Table of contents
- Relocation of companies outside the EU.
- Transfer of EU-based companies.
- Requirements and steps to be followed.
- How to relocate your company to Spain?
Business relocation to Spain has been gaining popularity recently. In light of the uncertain situation related to Brexit and US elections, some of our British and American clients have inquired about the possibility of relocation of their existing limited liability companies to Spain, in order to keep or gain benefits from having a business inside the EU.
It is true that it is a procedure that is not well known and in Spain, there is little regulation. The relocation abroad of the registered office of a Spanish LLC company and that of a foreign company to Spanish territory will be governed by the provisions of the International Treaties or Conventions in force in Spain and Law 3/2009 of 3 April 2009 on structural modifications of mercantile companies (LME), the Regulation of the Mercantile Registry (RRM) and the interpretations are given in this respect by the General Direction of the Registry and Notaries (DGRN).
The law on structural modifications states (Article 94) that the transfer of registered address does not affect the company’s legal personality. Thus, a company incorporated in accordance with the regulations of another State may, initially, transfer its registered address to Spain. In order to carry out the relocation process, it will be necessary to comply, in Spain, with the requirements analyzed throughout this post.
First of all, what does the company relocation or “moving” of the registered office to Spain really mean?
- Change of “nationality” and applicable law: Your foreign entity will be transformed into a Spanish company.
It is important to take into account the change of the registered address to Spain entails the adoption of a new nationality and consequently a change in the law applicable to the company.
Upon this, we can ask ourselves if it is possible to relocate the registered office with the maintenance of legal personality to the specific country where the company wishes to be established. Short answer: Yes. In this sense, the LME has incorporated into Spanish law since its entry into force on 4 July 2009 a regulation on the international transfer of the registered office, applicable both to the “emigration” of Spanish companies abroad, and to the “immigration” of foreign companies.
The challenge: relocation of companies outside the EU.
In the case of companies with a registered address outside the EU ( USA for example), it is much more complex to make the change, which may mean that the company abroad has the obligation to be liquidated and extinguished before making the relocation, so it is not possible to carry it out.
Thinking about doing business in Spain? Consider opening a representative office or set-up a branch in Spain from your foreign mother company remotely. Glady Lexidy can help with all corporate services covering Spanish and Portuguese markets.
In other words, it should be noted that the agreement to move the UK registered office abroad can only be adopted when there is an international agreement in force in Spain that allows it with the maintenance of the same personality.
Would like to carry your UK business in Spain before Brexit? We advise to take rapid action before the transitional period, Lexidy can help you mitigate all your doubts with our Brexit Services.
Transfer of EU-based companies.
EU-based companies have the right to relocate the registered office to another Member State. It is part of the Community freedom of establishment and is a further step towards harmonizing international transfer of the domicile at the European level. In the Case C-106/16, Polbud – Wykonawstwo sp. z o.o., the European Court of Justice declared that these restrictions are contrary to the freedom of establishment and therefore incompatible with European Union law.
In case you are the owner of a UK company, this article may be in the area of interest SPAIN: BEST OPTION FOR BUSINESS CONSIDERING A MOVE FROM THE UK.
Relocation requirements and steps to be followed:
The LME establishes the legal regime for the international transfer of the registered office. In the event that both legal systems involved admitting that the company whose domicile is to be transferred will retain its legal personality, we must know that with respect to the manner of accrediting that foreign legislation permits the relocation of the domicile without loss of the legal personality of the latter. This must be done in accordance with Article 36 of the Mortgage Regulations, by virtue of which compliance with the forms and formalities required in the country of origin may be accredited, among other means, by a Spanish Notary or Consul or by a Diplomat, Consul or official of the company’s country of origin.
a) Review the law! As mentioned, it is important to be sure that the law of the country of registration allows business relocation.
b) Drafting of the relocation project to transfer the registered address to Spanish territory in accordance with the provisions of the applicable law (following the requirements and formalities set forth therein). The relocation project shall contain at least the following mentions: (i) The name and address of the company, as well as the data identifying the registration in the Commercial Register. (ii) The proposed new registered office. (iii) The articles of association which are to govern the company after its relocation, including, where appropriate, the new company name. (iv) The timetable for the transfer. (v)The rights provided for the protection of shareholders and creditors, as well as employees.
c) Deposit and publication. The administrators are obliged to present a copy of the business relocation project for deposit in the corresponding Commercial Registry in Spain.
d) Administrators’ report. The administrators of the company have to submit a report explaining and justifying in detail the corporate relocation project in its legal and economic aspects, as well as its consequences for the shareholders, creditors, and employees.
e) Approval by the shareholders’ meeting: The transfer of the domicile to another State will have to be necessarily agreed by the meeting of partners with the requirements and formalities established in the regime of the company that is transferred.
**The agreement to relocate the registered office must be granted before a notary, accompanied by a literal certification of the company’s details contained in the registry of the country of origin, translated and legalized/apostilled, as appropriate.
The deed must be filed in the Spanish Registry, which will be competent due to the new corporate domicile, for its registration, in which, with the character of first registration, all the facts and circumstances that are of obligatory consignment according to the Spanish regulations and are in force in the foreign Registry must be stated.
f) Requirements of the Regulations of the Commercial Registry.
In addition to the above requirements, and in accordance with the regulations of the Commercial Registry, the following will also be required:
– Current legal history. In other words, the certificate of the current entries in the foreign registry of origin must be provided.
– It will also be necessary to provide the deposit of accounts for the last completed financial year. This deposit will be made both in the foreign registry and in the Spanish registry.
How to move your company to Spain?
Any foreign company may transfer its domicile to Spain, provided that its regulations of origin allow it. That is, provided that the business relocation does not involve the dissolution of the company in the country of incorporation.
Certain requirements must be met for the relocation to be effective. Such requirements are more demanding when the company comes from a State that is not part of the EEA:
- Compliance with Spanish regulations regarding the corporate form of the entity being transferred.
- Independent expert’s report for companies incorporated outside the EEA. The report must justify that the company has sufficient assets to cover the capital required in Spain.
- Literal certification of the current entries of the company in origin.
- Deposit of accounts for the last financial year in the register of origin and in the Spanish registry.
This article does not constitute legal advice. It is intended to provide general information only. Please contact our lawyers if you have any specific queries.
ABOUT THE AUTHOR
Senior Associate – Corporate Lawyer
Originally from El Salvador, Camila of Salvadoran and German nationality obtained her Bachelor´s Degree in Law (LLB) in Spain at Universidad de Navarra. She focused on International Business Law and Anglo-American Law as minors. She has experience in the regulatory aspects of the renewable energies sector and has been part of the legal team carrying out the Project Finance of the first commercial photovoltaic plant in El Salvador, Central America. At Lexidy, her main focus is the Corporate Department at the firm.
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