On September 29, 2022, Law 18/2022, of September 28, on the creation and growth of companies (called the “Create and Grow Law”) was published in the BOE. According to the objective of the published standard, it is to facilitate the creation of new companies, reduce bureaucratic obstacles , help with late payment and promote the growth of companies.
Therefore, the Create and Grow Law is an instrument to try to streamline certain bureaucratic procedures related to the creation of companies and certain instruments with increasingly greater impact given the technological change that we are experiencing. An interesting impact of the Create and Grow Law is expected for digital businesses and Startups.
Among the most important measures of the Create and Grow Law are:
- Facilitate business creation
- Promote business growth by improving regulation and eliminating obstacles to economic activities
- Increase the fight against late payment started with Law 3/2004, of December 29, which establishes measures to combat late payment in commercial operations (known as the Late Payment Law)
- Facilitate the access of new projects to financing, through new financing models (such as crowdfunding ) more adapted to new business models
Most important measures of the Create and Grow Law
Some of the most relevant changes to the Create and Grow Law are the following:
Related to business creation:
- New minimum share capital in limited liability companies. Possibility of establishing a company with 1 euro of share capital , instead of the 3,000 euros that until now were necessary, with other requirements that are added in cases where the amount of 3,000 euros of share capital is not reached.
- Elimination of the possibility of a company being established under a successive formation regime. In these cases, limited liability companies that are subject to this regime may adapt their Bylaws.
- Elimination of the figure of the New Company Limited Company. This type of company, barely used, will be eliminated en bloc from the Capital Companies Law.
- Certain information duties and additional obligations are established for notaries and intermediaries in advising and participating in the creation of companies in relation to the Entrepreneur Service Points (“PAE”) and the Information Center and Business Creation Network (” CIRCE”).
- The period within which the Commercial Registry has to register the deed of incorporation is considerably reduced, reducing it from 15 days to 5.
Fight against late payment:
- Measures to combat late payment that include, among others (i) the obligation to issue and send electronic invoices is established; ( ii ) In addition, companies that contravene Law 3/2004, of December 29, which establishes measures to combat late payment in commercial operations (known as the Late Payment Law), will not be able to access a public subsidy and ( iii ) repeated non-compliance with the rules to combat late payment in commercial operations is considered an unfair act.
Removal of obstacles to economic activities:
- The list of activities exempt from the requirement for a prior activity license is expanded. Thus, Public Administrations will not be able to require obtaining prior licenses for the activities detailed in the annex to the Crea y Crece Law.
Access to financing:
- are established for the regulation of business growth financing instruments such as participatory financing (known as Crowdfunding), collective investment and venture capital. Crowdfunding platforms may use mechanisms managed by them to group investors, including: (i) limited liability companies, ( ii ) entities subject to the supervision of the CNMV, the Bank of Spain or the General Directorate of Insurance. and Spanish Pension Funds, or ( iii ) other figures that are usually used for these purposes in States of the European Union.
- Registration in the Commercial Registry of civil companies is foreseen. This measure is especially relevant taking into account the usual use that is being made of this type of companies for investment, especially in the initial stages of Startups.
Conclusion on the Create and Grow Law
The Create and Grow Law provides for greater agility for the creation and constitution of new companies. The law is part of the Spanish Recovery, Transformation and Resilience Plan. The objective of the law is to promote the creation of companies and comply with some recommendations made by international organizations to Spain. We hope that the Create and Grow Law has a positive impact on digital businesses and startups and that it contributes to speeding up business creation in the coming months.
This publication does not constitute legal advice.
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