Law 18/2022, of September 28, on the creation and growth of companies

The measures contained in this law aimed at speeding up the creation of companies, improving regulation for the development of economic activities, reducing commercial late payment and facilitating access to financing, will also contribute, along with other laws such as those to promote emerging companies or bankruptcy reform, to the improvement of the business climate in our country, with the foreseeable positive indirect effects associated in terms of foreign investment and job creation.

Considerations

Factors for economic growth:

• Increase in business size
• Encouragement to entrepreneurship
• Good economic performance:

1) Efficiency

2) Productivity

3) Internationalization

News in Spain:

SMEs and the self-employed account for more than 99% of the productive fabric (61% of the Gross Added Value -GVA- and 64% of employment). -Microbusinesses (-10 workers) -> 94% of total companies

-Self-employed without employees ->59% of microenterprises

This Law is aimed at SMEs and the self-employed, due to their lower productivity, lower export capacity, low investment in innovation, low digitalization and reduced capacity to generate stable employment.

Critical phases in business evolution:

1. Birth of the company (excessive costs). The creation of new companies must be facilitated.

2. Growth of the company (disincentive). It is necessary to reduce obstacles that prevent its growth.

Measures planned to speed up business creation

Law 18/2022 modifies the Capital Companies Law by setting the minimum capital to establish a limited liability company at one euro, thus suspending the previous requirement that the minimum capital was set at 3,000 euros, previously in force.

For limited liability companies with a share capital of less than 3,000 euros, two rules are provided in favor of creditors:

• At least 20% of the profit must be allocated to the legal reserve until the sum of the legal reserve and the share capital reaches the amount of 3,000 euros.
• In the event of liquidation, if the company's assets are insufficient to meet the payment of the derived social obligations, the partners must be jointly and severally liable for the difference between the subscribed capital and €3,000.

This standard also promotes the use of the telematic processing system Information Center and Business Creation Network (CIRCE) and the Single Electronic Document (DUE).

This Law modifies articles 15 and 16 of Law 14/2013, of September 27, supporting entrepreneurs and their internationalization, to provide them with greater precision in the procedures carried out and improve the use of the CIRCE system.

It also repeals title XII of the Capital Companies Law, disappearing the specialty of limited company.

Improvement of regulation and elimination of obstacles to economic activities

In this aspect, Law 20/2013, of September 9, guaranteeing market unity, is modified.

Including a reinforcement of the windows that operators can use to complain, expanding legitimation.In this way, any citizen can file claims without having to be the person concerned.

Likewise, the Contentious-Administrative Jurisdiction Law (LJCA) is modified, with respect to the contentious-administrative appeal that the National Commission of Markets and Competition (CNMC) can file, against any general provision or action of any competent authority that is considered contrary to the freedom of establishment or movement.

Finally, in this area, Law 12/2012, of December 26, on urgent measures for the liberalization of trade and certain services, is amended, expanding the catalog of license-exempt activities.

Measures to combat commercial late payment

In order to improve compliance with the Law to combat commercial late payment, the following measures are incorporated into this Law:

• Promotion of transparency regarding payment periods for commercial operations (a State Observatory of Private Delinquency will be created and regulated).
• Expansion of the obligation to issue and send electronic invoices to all entrepreneurs and professionals. Smaller companies will have a transitional period of two years from the approval of the regulatory development for their implementation, while large companies will have to do so in a first stage.
• Incorporation of incentives for compliance with payment deadlines (both as a criterion for access to public subsidies and by strengthening public procurement regulations to guarantee that successful bidders pay the price agreed upon with subcontractors on time).
• Introduction of the obligation for commercial companies to indicate in their annual reports the average payment period to their suppliers or the number of invoices paid in a period less than the maximum established in the late payment regulations.

Improving financing avenues to promote business growth

This last group includes measures to try to improve some of the financing channels to promote business growth, making the mechanisms used as alternative financing more flexible, for example crowdfunding, collective investment and venture capital.

The chapter V of the Law provides for the adaptation of Spanish legislation to the legal regime established at the European level, so that platforms that are authorized in Spain can freely provide their services in the territory of the European Union. Thus reinforcing investor protection and thus allowing the creation of instruments to group them and reduce management costs.

The chapter VI introduces a set of reforms to promote and improve collective investment and venture capital in Spain. The type of companies in which these entities can invest is expanded, including financial companies with a high technological component.

Entry into force

This law will come into force on twenty days of its publication in the "Official State Gazette", with except of chapter V (introduces a new legal regime for the participatory financing platforms) that will come into force as of November 10, 2022 and article 12, relating to electronic invoicing between entrepreneurs and professionals, which will produce effects, for entrepreneurs and professionals whose annual turnover is greater than eight million euros, one year after the regulatory development is approved.For the rest of the businessmen and professionals, this article will take effect two years after the regulatory development is approved.

At the same time, the entry into force of this article 12 is subject to obtaining the community exception to articles 218 and 232 of the Directive 2006/112/EC of the Council, of 28 November 2006, relating to the common system of value tax added.