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Typical legal form for start-ups

sociedad de responsabilidad limitada (S.R.L. oder S.L.)

Brief information

Start-ups usually use the legal form of the S.L. It offers the advantages of low formation costs, limited shareholder liability and a low minimum share capital of EUR 3,000. It is the equivalent of the German GmbH.

The participation of a PE/VC Fund in a Board of Directors must be examined on a case-by-case basis.

The S.L. must have at least one Director. However, the management can be designed flexibly. Thus, one Sole Administrator (administrador único), several individual or joint Administrators (administradores solidarios mancomuna-dos) or a Board of Directors (consejo de administración) can manage the S.L. The Board of Directors may appoint one or more Administrators (consejero/s delegado/s).
As soon as an investor participates in the company, a board of directors is usually established.

The Board of Directors may appoint one or more Administrators (consejero/s delegado/s) and delegate the day-to-day management to them. In this case, the other members of the Board of Directors assume supervisory functions. Certain decisions may be reserved for the entire Board of Directors. The Articles of Association may also grant reservations of approval for the benefit of the shareholders' meeting. In any case, an examination must be carried out on a case-by-case basis to determine whether a participation due to tax-considerations would be possible.

Other legal form

sociedad anónima (S.A.)

Brief information

The legal form of the S.A. is unusual in the start-up sector. Conversion into a S.A. is usually only carried out in preparation for an IPO.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Cuatrecasas

Sources: Wegen/Spahlinger/Barth, Gesellschaftsrecht des Auslands 2. EL Januar 2018