Types of company in Spain: the differences between an SL and an SA
There are several types of company in Spain, but two account for almost all the activity: the limited company (sociedad limitada, SL) and the public limited company (sociedad anónima, SA). Both limit the shareholders’ liability to what they contribute. An SL can be set up with as little as €1 of capital and is designed for small and medium-sized businesses with few shareholders; an SA requires €60,000 and suits large projects, with many shareholders or that want to be listed on the stock exchange. Below we look at the other forms and all the differences.
The types of company that exist in Spain
By the liability of their shareholders or partners and by their purpose, the most common forms are these:
| Type | Minimum capital | Liability of shareholders or partners |
|---|---|---|
| Limited company (SL) | €1 | Limited to what they contribute |
| Public limited company (SA) | €60,000 | Limited to what they contribute |
| General partnership (sociedad colectiva) | None | Unlimited, joint and several |
| Limited partnership (sociedad comanditaria) | None (if limited by shares: €60,000) | Unlimited for general partners; limited for limited partners |
| Cooperative | Depends on the applicable law | In general, limited to what they contribute |
| Worker-owned company (sociedad laboral, SLL or SAL) | That of the SL or the SA | Limited to what they contribute |
- Capital companies (sociedades de capital): the SL and the SA, governed by the Spanish Companies Act (Ley de Sociedades de Capital). Either of them can be a single-member company (unipersonal), with one shareholder only, provided that status is recorded in the Commercial Registry (Registro Mercantil) and in the company’s documentation.
- Partnerships (sociedades personalistas): the general partnership and the limited partnership, little used today because at least some partners answer for the company’s debts with their personal assets.
- Cooperatives: the members join together to meet shared needs (work, consumption, housing) and run the cooperative democratically. They are governed by national law or by that of their region (autonomous community).
- Worker-owned companies: SLs or SAs in which most of the capital belongs to workers with permanent contracts and, with some exceptions, no shareholder holds more than a third.
- Professional companies (sociedades profesionales): these are not a separate type, but a way of jointly practising a profession that requires registration with a professional body (lawyers, architects, doctors) by adopting any of the above, normally the SL.
Outside the world of commercial companies are the civil-law partnership (sociedad civil) and the community of property (comunidad de bienes), which have no minimum capital but do not limit their members’ liability either.
Differences between an SL and an SA
Minimum capital
Since Ley 18/2022, known as the Crea y Crece Act, an SL can be set up with €1, which must be fully paid up. While the capital is below €3,000, the company has to allocate at least 20% of its profit to the legal reserve and, if it is wound up without enough assets, the shareholders are jointly and severally liable for the difference up to that figure. An SA requires a minimum of €60,000, of which it is enough to pay up 25% on formation.
Participaciones versus acciones
The capital of an SL is divided into shares known as participaciones sociales, which are not negotiable securities and whose sale to outsiders is restricted: unless the articles of association say otherwise, the other shareholders or the company have first refusal to buy them. That of an SA is divided into shares proper (acciones), which in principle are freely transferable and can be represented by certificates or by book entries. That is why the SL is a “closed” company, designed for shareholders who know each other, and the SA is “open” to investors coming in and going out.
General meetings and how the company runs
The SL is more flexible: the general meeting is called at least 15 days in advance and the articles of association can be tailored closely to the shareholders. In an SA, the meeting must be called at least one month in advance, there are quorum requirements for the meeting to be validly constituted and the law leaves less room for the articles. In both, the management body can be a sole director, several directors acting individually (solidarios) or jointly (mancomunados), or a board of directors.
Funding and the stock exchange
Only an SA can be listed on the stock exchange, and it is the usual form when capital is sought from many investors. An SL can increase its capital and bring in new shareholders, but with the limitations that come with a closed company.
What doesn’t change
Both pay Corporate Income Tax (Impuesto sobre Sociedades), at the same general rate of 25% and with the same reduced rates for newly created or smaller companies, which are worth checking every year because they have changed recently. The obligation to audit the accounts depends on the size of the company (assets, turnover and workforce), not on whether it is an SL or an SA. And both are formed by public deed (escritura) before a notary and registered in the Commercial Registry.
Which is better, an SL or an SA?
For the great majority of small and medium-sized businesses, family businesses and entrepreneurs, the SL: it needs less capital, costs less to maintain and lets you control who comes into the company. The SA makes sense when the project is large, will have many shareholders, expects major funding rounds or a stock market flotation, or when the law requires it for certain activities, such as some financial institutions and insurers. In both cases, a well-drafted shareholders’ agreement (pacto de socios) is as important as the form chosen.
Self-employed or limited company?
This is the other big question when starting out. As a self-employed person (autónomo) you pay personal income tax (IRPF), whose rate rises with income, and you answer for debts with your personal assets, although getting started is simpler and cheaper. With an SL the profits are taxed under Corporate Income Tax, you limit your liability and you project more of a business image, in exchange for higher formation, accounting and administration costs. There is no magic figure: it depends on the profits you expect, how much you are going to take out to live on and the risks of the activity. A commercial lawyer or a tax adviser can make the comparison with your numbers.
How to set one up
The steps for an SL are: the certificate showing the company name is available (certificación negativa de denominación), paying in the capital, the articles of association, the deed before a notary, the tax number (NIF) and registration. We explain them one by one in our guide to setting up a company. If you are already clear about the form or want someone to review the articles and the shareholders’ agreement (that is the work of a company lawyer), we’ll put you in touch with a specialist commercial lawyer.
Frequently asked questions
Can you set up an SL in Spain without €3,000?
Yes. Since Ley 18/2022, the minimum capital is €1. Until €3,000 is reached, the company must build up a reinforced legal reserve and, if it is wound up without enough assets, the shareholders are liable up to that figure.
What is the minimum capital for an SA?
€60,000. On formation at least 25% of the nominal value of each share must be paid up, and the rest within the periods set by the articles of association.
Can an SL have a single shareholder?
Yes: it is the single-member limited company (sociedad limitada unipersonal). Single-member status must be registered in the Commercial Registry and appear in the company’s documentation and publicity.
Can an SL be converted into an SA later on?
Yes. The law allows the conversion with a resolution of the general meeting and a deed registered in the Commercial Registry, provided the requirements for an SA are met, starting with the minimum capital of €60,000.
