The incorporation of a company in Spain is a process that requires meticulous attention to various legal and administrative aspects. One of the most critical steps is the drafting of the deed of incorporation, the document that formalises the creation of the company and establishes its operational basis. However, it is common for entrepreneurs to make mistakes during its preparation, which can lead to legal and operational complications in the future. The most frequent mistakes are detailed below, along with practical advice on how to avoid them.
1. Failure to Verify the Availability of the Company Name
Before proceeding with the incorporation, it is essential to ensure that the desired company name is available. Failure to do so can result in delays and the need to modify documents already prepared.
How to avoid it:
- Request for Negative Certification: Request a negative certification of company name from the Central Mercantile Register, which confirms that the chosen name is not registered by another entity. This step is essential to avoid legal conflicts and ensure the unique identity of your company.
2. Defining a Too Broad or Ambiguous Corporate Purpose
The corporate purpose describes the activities that the company will carry out. Too broad or ambiguous wording can generate legal and fiscal uncertainty.
How to avoid it:
- Specificity and Clarity: Write the corporate purpose clearly and specifically, detailing the main activities of the company. This facilitates tax classification and ensures that operations are within the established legal framework.
3. Failure to Correctly Specify the Distribution of Shares among the Partners
A lack of clarity in the allocation of shares can lead to conflicts between partners and problems in decision-making.
How to avoid it:
- Detail in the Deed of Incorporation: Clearly specify in the deed of incorporation the number of shares held by each partner, as well as the associated rights and obligations. This prevents misunderstandings and establishes a solid foundation for the governance of the company.
4. Drafting Incomplete or Undetailed Company Bylaws
The articles of association are the set of rules that regulate the internal functioning of the company. Poor drafting can lead to ambiguities and future conflicts.
How to avoid it:
- Complete and Clear Drafting: Make sure that the articles of association address key aspects such as:
- Administrative bodies: Define whether the company will be administered by a sole administrator, a joint administrator, a joint administrator or a board of directors.
- Decision-making: Establish procedures for important decisions, including the majorities required to approve agreements.
- Transfer of shares: Specify the conditions under which a partner can transfer their shares to third parties.
- Dividend policies: Detail how and when profits will be distributed among the partners.
- Conflict resolution: Include mechanisms for resolving disputes between partners.
Detailed and clear wording of the articles of association helps to prevent conflicts and ensures the orderly functioning of the company.
5. Not Choosing the Right Legal Form
Selecting an inappropriate legal structure can have significant tax and legal implications for the company.
How to avoid it:
- Analysis of Options: Evaluate the different legal forms available in Spain, such as the Limited Company (S.L.), Public Limited Company (S.A.), General Partnership, among others. Consider factors such as the number of partners, legal responsibility, minimum share capital and tax obligations. Choosing the right structure is crucial for the success and sustainability of the company.
6. Failure to Make a Correct Contribution to the Share Capital
The share capital is a guarantee for third parties and a financial basis for the company. Errors in its contribution can generate legal and operational problems.
How to avoid it:
- Bank deposit: Deposit the share capital in a bank account in the name of the company being incorporated and obtain the corresponding certificate. This certificate is necessary for the formalisation of the public deed before a notary. Make sure that the minimum capital required by law for the type of company chosen is correctly contributed.
7. Not having adequate professional advice
Trying to set up a company without professional support can lead to costly mistakes and legal complications.
How to avoid this with Specialised Advice: Seek the support of lawyers and advisors specialising in commercial law and company formation. They will guide you through the process, ensuring compliance with all legal obligations and the correct drafting of the articles of association.
At Gutiérrez Pujadas & Partners, we have a team specialising in company incorporation that will advise you every step of the way to avoid legal errors and optimise your articles of association. Ensure the success of your company from the start. Contact us today and receive expert advice with no obligation.