At last, the “Create and Grow” law is approved: we explain the key points

06 October 2022
Business Consultancy

After several months of negotiations, the Congress has approved the law 18/2022, of the 28th of September, of creation and growth of business (“Law create and grow), that has as a main aim boosting business creation and growth by adopting various measures which enter into force on 19th October 2022, with some exceptions.

The law contemplates the speeding up of procedures in the incorporation of limited companies (such as the creation of societies from 1 euro of share capital) and generalizes the use of electronic invoicing, among other measures.

We summarize the key aspects of this new law:

It has been approved the possibility of creating business with a share capital of 1 euro

With the approval of the law “Create and Grow”, the minimum share capital of a limited liability company is one euro, when until now it was 3,000 euros.

What are the conditions to create a limited company?

As long as the company’s capital does not reach the 3,000€ that were requested previously, two requirements must be met:

That 20% of the profits go to the legal reserve until reaching 3,000€ by adding the share capital.
In the event of liquidation, if the company assets are not enough to cover the payment of social obligations, the partners would have to pay the difference between the amount of 3,000€ and the amount of the subscribed capital.

What does the reduction of the minimum capital requirement to €1 entail?

The reduction of minimum share capital to 1€, removes the possibility of setting up companies by successive formation. The companies that are behold to this regime may opt to change their articles of association by creating an LLC provided that their share capital does not reach 3,000 euros and this modification is submitted before 19 October 2022.
The limitation of liability is extended to productive equipment used in the operation and those it replaces, duly identified in the Register of Movable Property and limited to the aggregate turnover in the last two financial years.
The founders of an SL may choose to incorporate the company by means of a public deed in standardized format and standard articles of association. The simplified models of the standardized format of the standardized articles of association and the standardized format of the powers of attorney must be available in all the official languages in all the Autonomous Regions. The publication of the company's registration in the Official Gazette of the Commercial Registry will be exempt from the payment of fees.
The final registration of the deed of incorporation of the limited liability company by means of a public deed in standardised form without standard articles of association shall be made within 5 days from the day following the date of the filing of the deed.

Benefit and Common Interest Companies

The figure of Benefit and Common Interest Companies is recognised as those capital companies that voluntarily decide to include in their articles of association their commitment to the explicit generation of positive social and environmental impact through their activity, and their submission to higher levels of transparency and accountability in the performance of these social and environmental objectives, and the taking into consideration of the relevant stakeholders in their decisions. The criteria and methodology for the validation of this new business concept will be established by means of regulatory development.

The obligation to issue electronic invoices is introduced.

All entrepreneurs and professionals will be obliged to issue, send and receive electronic invoices in their business relations with other entrepreneurs and professionals.

Which specific requirements will have to be applied?

Both the technological solutions and platforms offered by suppliers and those that are company-owned will have to offer interconnection and interoperability free of charge.
Copies of invoices may be requested for four years after they have been issued.
The recipient of the invoice may not oblige the issuer to formulate the invoice in a predetermined form.

Which period of adapting do the companies have?

For those companies with an annual billing higher to 8 million euros, the adaptation will be of a year. 30/09/2023
For the rest of entrepreneurs and professionals, it will take effect two years after the approval of the implementation of this law. 30/09/2024

Alternative financing schemes are strengthened

Measures are included to boost financing instruments for business growth, making alternative financing mechanisms to the bank financing system more flexible:
Crowdfunding or participatory financing, adapting state regulations to European regulations, the most noteworthy:
Inclusion of a new category called "portfolio management" which allows the participatory financial services provider to invest funds on behalf of the investor.
A single individual investment limit per project for retail investors is set at 1,000 euros or 5% of wealth.
Investment is limited for projects of €5M.
A period of 24 months is foreseen for companies to adapt their business activity.
Collective investment: the figure of "European long-term investment funds" is introduced, also giving retail investors access to investment by small and medium-sized unlisted companies in a type of assets (syndicated loans, private debt, participations and shares) until now, only available to institutional investors.
The figure of "debt fund" is recognised.
Venture capital: extending the type of company in which these entities can invest, including financial companies with a high technological component.