Understanding Business Structures: LLC, SLNE, and Corporations

Posted on Feb 17, 2025 in Law & Jurisprudence

Business Structures: LLC, SLNE, and Corporations

This document outlines the key characteristics of three common business structures: Limited Liability Companies (LLC), Sociedad Limitada Nueva Empresa (SLNE), and Corporations.

Limited Liability Company (LLC)

  • Number of Partners: One or more individuals or entities.
  • Liability: Limited to the capital invested.
  • Capital: Minimum of 3,005.06 EUR, divided into shares. Can be in cash, property, or rights.
  • Company Name: Trade name + “Limited Liability Company” or the abbreviation (SRL or SL).
  • Taxes: Corporation tax, VAT, IAE (Economic Activities Tax).
  • Constitution: Established by deed registered in the Commercial Register, including the articles of association.
  • Organs:
    • General Meeting: All members participate in oversight of social management, adoption of annual accounts, application of income, appointment/dismissal of administrators, and modification of statutes.
    • Administrators: Manage the company; can be a single manager or a Board of Trustees.
  • Other: Suitable for SMEs (Small and Medium Enterprises).

Sociedad Limitada Nueva Empresa (SLNE)

  • Number of Partners: 1-5 individuals. Can exceed the maximum if a process occurs after the company’s creation.
  • Liability: Limited to the capital invested.
  • Capital: Between 1,012 and 120,202 EUR. Profits are shared according to shares outlined in the Articles of Association.
  • Company Name: Name and surname of one of the founding partners, followed by an alphanumeric code (provided electronically during constitution) or acronyms (SLNE).
  • Taxes: Corporation tax, VAT, IAE.
  • Constitution: Performed through the DUE (Single Electronic Document), including all relevant company information.
  • Organs:
    • General Meeting: All partners.
    • Managers: One or several.
  • Other: Designed for small enterprises seeking quick and easy setup with lower production costs.

Corporations

  • Number of Partners: One or more equity partners with specific rights. Can be individuals or legal entities. Physical transfer of shares is generally free.
  • Liability: Limited.
  • Capital: Minimum of 60,101.21 EUR, with no maximum. Divided into shares.
  • Taxes: Corporation tax, VAT, IAE.
  • Organs:
    • General Board (partner).
    • Administrator (one or more, or a council).
    • IGO (General Meeting), IE (Special Meeting), IU (Universal Joint).
  • Constitution:
    • Foundation: Simultaneous (fully paid shares at creation) or sequential (shares disbursed in succession).
    • Actions must be subscribed and at least 25% paid by public deed before a notary.
    • Articles of association must be drafted at the time of constitution, including the required capital portion and other terms.
  • Other: Typically used for larger companies (members and shares).

Shareholders’ Rights

  • Common Rights: Membership in the company entitles shareholders to rights based on their shares. Partners can participate in meetings and vote (if holding voting shares).
  • Unusual Rights: Shareholders have preferential subscription rights when new shares are issued, benefits distributed among existing shareholders (right of first refusal), and legal reserves. Minimum 10% or voluntary. If a shareholder declines to buy new shares, they may be financially compensated.

Types of Actions (Shares)

  • Each aliquot represents a division of the company’s capital, represented by titles or account entries.
  • According to Rights:
    • Ordinary: No special rights.
    • Privileged: Special privileges, such as a minimum dividend.
  • According to Ownership:
    • Nominative: The action includes the owner’s name.
    • Al Carrier: The action belongs to the possessor.
  • According to Capital:
    • Ordinary: Paid with money.
    • Own: Payment accepted as a contribution in kind.
    • Freed: The action is issued under reservation or in its entirety.