Companies can now be incorporated entirely online in Spain

On 9 May 2023, Law 11/2023, of 8 May, was published, transposing the directives  of the European Union on the accessibility of certain products and services, the migration of highly qualified persons, taxation and the digitalisation of notarial and registry procedures; and amending Law 12/2011, of 27 May, on civil liability for nuclear damage or damage caused by radioactive materials.

As can be deduced, the law introduces reforms of various kinds; however, in this article we will focus solely on the corporate changes brought about by this Law, whose main new development is the online incorporation of companies, which will make it possible to carry out incorporation without the founders having to appear before a notary or any other public authority.

As a result, among other regulations, the Capital Companies Act has been amended, introducing new articles such as articles 20 bis and 22 bis and a new chapter III bis, which define the features and conditions of this procedure, which we analyse below:

• Types of companies:

  • The online incorporation process is only available for limited liability companies incorporated through cash contributions, without prejudice to the possibility of incorporating this type of company through the procedure established by law.
  • It is also important to highlight that this online process is not limited to incorporation, but also extends to the entire life cycle of the company, for which a system for submitting documents online will need to be established.

• Contributions:

  • Cash contributions will be made through a payment instrument widely available in the European Union that allows the person making the payment to be identified.
  • The payment instrument used must be provided by an electronic payment service provider or a financial institution established in a Member State.
  • The documentation, valuation and transfer of cash contributions will be carried out electronically.
  • Notwithstanding the above, it is important to note that, in accordance with article 62.2 of the Capital Companies Act, it will not be necessary to prove the reality of the cash contributions if the founders state in the deed that they will be jointly and severally liable to the company and its creditors for the reality of the contributions, as expressly established in article 40 ter, section 3.

• Electronic templates:

  • The Ministry of Industry, Trade and Tourism, together with the Ministry of Justice, must make the necessary changes to the Single Electronic Document in order to make available a standardised public deed and standard articles of association
  • All these templates and documentation must be accessible through the European digital gateway, and a communication node with the notarial platform must be established.

• Registration in the Commercial Registry and deadlines:

  • If the online incorporation method is used, the new article 40 quater establishes that the registration deadline in the Commercial Registry will be six working hours counted from the day following the date of the entry of presentation, if deeds in standardised format with coded fields and standard articles of association are used.
  • In all other cases, the maximum period will be five working days from the day following the entry of presentation.

• Exceptions:

  • Although in principle the process exempts founders from appearing before a notary, there are some exceptions under which founders may be required to appear in person. Specifically, in the following cases:
    • By reasons of public interest and in order to prevent any forgery.
    • To verify the legal capacity of the signatory and, where applicable, the validity of their powers of representation

In such cases, the Notary must attach to the deed of incorporation the reasons why physical attendance is required.

However, these exceptions only apply to the incorporation of companies, not to the other stages of corporate life.

• Reform of other regulations:

On the other hand, the introduction of all these new developments entails the regulation and amendment of the rest of the legal system so that they can be implemented. Therefore, with regard to the Commercial Code, article 17 has been amended in order to improve free access, through the Commercial Registry, to relevant information on commercial companies and their branches throughout the European Union.

The Notarial Law has also been amended to allow companies to be incorporated by videoconference as a channel for the exercise of the notarial public function. This procedure may be used for appointments and commercial powers of attorney, as well as for the execution of any other corporate act.

• Entry into force:

The reform of the of the Capital Companies Act came into force on 10 May 2023; however, the reform of the Notarial Law, which is what enables the online incorporation system, with executions by videoconference, will not come into force until six months later, i.e. until 9 November 2023, and as for the other reforms, such as those of the Commercial Code, the Mortgage Law and Law 24/2001, which provide the remaining elements that give the system coherence, they will come into force on 9 May 2024.