Investment approach
SL Share Capital in Spain: Minimum, Notary and Registro Mercantil
The minimum for an SL since 19 October 2022 is €1, not €3,000. While capital is below €3,000, two restrictions apply: a reserve from profit and joint liability of the members.
The minimum share capital of an SL in Spain is €1, not €3,000: the old threshold was abolished by Ley 18/2022, in force since 19 October 2022. While capital is below €3,000, the company must put at least 20% of profit into a reserve, and on liquidation the members are liable for the difference between €3,000 and the capital paid in. The notary executes the deed, and the Registro Mercantil (commercial registry) registers the company.
What changed: the threshold was €3,000, now it is €1
The new wording of art. 4 of the Ley de Sociedades de Capital (LSC) says that the capital of an SL cannot be less than one euro. The change was made by article 2 of Ley 18/2022. For a joint-stock company (SA) the threshold is different: €60,000.
If you have read "€3,000 minimum" in older texts, they are out of date. But low capital has a price:
| SL capital | Reserve from profit | Members' liability |
|---|---|---|
| €3,000 and above | General LSC rules | Only the contribution paid in |
| From €1 to €2,999 | At least 20% of profit, until the reserve and capital together reach €3,000 | On liquidation, if assets fall short, the members are jointly liable for the difference between €3,000 and the capital |
Both rules are in art. 4.1 LSC as worded by article 2 of Ley 18/2022.
Worked example: what €1 of capital means
Worked example, not a forecast. An SL is formed with €1 of capital. At the end of the first year profit is €5,000. The minimum into the reserve: 20%, that is €1,000. Capital plus reserve: 1 + 1,000 = €1,001, so €1,999 is still missing to reach the €3,000 threshold.
For liquidation the picture is different. If the company is wound up with a shortfall of assets and the capital was €1, the members are jointly liable for €2,999. The sum is small, but it shows that low capital does not remove liability entirely.
What can be contributed: money or property
Capital is formed from contributions in cash and in kind. For in-kind contributions (real estate, rights, equipment) the members answer for the reality and valuation: this is a separate regime, described in arts. 63 and 73 LSC. If a property is contributed, tax and valuation questions are added, and they need to be settled with an asesor fiscal (tax adviser) before signing.
The law does not say what a project's capital should be. The size is set by the project economics and the financing terms: part of the money usually goes in as a member loan rather than capital. How this is split is shown in the article on the project capital structure.
What the notary and the Registro Mercantil do
- The notary checks the members' identity, the documents and the method of payment, and draws up the escritura (public deed). The company acquires legal personality only with the registry entry (art. 33 LSC).
- The Registro Mercantil checks the legality of the documents and makes the entry. The documents must be filed within two months of the date of the deed (art. 32 LSC).
- The tax agency assigns the permanent NIF after the deed and proof of registration are provided; see the NIF procedure.
- Every year: the members' meeting must take place in the first six months of the year (art. 164 LSC), and the accounts are filed for deposit at the Registro Mercantil within a month after they are approved (art. 279 LSC).
Since 19 September 2023 the Registro Central de Titularidades Reales (RD 609/2023) has been in operation: the central register of companies' ultimate owners. How the bank and the notary verify the ultimate owner is described in the article on AML when buying property.
Questions to ask your abogado before signing
- What capital to set, taking into account the bank, the seller and the payment schedule, and what goes in as a member loan.
- Whether a contribution in kind is needed, or money is enough.
- How to record in the articles and in the agreement between the members the procedure for future capital increases.
- What happens if some members do not pay in their contribution on time.
The step-by-step formation of an SL is covered in the article on setting up an SL.
When low capital does not fit
The law allows minimum capital, but it does not answer the question of whether that is enough for the project. If the company buys a property and takes bank financing, the bank looks at solvency and security, and what exactly it will require, find out from the bank. A project with several members needs a matching contribution and a contract, otherwise the question "who put in how much" will have to be settled later, in a dispute. This is not a conclusion about what capital you need: the amount is determined by your abogado for your project.
The next step: estimate the full budget and the cash need in the investor calculator and in the article on peak capital requirement.
Questions and answers
What is the minimum capital for an SL in Spain?
One euro, under art. 4 LSC as worded by Ley 18/2022. While capital is below €3,000, the 20% profit reserve and the members' joint liability on liquidation apply.
Is it true that an SL needs €3,000?
That was the rule until 19 October 2022. Now €3,000 remains the threshold after which the reserve restrictions stop applying.
Can I contribute real estate to the capital of an SL?
Yes, as an in-kind contribution, but with a separate regime of valuation and liability (arts. 63 and 73 LSC) and tax questions. Settle them with an abogado and an asesor fiscal before the deed.
When does an SL become a legal entity?
From the moment of its entry in the Registro Mercantil (art. 33 LSC). How members answer for deals made before registration is a question for an abogado (Spanish lawyer): do not sign a purchase contract on behalf of a company that does not exist yet.
