How To Close A Company In Spain

A limited liability company in Spain (SL) can be voluntarily closed if the company is still regarded as solvent i.e. has no debt. Spanish companies may be dissolved in this way if the company purpose for which the company was established has been met, or the company remains dormant for a prolonged amount of time or the shareholders simply want to retire.

In order to ensure that the Spanish company is closed in the proper manner and in the quickest possible timeframe you will need to follow the steps below:

• • Extraordinary general shareholders' meeting to be held to propose the winding up of the company
  • If this is accepted, one or more liquidators will be appointed (normally, the directors/shareholders) to settle debts with creditors.
  • If there is money remaining after all debts have been settled then this will be divided between the partners / shareholders.
  • Once the winding up operations have been finalised, the liquidators must then issue a public deed for company closure in front of a notary
  • The deed will include the following two elements: final liquidation balance and list of partners with their identifying data and value of each partners shareholding
  • Payment of stamp duty needs to be made within 30 days, which will amount to 1% of the value awarded to the partners after liquidation
  • Companies are also required to deregister from the Companies Register, Professionals and Retained Persons and also from trading tax (Impuesto sobre Actividades Economicas – IAE) within one month of winding up or when the company ceases trading.
  • Companies must also report closure to the social security within six calendar days of ceasing to trade or closure of the company
  • If companies have other licences or permits they have applied for they must deregister from these

NB: This should not be done independently it is important to take advice and assistance from a professional. Please call us immediately if you are thinking of closing your company. We will put you in touch with a member of our specialist team.

ADVANTAGES OF VOLUNTARY DISSOLUTION

• • The most efficient and cost effective way of closing a company in Spain if there are no creditors.

DISADVANTAGES OF VOLUNTARY DISSOLUTION

• • Expensive but the only way that a company can be dissolved in the most efficient manner if the company is still solvent
  • If the company is not dissolved in the proper manner then this could take time and money, please contact us for assistance and fees for winding up your company in Spain

NB: In Spain it is extremely important to use a lawyer and/or accountant in order to ensure that you are not in breach of any legislation whether civil or criminal. Please call us for assistance and we can put together a specific package for you based upon your requirement.

In Spain, Liquidation is enforced when the company must be wound up and liquidated for legal reasons ie. bankruptcy, losses, merger with another company etc

When filing for bankruptcy is the only option left for a business owner, it pays to commence the process as early as possible.

What happens in a compulsory liquidation?

This is not clear cut in Spain. Under the terms of the 2003 Bankruptcy Act companies go down the same path to either enforced or imminent insolvency:

• • Enter into a concurso de acreedores under the category of "imminent insolvency" which gives both the option to either wind up assets or partially restructure the business
  • The directors of the company are now responsible for filing an arrangement for insolvency within two months from the moment that they know or were aware that the company is insolvent
  • Arrangements can be made which imply that an agreement has been reached between debtors and creditors. Arrangements can be made with creditors by way of restructuring and payment of the debt in instalments
  • If the debtors reject the arrangement or the judge does not allow the procedure to begin, the debtor's company will go into liquidation.
  • The arrangement with creditors is considered over when the arrangement has been fulfilled or all the creditors have been paid and the arrangement has been rated
  • By means of this "rating" the judge will decide whether insolvency was not the fault of the company or whether it was deliberate.
  • If it was deliberate, the debtor will be banned from trading or administering assets for a period of 15 years
  • If this should happen this has implications on the debtor – please contact us urgently if this is the case and our insolvency lawyers will assist you.

For both options it is important to take care to protect the assets of the business, to conform to the liquidator's wishes and to act responsibly. Please contact us for further information and advice as to how to proceed.