Legal Framework

• As with most Latin countries, legal requirements are much more onerous than in other environments. Most small and medium sized companies appoint partners of law firms as company secretaries on a retainer basis to cope with the plethora of legal obligations. The cost of setting up a new company is high compared to e.g. Northern Europe.
• Company law is governed by local laws (ley de sociedades etc) and by the commercial code (código de comercio) which defines more detailed requirements. Company structures are similar to other European countries. Most large and medium companies set up as SA (Sociedad Anonima), and smaller companies usually opt for the SL format (Sociedad Limitada). The usual other options such as cooperatives also exist.
• Notaries are a way of life in Spain. Their ‘intervention’ is required in all bank loans and overdraft facilities, signing powers, presentation of annual accounts, etc. Executive powers of company directors and employees must be defined in writing and in most cases notarized and registered with the local mercantile registry (registro mercantil). These include bank signing powers, representation of the company in official, commercial and legal matters and labour responsibilities (hiring, firing etc). Banks will normally ask to see registered ‘poderes’ when opening bank accounts etc.