THE “CREA Y CRECE” LAW

Although it will not come into force until 2022, the Spanish “Growth Law” will continue with its parliamentary processing named as the “Crea y Crece Law” (“Create and Grow Law”), within the framework of the Spanish Recovery, Transformation and Resilience Plan. The main novelties of said law will be:

1. The incorporation through digital media of companies with a minimum share capital of one euro will be allowed (compared to the minimum 3,000 euros that are currently required) and in less than ten days with the consequent reduction in terms and notarial costs and registration. This term will also apply to capital stock increase and reduction operations. And companies formed in this way will be obliged to allocate 20% of their profits to the Legal Reserve item until this added to the share capital reaches the minimum figure of 3,000 euros. And if the company has debts and is dissolved without being able to satisfy the debts with the resulting equity, the partners will be jointly and severally liable for the difference between the amount of 3,000 euros and the amount of the subscribed capital.

2. Likewise, measures will be included to face late payment in commercial operations that will make it impossible to access the aid of the Recovery, Transformation and Resilience Plan for companies that do not meet the legal payment deadlines.

3. It will also incorporate measures to improve business growth financing instruments alternative to bank financing, such as crowdfunding, participatory financing, collective investment and venture capital, and measures to simplify existing legislation, remove obstacles, streamline procedures and expand the catalog of license-exempt activities.

4. The Crea y Crece Law will also contemplate the derogation of the regulation of companies in a successive formation regime, so that companies that, prior to the date of entry into force of this law, are subject to the provisions of article 4 bis of the Capital Companies Law, they may choose to modify their bylaws to stop being subject to the successive formation regime and be governed, as long as their share capital does not reach the figure of 3,000 euros by these same rules as set out above.

5. On the other hand, the regulation regarding “New Company Companies” (Sociedad Nueva Empresa) will disappear as it is considered obsolete. For this reason, these new companies already existing at the entry into force of this law must be governed by the regulatory provisions of limited liability companies and will use the name SRL.

The objective is to simplify and modernize the investment environment that should allow an improvement in the promotion of economic activities in Spain that also contributes to being more attractive to foreign investors.