the Tax Authorities.
- f) Certificate of being up to date with Social Security payments.
- g) Declaration of compliance with the requirements of Articles 3 and 6 of Law 28/2022, of 21 December.
- h) Business plan.
In addition to these documents, the company must justify compliance with the requirements established both in the Startups Act and in Articles 4 and 5 of the Order.What requirements must a start-up company meet in order to obtain certification?
The Startups Act includes several formal requirements that startups must fulfil in order to achieve certification. You can find them here: https://metricson.com/nueva-ley-startups
The main objective of Order PCM/825/2023 is to clarify two of the requirements set out in the law: the status of innovative venture and scalable venture.
Regarding the condition of innovative venture, Order PCM/825/2023 considers that a startup meets this requirement in the following cases:
a) Expenditure on research, development and technological innovation represents at least 15 per cent of the company’s total expenditure over the previous two financial years, or in the previous financial year in the case of companies less than two years old.
b) That the applicant company has been the beneficiary of public investment, financing or aid for the development of R&D&I projects or innovative entrepreneurship in the last three years without having suffered revocation due to incorrect or insufficient execution of the financed activity.
c) That the company has a reasoned report issued by the Ministry of Science and Innovation, regarding its high degree of innovation.
d) That the company accredits that it benefits from Social Security contribution bonuses for having hired research personnel.
e) That the company has an Innovative SME Seal awarded by the Ministry of Science and Innovation.
f) That the company has Young Innovative Company Certification issued by AENOR (EA0043) or Small or Micro Innovative Company Certification issued by AENOR (EA0047) or Certification in accordance with standard UNE 166.002 – R&D&I Management Systems.
In the event that the start-up does not meet any of these requirements, it must present a report justifying any of the following aspects:
a) The presence of technological innovation, whether in development or exploitation, and which may be protected by industrial property rights (trademarks and trade names are excluded) or other rights such as protected software or know-how, all of which are related to the applicant company’s business model. An optional report may be requested from the Spanish Patent and Trademark Office (SPTO) for the evaluation of this aspect.
b) The presence of innovation in products, processes, services and/or business models.
With regard to the assessment of the scalable nature of the venture, the Order establishes the following criteria:
a) Degree of market attractiveness. The supply and demand of the sector in which the applicant company operates, the generation of traction, the strategies for attracting users or customers, as well as the growth of demand, the sensitivity of demand to the economic cycle, the barriers to entry for new suppliers, as well as other aspects that may help to establish or infer the degree of attractiveness of the market will be assessed.
b) Stage in the life of the company. The implementation of prototypes and the achievement of a minimum viable product or the market launch of the service will be assessed. As well as the position of the applicant company in the market, whether or not its products or services are on the market, how long they have been marketed, how long they have been in development, or how long it will take them to reach the commercialisation phase, among others.
c) Business model. For each applicant, the scalability of the number of its users, the number of its operations or its annual turnover will be considered, as well as the definition and monetisation of its activity, products and/or services and the objectives and nature of its investment plan and its financing.
(d) Competition. Competing companies in its field or sector of activity and the differentiation with respect to the same will be assessed, including the strengths and weaknesses of the competing companies with respect to the applicant company.
e) Team. The experience, training and track record of the team that makes up the applicant company will be assessed, both the previous experience in other companies and related sectors of the management team, as well as the solvency and track record of the partners.
f) Contracts with suppliers, providers and rental contracts. The companies and/or professionals that provide services to the applicant company and their importance in the production process will be considered.
(g) Customers. The volume of clients or users of the applicant company, their degree of concentration and their relevance for the company in terms of their diversification will be considered.
Likewise, the company will be considered to meet the requirements if it has signed one or more policies with ENISA during the last 3 years, provided that one of them is still in force and there are no incidents.
As these are subjective factors, and therefore subject to the interpretation of the analyst responsible for each process, ENISA has published a guide which you can download here.
How does the certification procedure work?
If your startup meets the requirements analysed and you have the required documents at your disposal, the procedure is simple: just go to the following address and complete the online form developed by ENISA.
ENISA may request additional information or documentation to prove compliance with the requirements or to ensure that you do not incur any cause for non-compliance.
If ENISA does not respond within three months of the start date of the certification procedure, with the submission of the application and the necessary documentation, the administrative silence will be considered positive and the startup will acquire the status of an emerging company, although it will have to apply for recognition in order to be recorded in the appropriate registers.
How is the start-up certification lost?
ENISA will collect information from different Spanish public entities to periodically verify whether the startup continues to comply with the necessary legal requirements (such as being up to date with its tax and labour obligations, being less than 5-7 years old or not being part of a group in which another company does not meet the requirements).
ENISA will also carry out random reviews every year to verify that compliance continues, and may at any time require companies to provide the necessary supporting documentation.
Finally, companies are obliged to report any cause of non-compliance with the requirements set out in the Law and in the Order.
In the event that, as a result of these review processes, ENISA decides to cancel the certification, this loss of effect will occur on the date of communication to the company, but the loss of the associated benefits will take place from the date on which the company ceased to comply with the requirements, even if ENISA has not reached a decision on this fact.
CONCLUSIONS
The Startups Certification Order defines in much greater detail than the Startups Act the criteria and requirements necessary to obtain certification, but continues to leave compliance with many of these requirements to the interpretation of the ENISA analyst responsible for each process.
Companies that have signed loans with ENISA during the last three years and are up to date with these loans are an exception to this rule, as they will be able to access certification – provided they meet the other requirements – through the fast track.
If you do not know if your company is eligible for certification, need help in obtaining the documentation or preparing the necessary reports, or simply have doubts about the process and would like to start it with all the guarantees, you can contact one of our specialists, who will guide you through the whole process. You can contact us here.
Article written by:
Luis Gosálbez
Managing Partner
About Metricson
Metricson is a pioneer in legal services for innovative and technology companies. Since its inception in 2009, it has advised more than 1,400 companies from 14 different countries, including startups, investors, large corporations, universities, institutions and governments.
If you would like to contact us for any aspect of legal advice, please do not hesitate to write to us at contacto@metricson.com. We look forward to talking to you!