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In order for the decisions adopted by the General Meeting to be valid, a quorum is required. The composition of the quorum depends upon the matters addressed because some of them are required to be approved by a majority of votes where others would not.

Spanish law defines two types of General Meeting as follows:

1. Ordinary General Meeting (OGM): which should compulsory take place within the first six months of each corporate year to approve the social administration and the accounts of the company for the previous year.
2. Extraordinary General Meeting: is any General Meeting that is not an Ordinary General Meeting.

Director Or Board Of Directors (Órgano De Administración)

The Director/Board of Directors are appointed by a General Meeting and must observe the decisions adopted by the shareholders at the General Meetings.

The Director or the board of Directors manage and represent the company.

The corporate governance of a company, can be performed by another company₂, one or various individuals, and if the later, they can operate and be organized as follows:

1. Solidary administration (Administración solidaria) where any director can operate with full effectiveness and legitimacy, within the limits established by the law and the General Meeting (Junta General), without for the need of the expressed consent of the other directors.
2. Joint management (Administración mancomunada where all directors must expressly give their consent for the decision to be effective.
3. Board of directors (Consejo de administración) where decisions are taken by the majority of the directors.

With regards to a public company (sociedad anónima), can either have two individual directors operating jointly or three or more individual directors forming a Board of Directors automatically.

In relation to a limited liability company (sociedad limitada) it is possible to establish in its company’s articles of association, different types of structures to organize its organization. By holding a general meeting (junta general) they can decide which type of structure they require, without it being necessary to modify its articles of association.

Remuneration System Of The Director Or Board Of Directors (Órgano De Administración)

The directors of the board of directors will not receive any remuneration unless a remuneration system is established in the articles of association of the company. Indeed, the articles of association must establish accurately, the remuneration system assigned to the directors/board of directors.

The terms of the said remuneration system can be, among others, as follows:

1. A fixed salary.
2. Attendance allowance, where the remuneration is based on the number of attendances to committees, meetings etc.
3. Profit sharing where the director/board of directors are remunerated based in the company's profit either by:
1. A fixed percentage of the profit of the company.
2. A variable percentage of the profit made by the company.
4. Linked to the company's shares by:
1. Giving shares to director/board of directors.
2. Giving the director/board of directors the option to buy shares (stock options) in the company.
3. Making remuneration dependent on the share price. Therefore, as the share price increases the Director/Board of Directors will receive a higher salary.

The Duty Of Diligence And Loyalty Of The Director / Board Of Directors

The duty of diligence and loyalty of the director/board of directors of a company, are regulated at Articles 225 to 232 of the Spanish Company Act and, in broad terms, are the following:

1. General duty of care: It refers to the material performance of the director/board of directors which has to be in line with the aim to achieve major benefits for the company, by complying with the Law and the articles of association.
2. Duty of loyalty: The director/board of directors cannot take advantage of their position for his/her own benefit and the only economic compensation that the director/board of Directors will receive for his/her performance of duties is the one established in the company's articles of association.

Written by Laura Gallego Herráez.

If you want to receive our next articles about DOING BUSINESS IN SPAIN, send us an email to: london@scornik.com

₁Article 191 Spanish Companies Act.

₂In this case, the company will appoint a natural person who will act in its behalf in order to perform the duties of Director of the company.

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Accordingly, any British nationals who wish to hold the position of a director or shareholder of a company incorporated in Spain, must have a foreign identification number. This can be applied for at any Spanish Consulate in the United Kingdom or at any police station in Spain personally or through a legal representative appointed via a power of attorney.

Obtaining a Foreign Identification Number for a corporate entity (NIF)

The NIF (Número de Identificación Fiscal), similarly, is a requirement for any foreign company when carrying out any operation subject to tax in Spain. Accordingly, this will be required for an English company to register at the Mercantile Registry.

This NIF will operate as the company’s tax number and must appear on every invoice issued by the company.

When applying, the company can also notify the Spanish Tax Authorities that it is going to commence its commercial activity.

Stamp Duty Tax on corporate operations

The stamp duty tax is levied on onerous transfers of assets, corporate transactions and documented legal acts.

On corporate operations the stamp duty tax is levied, among others, on the following:

1. Incorporation of the company, the increase and decrease of their share capital and its dissolution.
2. The transfer from the United Kingdom to Spain, of the registered office or its headquarters.

Accordingly, as indicated previously, the incorporation of the company is subject to the said tax. However, at the same time, it is exempt, so at that point it will be necessary to submit the stamp duty tax paperwork (modelo 600) without it being necessary to pay any tax.

The said paperwork can be submitted to the Spanish Tax Authorities, by the founder´s company or through a legal representative appointed via the authorization representation system, that the Spanish Tax Authorities provide for filing tax declarations and self-assessments.

Company Name: obtaining negative certification of company name

When applying for the registration of a company it is firstly required to obtain a negative certification for the company’s name certifying that there is no other company registered at the Spanish Mercantile Register with the same name as the one wished to be use for the company applying for registration.

The company name under which the company will be registered does not require being the same name under which the company will be trading (commercial name) which can even adopt more than one. Accordingly, it is advisable for the commercial name to be registered at the patent and trademark office.

Written by Laura Gallego Herráez.

If you want to receive our next articles about DOING BUSINESS IN SPAIN, send us an email to: london@scornik.com

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NON-MONETARY CONTRIBUTIONS IN CORPORATION COMPANY (SOCIEDAD ANÓNIMA)

Spanish law establishes that those shares that are bought through a non-monetary contribution must be evaluated by an independent expert who will be appointed by the mercantile registrar.

The said evaluation should contain the accurate description and valuation of the non-monetary contribution(s) according to objective criteria.

If the expert fails in providing an accurate valuation of the non-monetary contribution(s), he/she will be held responsible by creditors, third parties and the company.

Nevertheless, Article 69 of the Spanish Company Act determines situations in which the non-monetary contributions can take place without an evaluation being needed.

NON-MONETARY CONTRIBUTIONS IN LIMITED LIABILITY COMPANIES.

In limited liability companies, the evaluation of the non-monetary contributions is made by the stakeholders of the company.

In the case of overvaluation of the non-monetary contributions, the stakeholders who made the non-monetary contribution and those who were stakeholders when the capital increase was agreed will be liable to the company and its creditors.

However, those stakeholders who voted against the evaluation of the non-monetary contributions will be exempt of liability.

Written by Laura Gallego Herraez.

If you want to receive our next articles about DOING BUSINESS IN SPAIN, send us an email to: london@scornik.com

The General Data Protection Regulation 2016/679 (GDPR) regulates the protection of personal data within the EU, sets a mechanism called «adequacy decision», to asses «adequacy» to those countries that, despite not being European members, have in place regulatory standards that, under the Commission's opinion, guarantee adequate protection to data protection and, consequently, allows for the transfer of personal data from the EU to those countries without the need of additional safeguards.

On 28th June 2021, the European Commission adopted an adequacy decision for the UK, allowing the free movement of data for a four-year period from the adoption of the adequacy decision, i.e. until 28th June 2025 and afterwards the EU will start a new process of evaluation of the standards of UK data protection regulation and accordingly, conclude whether or not to renew the «adequacy status» of the UK.

Currently, the UK GDPR regulates data protection in the UK, which content is the same as GDPR, the only difference being the replacement of the referrals that the GDPR makes to EU data protection supervisory bodies with data protection officers in the UK.

Laura Gallego Herráez.

Associate Spanish Lawyer and business developer at Scornik Gerstein LLP.

Email: laura.gallego@scornik.com

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However, for the purpose of safeguarding the interests of creditors, the limited liability company must at least allocate 20% of its profits to its legal reserves until the said reserves, together with the company’s capital, reaches the amount of 3,000 Euros.

Additionally, if the company goes into liquidation, if its assets are insufficient to meet its obligations, the shareholders shall be jointly and severally liable for the difference between the amount of 3,000 Euros and the company’s capital.

According to the Create and Grow draft bill, it will be possible to set up a limited liability company online within a maximum of 10 working days and without the need to appear before a notary public nor at the Registro Mercantil (Companies House) in person.

Also, any variation of the company’s capital, will be published at the Mercantile Registry and effective within 10 working days.

Indeed, the Create and Grow draft bill establishes that all public notaries with power within the Spanish territory must be registered at the Notarial Electronic Agenda, in order to carry out the incorporation of companies online. A notary public cannot refuse any incorporation procedure initiated through the online system.

Combating Late Payment

According to article 4 of the Spanish Law 3/2004 of 29 December regarding payments in commercial transactions, the maximum period within which the debtor must pay any outstanding debt to a creditor is 30 days, unless the two counterparts set up another date of payment, which cannot exceed 60 days.

However, it is not uncommon for those deadlines not to be met and due to that, small and medium-size business can suffer lack of liquidity.

In order to combat late payment, the Create and Grow draft bill establishes that a company which does not makes a payment within the period mentioned above, will not be entitled to apply to any public subsidies nor be eligible for take part in public contracts.

Mandatory B2B E-Invoicing

Pursuant to the Create and Grow draft bill, electronic invoices must be used in all commercial relations between companies and self-employed people. This measure not only contributes to reinforce the digitalization of the business operations, but also guarantees greater traceability and control of payments for the public administration in order to combat the late payment mentioned above.

If the current version of the Create and Grow draft bill is approved, companies and self-employed with annual turnover over eight million Euros, must use the e-invoicing system within a year after the said draft bill enters into effect, while companies and self-employed with turnover under eight million Euros, must use the e-invoicing system within three years once the bill becomes enforceable.

According to the Create and Grow draft bill, businesses and self-employed must give free of charge access to their e-invoices, which should be readable, printable and downloadable.

In addition, said access to must be maintained for up to four years since the invoices were produced, even if the persons invoiced had expressly refused having access to them.

If businesses or self-employed persons do not comply with the e-invoicing regulation, they could face a fine of up to €10,000.

Laura Gallego Herráez.

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The new Digital Nomad Visa, will however allow them to work under the following conditions:

• Be Non-European Economic Area (EEA) citizens.
• Be able to show that his professional services or work is suitable to be carried out remotely.
• If employed, only by a non-Spanish resident company for at least the last 3 months and which has been trading for more than 1 year.
• If self-employed, be able to show that has been providing their services for at least the last 3 months, to non-Spanish clients and up to a maximum of 20% of his activity to Spanish resident clients.
• Have a University or professional or business training degree or more than 3 years of professional experience.

The Spanish Start-up Law visa will last for a year or 2 years if the applicant is already residing in Spain and can be renewed if the above conditions are maintained.

When will be possible to apply for the new Spanish Digital Nomad Visa?

On the 10th of December 2021, the Spanish Government submitted for debate and approval to the Spanish Parliament a draft of the Start-Up bill and with it, a new employment visa category, the “Digital Nomad” visa category. Although it was expected to be aproved by the end of the year 2021 / beginning of 2022, it was firstly delayed to summer 2022 and, as of writing this, has been delayed again to September 2022.

If you want to be updated about this topic, send an email to london@scornik.com and you will receive the latest news.

Written by Laura Gallego Herráez.

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It is important to bear in mind that, the enforcement of these measures depends on the Spanish municipal authorities and rules, as they cannot be directly enforced by the national legislation.

In consequence, some regions governed by the political party called Partido Popular(PP) such as: Madrid, Andalucia or Murcia, have announced that they will not apply the said new rules over those regions.

The Spanish cabinet has estimated that its draft housing bill will be approved by the second half of 2022. If you want to be updated about this topic, send an email to london@scornik.com and you will receive the latest news.

Written by Laura Gallego.

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The day of the signing of the trade agreement, the Minister of Trade Policy George Hollingbery said: ´´The agreement signed today with Colombia, Peru and Ecuador will give added assurances to UK businesses trading with the region. Businesses will be able to continue trading like they do today after we leave the EU, with consumers and investors continuing to enjoy the benefits.´´

"We look forward to further strengthening our ambitious trade and investment relationship with the Andean Countries as we continue to work closely together in the future."

Which countries are covered by the UK-Andean agreement?

As we mention before, the countries covered by the UK-Andean agreement are:

• Colombia
• Ecuador
• Peru

What does the agreement include?

This trade agreement includes provisions on:

• trade in goods (including provisions on preferential tariffs, rules of origin, and tariff rate quotas);
• trade in services;
• intellectual property.

It replicates elements of the EU-Andean agreement, such as provisions on political dialogue and human rights.

Can a UK exporter process material from EU to export to Andean countries?

Yes, an UK exporter can use materials from EU to manufacture his product. However, an UK exporter must ensure that the processing over the materials, depending on the products, meet certain requirements.

For example, an UK exporter cannot simply package or label a product from the EU and export it to the Andean countries as a good originating in the UK.

Written by Laura Gallego.

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Operating in Uruguay trough a Permanent Establishment (Pe)

Pursuant to Article 5 of the said DTT, a British company has a PE in Uruguay, when it has, within the Uruguay´s territory, a fixed place of business or an operational site through which habitually performs a business activity.

Accordingly, a PE includes, but is not limited to:

• Places of management;
• Offices and workshops;
• Natural resources exploitation: petroleum or gas wells mines or quarries;
• Factories;
• Construction or installation sites

Therefore, the term PE shall be deemed not to include the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery.

Corporate Tax: 25%

Net income derived from business activities conducted in Uruguay, obtained by legal entities resident in Uruguay and non-residents operating through a PE in Uruguay, is taxed at a rate of 25%.

In order to determine the net taxable income, it is necessary to take into account tax deductions and allowances.

VAT: 22%

Uruguayan VAT is at a general rate of 22%.

Items subject to 10% VAT rate:

• Health services.
• Hotel services.
• The first sale of immovable assets.
• Food and medicines.

Items exempt from VAT:

• Books.
• Milk.
• Magazines.
• Agricultural machinery.
• Accessories.
• Certain bank services.

Imports/Exports between United Kingdom and Uruguay

• Total exports from United Kingdom to Uruguay amounted to £97 million at the end of 2021.
• Total imports from Uruguay to United Kingdom amounted to £319 million at the end of 2021.

See below, the latest statistics on trade and investment between United Kingdom and Uruguay provided by the British Department for International Trade

Trade and Investment Factsheet (publishing.service.gov.uk)

Written by Laura Gallego.

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1. Be newly created or if not being newly created, with no more than 5 years elapsed since its incorporation, in general, or 7 years in the case of biotechnology, energy and industrial companies.
2. It has not arisen from a merger, spin-off, or transformation operation.
3. Have their registered office or permanent establishment in Spain.
4. 60% of the workforce must have an employment contract in Spain.
5. Be an innovative company.
6. Not distribute or have distributed dividends.
7. Not be listed on a regulated market or a multilateral trading system.

How do we know that our startup is innovative for the purpose of the new Spanish legislation?

As we mentioned before, the new Spanish start-up law will apply to companies who meet the requirement of ´´being innovative´´, among others, but how we can conclude whether a start-up is innovative for the new Spanish start up rules propose?

Pursuant article 4 of the said law, entrepreneurs must contact ENISA (Empresa Nacional de Innovación SME S.A.) which is a state-owned company who will assess whether or not the start-up is innovative for this purpose.

Which are the main benefits provided by the new Spanish startup law?

The tax rate for start-ups in corporate income tax and non-resident income tax (IRNR) is dropped, from the general rate of 25% to 15%.

Also, with the aim of promoting investment, the new rules raise the maximum deduction base for investment in start-up companies from 60,000 to 100,000 euros per year. In addition, the deduction rate increase from 30% to 40%.

Moreover, this new law envisages the possibility for start-ups to request a deferral of the tax due on corporate tax for a period of 12 months.

On the other hand, in order to make simple the bureaucratic process, non-resident investors are no longer required to obtain a foreigner´s identification number (NIE) and they only will need to obtain a tax identification number (NIF).

Spain’s Entrepreneurial Nation Strategy

With the aim of becoming the number one country in Europe for investment in innovative entrepreneurship, the Spanish Government has announced the implementation of 50 measures to provide support on the innovative entrepreneurial field. These measures include and are not limited to the following:

Connected Industry 4.0 project, which has the objective of providing a strategy to support companies in their digital transformation.

The Spanish National Department of Traffic (Dirección General de Tráfico) leads the project Plataforma de vehículo conectado 3.0 where the Spanish Government proposes the increased of new technologies, automation, big data and 5G to improve the vehicles’ connectivity.

Also, the Spanish Government has approved an Integrated National Energy and Climate Plan 2021-2030 where promotes energy efficiency and renewable energy. Also, encourages to consumers to become active players in the energy transition.

In addition, Spain will launch the National Entrepreneurship Office to coordinate and organise support services for entrepreneurship in collaboration with public and private agents.

Spain will use its Next Generation EU subsidy which is approximately €1.5 billion to put these ideas into action.

When will be possible access to the benefits provided by the new Spanish startup rules?

We are expecting the official announcement from the Spanish Government.

If you want to be updated about this topic, send an email to london@scornik.com and you will receive the latest news.

Laura Gallego Herráez

Associate Spanish Lawyer and Business Developer at Scornik Gerstein LLP.

laura.gallego@scornik.com

Read more about Corporate & Commercial.