A Spain New Limited Liability Company (SLNE) is formally called a “Sociedad Limitada Nueva Empresa”. This type of company is a new variation on the S.L. (LLC). It is intended for small and medium-sized companies as LLC’s can have unlimited shareholders. Similar to a LLC, formation is a simple and quick registration process.
The law allowing for the formation of SLNE’s was enacted in 2003. Its purpose was to encourage small companies to form in Spain. Instead of unlimited shareholders enjoyed by a LLC, the SLNE maximum is five. The company name differs from a LLC as it must use one of the founder’s names. While the minimum share capital is 3,000 Euro like a LLC, it has a maximum at 120,000 Euro.
Foreigners can form a SLNE while owning all of its shares.
Background
The Kingdom of Spain is located in Europe and is a sovereign country. Its political system is a unitary parliamentary constitutional monarch with a Monarch, a two house Legislature and a Prime Minister.
Benefits
A Spain New Limited Liability Company (SLNE) has the following benefits:
• Foreign Owners: Spain permits foreigners to own all of the shares in a SLNE.
• Limited Liability: Shareholder liability is limited to his/her contributed capital.
• One Shareholder: Only one shareholder is permitted to form a SNLE.
• One Manager: The minimum requirement is one manager who can be the sole shareholder.
• Low Minimum Share Capital: The required minimum share capital is 3,000 Euro.
• Fast Registration: The SLNE can be registered online in one day.
• EU Membership: Spain offers opportunities to engage with other EU members as a member of the European Union (EU).
SLNE Company Name
Unlike any other company, the SLNE’s name must include that of one of its founder’s first name and two surnames along with its government registration number and either the phrase “Sociedad Limitada Nueva Empresa” or its abbreviation “SLNE”. The two surnames follow Spanish culture of including the family names of both parents. Most English speaking applicants include their given middle name to form the three names. For example, “William Robert Smith” is an acceptable first name and two surnames.
The government registration number is an ID-CIRCE code which is provided when registering online or in person. The ID-CIRCLE is an online platform allowing for fast registration of LLC’s and SLNE’s in Spain. Its Spanish name is “Centro de Información y Red de Creación de Empresas”. And its English translation is “Information Centre & Business Setup Network”.
If the original founder is no longer a shareholder, another name must replace the original name. However, using a shareholder’s name will no longer be required; Any name can be used as long as it is approved by the Central Commercial Registry.
Registration
All that is required to register a new SLNE is to file a single electronic document online with the public Deed of Formation. Approval can occur within 48 hours of the filing.
Limited Liability
Third party liability is limited to the shareholders’ contributed capital.
Shareholders
The SLNE shareholders can be a minimum of one and a maximum of five. Only natural persons can be shareholders. Corporations and other legal entities are not permitted to be shareholders. A shareholder can only be a shareholder in one SLNE.
Membership can be increased after registration by increasing the transfer of shares. However, if shares are acquired by legal entities, the shares must be transferred to natural persons within three months.
Management
Members of the managing body must be shareholders. Thus, a SLNE is self-ruling by its shareholders. A Board of Directors is prohibited. One sole shareholder can be the sole manager.
Governing bodies are a General board of shareholders and a personal or multi-personal managing body. Their duties can be established by a Resolution of the General Meeting (Junta General) and by adapting the company’s bylaws.
Corporate Purpose
The law allows the following types of business activities: tourism, farming, forestry, livestock, fishing, construction, industrial, commercial, transportation, brokerage, communications, professional services, and all other service activities.
The corporate purpose may include more than one business activities.
Accounting
Spain requires every SLNE to maintain proper accounting practices and financial statements which include cash flow, income, expenses, losses, change in equity, and a balance sheet.
Registered Office and Agent
SLNE must have a Spanish registered office with a local registered agent.
Minimum Share Capital
The minimum share capital for a SLNE is 3,000 Euro while the maximum amount is 120,000 Euro. Unlike a LLC whose shareholders can contribute “like-kind” in lieu of cash, the SLNE shareholders may only contribute cash. If the capital exceeds 120,000 Euro, the company must reregister.
Annual General Meeting
The law requires an Annual General Shareholders’ Meeting. Since a SLNE is a small company there is flexibility regarding the manner in which the meetings are held.
Taxes
The SLNE is treated as a single legal entity for tax purposes requiring only one tax return.
The law allows a SLNE to defer paying certain taxes along with prepayments and withholding from one to two years without having to pay interest or late payment penalties.
The 2017 corporate tax rate is 25%. The Value Added Tax (VAT) is 21%. However, some products and services VAT are 4% to 10%.
Public Records
The Commercial Registry records are available to the public.
Registration Time
Registering a SLNE can be done in person or much faster online where the process takes one day.
Shelf Companies
Spanish shelf companies are available to purchase.
Conclusion
A Spain New Limited Liability Company (SLNE) has these benefits: 100% foreign ownership, limited liability, one shareholder, one manager, low required minimum share capital, fast one day online registration, and EU membership.
