Start up with one euro!

18 April, 2023
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Commercial
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Patricia Fernández


The entry into force of Law 18/2022, of September 28, on the creation and growth of companies, considerably reduces the initial amount of the investment, and greatly simplifies the formalities for the incorporation of the limited liability company.

How do these issues materialize?

Firstly, the possibility of incorporating a limited liability company with an initial share capital of 1 euro is introduced. In this way, it Will be possible to allocate greater resources to other items necessary for the clearance, consolidation, and growth of the company.

This legislative innovation, however, entails a series of obligations to protect third parties that may contract with the company. As long as the share capital of the company does not reach 3.000 euros, the following must be complied with:

1. An amount equivalent to 20% of the profits shall be allocated to the legal reserve until said reserve, together with the share capital, reaches the amount of 3.000 euros.
2. In the event of liquidation (voluntary or compulsory) of the company in which the assets are insufficient to cover the payment of the company’s debts, the partners must be jointly and severally liable for the difference between the amount of the subscribed capital and the amount of 3.000 euros.

Although this amendment is undoubtedly very good news, it Will be necessary to be especially careful to avoid incurring in dissolution due to losses that leave the net worth reduced to an amount less than half of the capital stock (article 363.e) of the Capital Companies Law). It should be borne in mind that with a share capital of one euro the company can incur in this case cause for dissolution relatively quickly.

On the other hand, in order to facilitate the incorporation of limited liability companies, the possibility of carrying out most of the telematic procedures through the information and Network Center for the Creation of Companies (CIRCE) has been introduced, and the Attention Points for Entrepreneurs (PAE) have been set up to provide information services, processing of documentation, advice, training and support for business financing.

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