Business Structures, Entrepreneurship & IP Essentials
Fundamentals of Business & Entrepreneurship
Free Market Economy
Individuals choose economic activities, while the state imposes regulations to control the economy. Price fixation is free.
Freedom of Enterprise
The freedom for private businesses to organize and operate for profit within a competitive system. There is no government interference, other than to protect public interest and maintain national economic balance.
- Freedom to choose business within legal frameworks
- Private property rights
- Free competition
- Protection of customers
- State’s obligation to promote private initiative
- Economic policies originate from the national legislative branch
Entrepreneur
An individual who, on their own behalf, practices a professional activity to produce goods or services for the market.
- Natural or legal person
- Takes risks and seeks profit
- Organizes an activity
- Develops professional economic activity
- Produces goods or services
Business Size Classification
- Micro: <10 workers | <€2 million turnover
- Small: <50 workers | <€10 million turnover
- Medium: <250 workers | <€50 million turnover
Entrepreneurial Activity & Legal Aspects
Categories of Economic Activity
- Industrial: e.g., INDITEX factory
- Commercial: e.g., selling INDITEX products
- Services: e.g., MOVISTAR mobile data service
Individual Entrepreneur
Must be 18 years or older, with full disposition of their assets.
Exceptions:
- Minors with a legal representative.
- Married individuals under certain marital regimes may also be responsible for their partner’s debts.
Incompatibilities for Entrepreneurs
Incumbents:
Individuals holding public office, public servants, and high-ranking officials. Example: A judge must request permission to engage in entrepreneurial activity.
Conditionalities:
General representatives and company administrators (CEOs) often have significant responsibilities and workload.
Entrepreneurial Collaborators
- Dependents: Individuals in a subordinate position, fulfilling orders (e.g., employees/workers).
- Non-Dependents: Individuals with autonomy (e.g., franchisees like McDonald’s, independent sales representatives).
Extinction of Entrepreneurial Status
Occurs upon death or by voluntary decision (e.g., deregistering from social security and taxes).
Consumer Rights & Limited Liability
Consumer
A natural person acting outside the scope of their economic activity.
Consumer Rights
- Protection against risks affecting health and safety.
- Protection of legitimate economic and social interests, including against unfair practices (e.g., deceptive selling).
- Compensation for damages incurred.
- Correct information regarding goods and services, and the transmission of knowledge for informed consumption.
Limited Liability Entrepreneur (LLE)
An entrepreneur who does not bear unlimited responsibility before creditors. This status aims to protect their primary residence if certain requirements are met.
- Must have legal capacity.
- Must add to their name their VAT number and the acronym ERL (Emprendedor de Responsabilidad Limitada).
Requirements:
- Manifest their intention to be a Limited Liability Entrepreneur before a notary, indicating their activity.
- Inscription in the Public Register of Commerce.
- Inscription in the Public Register of Property.
- Present annual accounts before the Public Register of Commerce.
Exceptions:
- Debts to the Tax Agency and Social Security.
- Primary residence value exceeding €300,000.
- Debts not directly related to the economic activity.
- Debts incurred prior to acquiring LLE status.
- Proof that the entrepreneur committed fraud.
Types of Business Companies & Structures
Joint Stock Company (SA)
Minimum capital of €60,000 (may vary by activity). Features limited responsibility. Management by partners or external persons. Shares are freely transferable.
Limited Liability Company (SL/SRL)
Minimum capital of €3,000. Management by partners or external persons. Shares are transferable, often with rights of first refusal.
Limited Partnership by Shares
Formed for profit, with a minimum capital of €60,101.21. Transmission of shares is possible. Partners can be silent or collective shareholders.
New Limited Liability Company (SLNE)
Minimum capital of €3,000, maximum €120,000. Formed by 2-5 natural persons. Can be established online within 48 hours.
Worker-Owned Company
Minimum 3 partners, with permanent contracts and employment. No single partner can hold more than 33.33% of the capital, except for public institutions (up to 50%). Transfer of shares gives preference to permanent workers.
- Private: Minimum €3,000 capital.
- Public: Minimum €60,101 capital.
Professional Company (SLP)
Requires specific professional qualification for the joint exercise of a professional activity, either directly or through professional companies.
Listed Companies
Listed on a stock market, with no limits on share transmission. At least 25% of shares must be publicly available. Minimum value of €6 million. Features limited responsibility. Inscribed in the Public Register of Commerce. Minimum capital of €1,202,025.
Cooperative Association
Formed by a group of individuals for mutual benefit. Features limited responsibility, equal rights for all members, and potential tax benefits. May face challenges in hiring non-member employees.
Industrial Property & Brand Protection
Industrial Property
Protects inventions and industrial creative works.
- Property Rights: Managed by the Spanish Patent and Trademark Office.
- EUIPO (European Union Intellectual Property Office): Manages EU trademarks and registers community designs.
Not Covered:
- Mathematical methods
- Scientific theories
- Cloning
- Genetic modification of human beings
Protected Designation of Origin (PDO)
Indicates the strongest link to the product’s origin.
Protected Geographical Indication (PGI)
Establishes a relationship between a specific geographic region and a product name. At least 85% of the raw materials or production process must originate from that geographical area.
Innovation
The introduction of something new that improves a product, process, or service.
Protected through patents and Intellectual Property (IP) rights.
Distinguishing Signs
A communication tool, an essential element in a company’s strategy to maintain market share.
- Differentiate an activity, service, or product from others (e.g., Trademarks, Trade Names).
Trademarks
A sign or combination of signs used to distinguish goods or services from those of other enterprises.
Purpose:
- Products & Services (the product itself)
- Collective (e.g., ‘Café de Colombia’)
- Certification marks
Trademark Registration & Management
Reasons to Deny Registration
- Common or generic terms
- Highly descriptive of goods and services
- Geographical indicators (if misleading)
- Contrary to public order
- Offensive to good morals or public health
Right to Register
Natural or legal persons, or non-residents of Europe represented by an Intellectual Property Agent.
Expiration of Trademark Rights
- Not renewing the registration
- Renunciation by the owner
- Lack of genuine use (for 5 consecutive years)
- Loss of distinctiveness
- Fraudulent use
License
A contract where the trademark owner grants permission to a third party to use the mark in exchange for payment.
Slogan
Perceived by the average customer as an indication of the commercial origin of products.
Trade Names
Give the owner the right to use a sign or name.
- Independent from the company’s legal name.
- Registered in the Commercial Register.