Migration of legal entities from and to Spain
The Law 3/2009 regulates both the transfer of the domicile of Spanish commercial companies abroad (emigration) and the transfer of the domicile of companies incorporated under the law of other States to Spanish territory (immigration). Thus, the transfer to Spanish territory of the domicile of a company incorporated under the law of another State shall, in principle, not affect the legal personality of the company. However, the law requires that it must comply with the requirements of Spanish law for the incorporation of the company whose type it holds, unless otherwise provided by the international treaties or conventions in force in Spain.
The transfer of the registered office of foreign companies to Spanish territory is expressly regulated in article 94 of the Law 3/2009, which establishes the legal requirements for the entry of foreign companies into Spain, distinguishing between companies from countries belonging to the European Economic Area and states that are not part of it. The international transfer of registered office has been regulated in Spain as a structural modification operation since 2009, as a result of the transposition of the now repealed Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies (now Directive (EU) 2017/1132, of 14 June 2017), in Law 3/2009, of 3 April, on structural modifications of commercial companies (“LME”), in order to guarantee the effectiveness of the internal market of the European Union and facilitate corporate mobility. This was at the time an important novelty in that it meant the development of a more specific regulation of the matter in Spain.
The same rule shall apply to the transfer to Spain of the domicile of companies incorporated under the law of States that are not part of the European Economic Area, if their personal law allows it with the maintenance of legal personality. In this case, the LME also requires companies to justify that their net worth covers the share capital required by Spanish law with an independent expert report.
Notwithstanding the foregoing, without prejudice to this new regulation of the cross-border transfer of domicile in Spain, over the years legal practice has made it clear that the current regulation of international transfer of domicile may be insufficient, mainly as a result of the involvement of two legislations in the process that sometimes makes it difficult to manage the incidents caused by the differences between the jurisdictions of the countries involved, which in certain cases can complicate and extend the transfer process more than initially estimated, to which is added the fact that companies are forced to have to consult in both countries, which can also make the process more expensive than desirable by them.
What we offer
- Intra-Community transfers of registered office (from Spain to another European Country and vice-verca)
The international transfer of domicile of companies between countries of the European Union is based on the principle of freedom of establishment, according to European regulations and consolidated jurisprudence of the Court of Justice of the European Union (“CJEU”), which seeks to facilitate the transfer of the registered office between member countries of the Union with the continuity of the legal personality of the company whose domicile is transferred and without national laws being an obstacle in the process.
Under the freedom of establishment of the Community, restrictions on the freedom of establishment of companies formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Union in the territory of another Member State are prohibited. This prohibition shall also apply to restrictions on the opening of agencies, branches or subsidiaries by such companies.
In this sense, the lack of a specific European Directive on the international transfer of domicile makes the jurisprudence of the Court of Justice of the European Union especially relevant, a field in which our office is highly specialised due to our extend experience in cases before the European Court. The most recent jurisprudential doctrine of the Court being that issued in the judgment of October 25, 2017 (Polbud case), which establishes that under the umbrella of the freedom of community establishment a company incorporated under the law of a Member State can transfer its registered office to the territory of another Member State, without the need to transfer its real registered office, provided that the company fulfils the conditions laid down by the State of destination for granting its nationality to the company. Similarly, Member States may not impose a liquidation obligation on companies wishing to transfer their registered office to another Member State. All of the above under the premise that moving the domicile to benefit from more advantageous Union legislation “does not constitute abuse in itself“.
As already mentioned, it is expected that Brexit will lead many companies in the United Kingdom to want to move their domicile to other Member States, which is presented, at European level, as an opportunity to promote the enactment of a new Directive with specific and more extensive regulation on international transfers of domicile between members of the Union that simplifies and harmonizes the procedure at Community level.
- Transfer of foreign companies in Spain from non European countries
The main specialty of the immigration procedure of foreign companies to Spain is the cross-border nature of the process, which implies the coexistence during it of two national laws, that of the country of origin and that of the country of destination, so that in many cases there are certain incompatibilities between them, which must be overcome so that both legislations converge in the common purpose, which is the legal effectiveness of the transfer of domicile in both jurisdictions.
Thus, the transfer agreement must be governed by the national law of the company whose domicile is moved, but in turn it must comply with the legal requirements and requirements of the country of destination, Spain in this case (each Member State has the power to define the connecting factor required of a company in order to be considered incorporated under its national law).
Focusing on the applicable law in Spain, the LME regulates in more detail the procedure for cases of emigration of Spanish companies abroad, since only one article of the aforementioned law refers to the process of immigration of companies to Spain.
Without prejudice to the scarce regulation of the immigration process of companies to Spain, the process is sufficiently established from a practical point of view, being the main milestones of the process the following:
- The foreign company whose registered office is to be transferred to Spain must adopt the transfer agreement in accordance with the provisions of its applicable law, which determines the necessary requirements for the execution of the agreement. However, it must include the necessary mentions in order to comply with the requirements of Spanish law for the constitution of the company whose type it holds, and which includes, for example, the adaptation of the bylaws.
- The agreement of transfer of the registered office must be elevated to a public deed, granted before a notary, which will be accompanied by the literal certification of the company’s data that appear in the registry of the country of origin, translated and legalized / apostilled, as appropriate.
- The deed must be registered in the Spanish Mercantile Registry that will be competent by reason of the new registered office in Spain.
- Simultaneously with the presentation of the deed of transfer of domicile in the Mercantile Registry, the company that transfers its domicile must make the deposit of its annual accounts for the last closed financial year in the Spanish Mercantile Registry that corresponds
- In the event that the State of origin is not part of the European Economic Area, an independent expert report will also be necessary justifying that its net assets cover the amount of the share capital required by Spanish law. The independent expert shall be appointed by the Commercial Register of the province of destination in accordance with the provisions of the Regulations of the Commercial Register.
The lack of legislative harmonization in the different countries means that in practice the process of international transfer of domicile is complicated, extended and more expensive than the companies initially foresee. For this reason, what our office offers as an added value service is also a comprehensive in depth analysis of the pros and cons of transferring a foreign legal entity in Spain.