Do you have a Spanish company? Think about your compliance obligations!

Our office assists local and international companies establishing and incorporating Spanish companies (sociedad limitada, similar to a private limited company). OTIS LEGAL GROUP advises specifically Dutch companies as well as other nationalities with the day to day corporate business in Spain. 

Although everyone likes to focus on the core business, there are a lot of other legal aspects that as shareholder or Director you have the obligation to comply with in Spain. These legal aspects go beyond the daily business as keeping the books, convening general meetings and doing tax returns.

Compliance Spanish company 

For example, there is a legal obligation to have the company’s deeds and books. The books should always be up-to-date and available at all times to the shareholders, tax authorities and other interested parties with a right of access. The deadline for legalizing the books is four months after the end of the fiscal year. This is part of the company’s legal obligations and compliance.

This deadline must be strictly adhered to in order to avoid the consequences of not being compliant as per the following:

• The company’s transparency: a lack of transparency can damage the investor´s confidence. Failing to legalize the books and maintain transparent financial records can harm the company’s reputation. This can negatively impact relationships with investors, suppliers and other stakeholders who may view the lack of financial transparency as a red flag. Financial institutions, such as banks, often require transparent and up-to-date financial records before providing loans or other forms of financing.
• Administrative sanctions: Spanish authorities, such as the commercial register and the tax authorities, can impose sanctions if legal compliance obligations are not met. If irregularities or suspicions of financial misconduct arise, authorities may initiate audits or investigations into the company’s financial affairs. These procedures can be time-consuming, costly, and disruptive to the company’s operations. Moreover, they may uncover further legal violations or result in additional penalties and liabilities for the directors involved.
• Directors’ liability: the company’s directors may be liable for not complying with these legal obligations. Directors may be held personally liable for any damages caused by their negligence or failure to fulfill their legal obligations. In severe cases where there is a persistent failure to comply with legal requirements and maintain accurate books, the company may face dissolution (initiated by the Commercial Registry).

What exactly do we mean by this legal compliance? Consider, among other things, the following annual obligations:

1. Book in which the shareholders are kept (libro de socios);
2. Having minutes of the annual general meeting of shareholders, in which any payment of dividends, financial statements and ratification or resignation of directors are discussed;
3. Book in which the minutes of the ordinary and extraordinary shareholders’ meeting are kept (libro de actas de juntas general);
4. If there is a board of directors, minutes should be kept of decisions made by the board (libro de actas del consejo de administración).

Other issues that might be mandatory or applicable to comply with within the company:

• Managing Changes in the Company: Ensuring proper documentation of extraordinary meetings and maintaining minutes for significant changes such as amendments to the company’s purpose, articles of association, capital increase, relocation, etc. Additionally, overseeing the implementation of these changes in accordance with legal requirements.
• Resolving Legal Conflicts: Providing guidance and assistance in resolving legal conflicts that may arise involving the company, directors, and shareholders. This includes advising on dispute resolution, negotiating settlements, or representing the company’s interests in legal proceedings.
• Compliance with Anti-Money Laundering Legislation: Offering advice and support in complying with anti-money laundering legislation. This involves implementing measures to prevent money laundering activities within the company, conducting risk assessments, and establishing appropriate internal controls and reporting procedures.
• Privacy Policy and Data Protection: Advising on privacy policy and ensuring compliance with regulations pertaining to the protection of personal data. This includes reviewing and updating privacy policies, implementing data protection measures, and addressing any data breaches or security incidents that may occur.
• Closure and Dissolution of the Company: Providing guidance and assistance in the orderly closure and dissolution of the company. This involves ensuring compliance with legal procedures, fulfilling obligations towards creditors and stakeholders, and managing the necessary administrative tasks associated with winding up the company’s affairs.

OTIS Legal Group is happy to help you arrange these compliance matters, digitally as far as possible of course, so that you can focus on your core business. We can annually arrange and maintain the deeds and (digital) books for you, in collaboration with your gestor and tax advisor. We can also arrange the other aforementioned peripheral matters, for example when changes take place in the company.

Please feel free to contact us. We are happy to be at your service.