Friday, November 10, 2017

How to buy a company in Spain

Consideration has been given for the editing and publishing of this post
Businessmen who want to start companies in Spain have several choices, perhaps this is one of the greatest advantages of opening a business here. Apart from the registration of a new company, there are two other possibilities for foreigners to own companies in Spain: to buy read-made companies, usually known as shelf companies, or to acquire other companies, a process which falls under the Civil Code.
We will analyze both options, in order to help you make an informed decision.
Shelf companies in Spain vs. registering a new firm
Many foreign investors buy shelf companies in Spain. Why? Simply because these companies are already registered and can start their activities as soon as the transfer of ownership has been concluded. Starting a new company implies registration at national and local levels because the national registration is the actual company incorporation process with the Trade Register and the tax authorities, while the local one implies obtaining the notification of the town council to operate in a certain city. 
In the case of shelf companies, the national registration process is already completed. 
What does buying a shelf company imply?
When deciding to purchase a ready-made company make no mistake: first check what you are buying. A company due diligence process might come in handy here. Make sure to enquire about the age of the company (of course, you can have your own requests related to this), ask if the company has a VAT number (they usually do, but double checking doesn’t hurt). It would also be worth asking about the bank account.
So, the shelf company has passed the due diligence check.  A meeting with the seller should always take place before the actual purchase. Details like the payment, the transfer, the sale-purchase agreement, or even a pre-sale agreement should be considered during this first meeting. Once this is completed, the sale-purchase contract through which the company is passed from one owner to another should be signed before a public notary.
Other steps after buying a Spanish shelf company
The purchase of a ready-made company doesn’t stop after you signed the agreement. You will then have to modify the incorporation documents of the company with your name and announce the Trade Register about these changes. You can also change the company address and appoint new directors, so it is best to make these changes all at once in order to spare a few trips to the Companies Register.
Acquiring a company under the Spanish Civil Code
The process of buying a company under the mergers and acquisitions regulation is a bit more complicated and requires more time. It also comes with more obligations for you as a buyer, as you will be required to also comply with the Employment Law and ensure the protection of the workers. 
There is also a great chance for the company to be put on auction and you will have to compete with other investors trying to buy the same company. Also, the paperwork related to acquiring a company is far more comprehensive and needs a through verification before being filed with the authorities.

Each type of purchase of an existing business has its own advantages and disadvantages; however, it will always rest in the buyer’s hands which option is better. Perhaps the best factor influencing such decision is how soon you intend on doing business there.

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