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Share Capital Increase and Reduction in Spain

Understand how to adjust the equity that shareholders have.

 

Our corporate lawyers will guide you through the process step-by-step.

How can a lawyer help me?

The process of increasing a company’s share capital is relatively straightforward, but there are many formal requirements to comply with. With such formalities and proceses, we always recommend working with a lawyer to ensure that the desired operation complies with highly technical process, such as the division of new shares, how to deposit the new capital in the company’s bank account or how to draft the meeting’s resolution to avoid issues with the Commercial Register.

The process is typically quick and simple when a company works with an experienced lawyer who knows how ot navigate Spanish bureaucracy. Their knowledge helps prevent headaches when executing the the share capital adjustment as well as potential problems in future. A lawyer can even sign the deed before a notary on your behalf via Power of Attorney, if it has been granted by the company’s administration.

At Lexidy LegalTech Boutique, we go the extra mile by assisting our clients on every step of the process. Here, we would advise the client on the best way to proceed with the share capital increase, the necessary amount to contribute and the best way to distribute the new shares. Lexidy’s recommendations will take into account the shareholders’ rights and the possible different taxation that follows. Our lawyers are here for businesses of all shapes, sizes and industry to assist them with their share capital needs..

¨We will be with you each step of the journey.¨

 

What is a share capital increase?

Increasing share capital is a corporate operation where the company’s share capital is adjusted by either issuing new shares or increasing the nominal value of the existing shares. 

This action must be agreed at the General shareholders Meeting and follow the process identified in the Company’s Articles of Association.

Spain’s Capital Companies Act allows share capital to be increased in the following ways.

 

  • Capital increase by cash contribution: This can be conducted by making a financial contribution in the company.

 

  • Capital increase by non-cash contribution: This is executed by contributing other assets that are not cash. These assets, which can items like a computer or a car, must have their ownership and economic valuation accredited. 

 

  • Capital increase charged to profits or reserves: This type of capital increase occurs from the profits or reserves already displayed in the last approved balance sheet.

 

  • Capital increase by offsetting credits: This capital increase requires the delivery of shares in the company’s capital in exchange for paying or forgiving the company’s existing debt.

What is a share capital reduction?

A capital reduction is a corporate operation where the sahre capital is adjusted as per the company’s Articles of Association. There are three types of capital reduction: 

  • Reducing the shares’ real value. This approach allows the company to reduce the nominal value of the shares but maintain the total number of shares in the business. This means that each share will decrease in value to match the total amount of the new, lower share capital.
  • Share amortization. This type of capital reduction eliminates a certain number of shares until the total capital falls to the new, agreed amount. This means that the the nominal value of the shares isn’t reduced. Instead, some shares are directly removed, which reduces the share capital and returns an amount to each shareholder.
  • Grouping shares for exchange. This requires several shares to be grouped together and replaced by a new one. This is similar to share amortization except the elimination of shares is achieved by combining the shares, rather than handling them individually.

How can I increase or reduce the share capital of my company?

Any action to increase or reduce the existing share capital must be agreed to at the General Shareholders Meeting and must follow the requirements stated in the bylaws. Once the resolution to increase or reduce the share capital has been approved and implemented, the directors must redraft the bylaws to reflect the new share capital figure.

A notary public must witness the signing of a certificate confirming the decision was made at the meeting. After this, the resolution must be registered in the Commercial Register.

Can I increase and reduce the share capital at the same time?

When a company has a financial accounting loss and its share capital has been reduced below the legally required minimum, the company enters a situation known as “compulsory dissolution”. 

To avoid dissolving the company and then cleaning up the accounts, businesses can instead carry out a so-called “accordion operation”.

This is a special corporate operation where the share capital is simultaneously reduced and increased. The aim of this is to financially reorganize the company. This operation allows the company to reduce its share capital to offset its debts and clean up its balance sheet, while immediately executing a capital increase to raise new resources and continue its activity.

Our Story

We are a department formed by qualified legal experts who have been trained in the field of corporate law. We work on these requests every day and it’s our passion. For us, Lexidy is a way of life and what excites us the most is to be able to deliver the happiness and satisfaction of a successful process. We want to help you achieve your goals and dreams.

Héctor Lopez Vazquez

Head of Corporate Department

Madeleine Cadwell

Paralegal

Marta Ametller

Paralegal

Samuel Ortega Vega

Lawyer

Client’s stories

Lexidy Legal Tech
4.9
Based on 437 reviews
Declan Ryan
Declan Ryan
20:48 01 Jun 22
The Lexidy team is uniquely positioned to provide pan-European business and tax advisory services; what would be complex or impossible for a country-specific advisor is straightforward for Lexidy. They answered in days what would take weeks for other firms.
D
D
17:31 24 Apr 22
I’ve dealt with hundreds of solicitors through business over the years but I must say Cristina and Lexidy Law are really something special. Responsiveness, proactiveness, knowledge and professionalism is, quite frankly, outstanding.M.
Signore Raffaele
Signore Raffaele
12:53 07 Sep 21
The service I have received from Hector has been extraordinary.He has helped me opening bank accounts, managing my NIE and setting up my company's branch in Spain.I am very grateful for the help and the exceptional treatment and management.I won't hesitate to contact him again for any other business I may need.
dawei2010
dawei2010
16:12 08 Apr 21
Our company engaged Lexidy Law Boutique to help pursue our monetary claim against a former business partner registered under Spanish jurisdiction. They provided a professional work and our claim got enforced even before it was expected. We will be happy to engage them anytime in the future for any civil law related matters and I can only recommend their services.
dk impprojects
dk impprojects
15:37 22 Feb 21
Lexidy law boutique services are very prompt and responsible, they created my business company in barcelona, spain. I received very good response from Maximiliano Agazzi for my residence permit issues. I am very much happy with Lexidy law boutique services.
Tom Elliott
Tom Elliott
11:44 18 Feb 21
Very helpful getting my business off the ground quickly and easily and affordably! Best of all, they speak English!
Dan Centinello
Dan Centinello
14:26 19 Nov 20
Let me start by saying that I normally do not write reviews - and I am often skeptical of the authenticity of the ones that are left. However, I feel like this law team has earned it and here's why...I am the type of person who will do endless research & contact several people before making a decision. I did the same when looking for a Spanish law firm that would be able to quickly handle my immigration matters and, most recently, help me with my leasing agreement for my apartment.They are extremely responsive (replying within a couple of hours of my messages) and even after office hours.Maximiliano, in particular, has been exceptional. He put a lot of effort to understand all the details of my situation so he can find the best solution.It was quickly evident that he understands that not all people have the same immigration situation and was going to tailor a solution specific to me.What impressed me most though was how he was thoughtful enough to make sure that his immigration solution did not impact my tax or business situation adversely. His focus on the big picture, while not missing the important small details is one of the main reasons why I felt compelled to write a review.Lastly, Max even made himself available during the time I was crossing the border, just in case I had any issues.With all this being said, I have worked with many lawyers in the past - many simply look for "a solution", but the great lawyers look for the "best solution". Everyone I have interacted with thus far at Lexidy seems to understand the latter. I feel very fortunate to have come across them in my research.I know how stressful it can be, especially when dealing with immigration issues. So, I hope this helps others out there that might be in the same situation I was in.
Michael Sandoval
Michael Sandoval
16:44 19 Oct 20
I have had the pleasure to work with a lot of Lexidy's departments. Working with Max Aggazi Paulet to achieve everything needed for my residency was incredible. he help endlessly until everything was accomplished. Soon after i began working with their Real estate department. It has been a journey and they have stuck with me every step of the way. They have gone beyond the scope of their duties to help my dreams of purchasing a property in Spain come to fruition. I would like to thank Alejandro Cano and Jordi Aranda for for everything. Last but not least through the entire Process I have had the absolute pleasure to work with Camila Broderson. She is a Gem. She has guided me in every step to work on opening my LLC in Spain and has also gone beyond the scope of her duties to assist and be available at any time. I plan to continue to work with team at Lexidy and would highly recommend them to everyone. Thank you Lexidy team for everything that you have done so far! I look forward to continuing our partnerships and friendships!
Swapnil Sai
Swapnil Sai
09:45 06 Jul 20
I feel compelled to write this review after my correspondence with the team at Lexidy Law Boutique. This is certainly a law firm with a difference which is devoted to its clients. They attended to all my needs and queries with utmost diligence and professionalism. A truly outstanding and accommodating team that would go out of its way to help its clients. They did more than just exceed my expectations. They have set up a service standard that I am afraid other firms may not be able to match! They have become my go-to legal advisors. My case was fraught with complications and they patiently unraveled those until I had clarity and peace of mind. They are a firm with a heart that I am deeply thankful to.
Petra Ahmann
Petra Ahmann
10:21 17 Jun 20
Lexidy assisted me with my residency visa in Spain, helped me set up a bank account, and attended appointments with me. Overall it was a smooth experience, and better priced than other firms.
Alexander Hohne
Alexander Hohne
18:44 15 Jun 20
I have had an amazing experience with Lexidy not only successfully obtaining my first two residency visa applications but also with the setting up of my two businesses. I can highly recommend this young and dynamic team.
Payam Agha
Payam Agha
13:18 25 May 20
I'm a non-EU Entrepreneur, and I'm in the process of setting up my business in Spain, and It's my pleasure to write a review for lexidy. The team are truly dedicated, they kept me informed and guided me as required.Camila diligently guided me through the process of setting up my project, and it's legal structure in Spain, and set up all the necessary tax and company registrations.Max's attention to detail and relentless determination ensured a favourable report issued by the Economic and Trade Commission of Spain in Sydney.If you are looking for a law firm in Spain, then I have no hesitation in recommending Lexidy for a fast, friendly and efficient service.
Duncan Campbell
Duncan Campbell
17:32 21 Nov 17
Fede and his team at Lequidy were incredibly responsive to an urgent legal issue that my business faced, and dealt with the problem efficiently outside of office hours. Highly recommended.
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