One of the recurring questions we get from people who approach our firm is whether it’s possible to create a company without the need to contribute capital. In other words, without having to provide the well-known initial 3,000 euros. In short, we can say that it is possible, and below we explain how.
What do I need to know when incorporating a company?
When setting up a company, there are a number of steps to follow. Among them are the capital contributions. The Civil Code itself, in Article 1665, emphasizes how contributions are an essential foundation for the incorporation of a company: “The company is a contract by which two or more persons commit to contribute money, assets, or industry, with the aim of sharing the profits.”
Therefore, to incorporate capital companies, that is, Corporations (Sociedades Anónimas) and Limited Liability Companies (Sociedades Limitadas), it is necessary for partners to make contributions of assets or patrimonial rights (the capital).
When creating a company, a deed of incorporation must be drawn up, specifying the identity of the partner(s), their will to form the company and the type of company chosen, the company’s bylaws, the identity of the person(s) initially in charge of administration and representation, and the contributions each partner makes. For corporations, some contributions may be completed at a later stage.
Opening a bank account for capital contributions
Once we know how we want to incorporate our company, and having a clear understanding of the essential elements, we must then take the following steps. First, go to the Central Mercantile Registry to request the Corporate Name Certificate. This certificate confirms that the name we want for our company is available and can be used. If we process it online, it usually takes no more than 48 hours to receive the certificate.
The next step is to go to a bank with the Negative Name Certificate to open a provisional bank account in the company’s name, into which the initial financial contributions (typically 3,000 euros) will be deposited. Once the money is deposited, the bank will issue a certificate confirming the deposit of the share capital. This certificate is required when signing the deed of incorporation at the notary.
Regulatory updates regarding proof of capital contributions
The Capital Companies Law, which governs these matters, outlines the procedures for incorporating capital companies. An important update is found in Article 62.2, which states that in the case of Limited Liability Companies, it is no longer necessary to prove the deposit of share capital at the time of incorporation. This means that a statement from the founding partners is sufficient to declare that they have made the capital contribution, and they will be personally liable to third parties for the accuracy of this declaration.
Thanks to the legislative update, it is no longer necessary at the initial stage to open a bank account or deposit the share capital in order to incorporate a company. This streamlines the incorporation process and allows activities or a project to begin more quickly through a legal vehicle that clearly defines the partners’ ownership percentages.
