Create a company with 1 euro? Although it may seem far from reality, Spanish law now allows this possibility. On September 29, Law 18/2022, of September 28, on the creation and growth of companies (BOE-A-2022-15818), also known as the “create and grow” Law, was published, which modifies, among other issues , the Consolidated Text of the Capital Companies Law (BOE-A-2010-10544).
The main reform of this law is the reduction of the minimum share capital in the constitution of a limited company to €1 and measures are taken to expedite the constitution of limited companies. Thus, the new text introduces novelties in the fight against late payment (chapter IV), in the participatory financing of companies (chapter V), as well as in collective investment (chapter VI), modifying multiple laws.
This change with the new law is intended to promote entrepreneurship and facilitate the creation of new companies and encourage the increase in business size. As of the entry into force of the new regulation, limited liability companies may be established with a minimum share capital of 1 euro of capital, unlike the previous regulation that required at least 3,000 euros, according to the new wording of Articles 4 and 5 of the Capital Companies Law. With this reduction, it is intended to reduce the costs and economic effort in the incorporation of companies.
However, the capital, for the purposes of liability towards creditors, continues to be set at the previous 3,000 euros, reducing it to 1 euro only for incorporation purposes. Thus, the new wording of article 4 of the Capital Companies Law establishes certain limitations or requirements when it is incorporated for 1 euro. In this sense, it indicates that "as long as the capital of limited liability companies does not reach the figure of three thousand euros, the following rules will apply":
In the first place, an amount at least equal to 20% of the profit must be allocated to the legal reserve until said reserve together with the share capital reaches the amount of three thousand euros.
Also, in case of voluntary or forced liquidation, if the company's assets are insufficient to meet the payment of social obligations, the partners will be jointly and severally liable for the difference between the amount of three thousand euros and the amount of the subscribed capital.
But all that glitters is not gold. Starting a business also entails a series of responsibilities and commitments. As its name indicates, an SL has limited liability, but obviously it will not be only 1 euro, as this could lead to problems in the future.
The objective of the Government is to promote and facilitate the moment of the constitution of a company, eliminating the prerequisite of having a capital of 3,000 euros. However, this is just to get rolling.
In other words, this 20% reserve is intended entirely to cover this lack of capital that does not exist when the minimum requirement goes from 3,000 to 1 euro. The goal of this measure is to make it easier to start, not eliminate capital.
It is normal that the possibility of creating a company with one euro may be attractive. The truth is that in order to create it you must follow the same steps that were needed before.
The great novelty is that, in addition to the practically elimination of the initial share capital, it is easy to set up, since you can do it electronically.
The new Law facilitates the telematic constitution of companies. To do this, you will have to access the one-stop shop of the Information Center and Business Creation Network (CIRCE). In this way, you will reduce deadlines, notary costs and registration costs.
The public deed is required to have a standardized format. The period in which the registrar must definitively register the deed of incorporation in the commercial register is reduced. The publication of the registration of the company in the Official Gazette of the Mercantile Registry will be exempt from the payment of fees. In short, another money that can be saved.
