On September 29, 2022, Law 18/2022, of September 28 was published in the BOE, on the creation and growth of companies or, as it is more commonly known, the “Create and Grow” Law.
According to the preamble in this regulation, which is enacted within the framework of the reforms of the Recovery, Transformation and Resilience Plan, the Law aims to facilitate the creation of new companies and reduce the obstacles they face in their growth, whether of regulatory or financial origin, to thereby achieve an increase in competition for the benefit of consumers, the productivity of the industrial fabric, business resilience and the ability to create quality jobs.
Among other measures included in this regulation, the “Create and Grow” Law modifies article 4 of the Capital Companies Law in relation to the minimum share capital, establishing the possibility of setting up a limited liability company with a share capital of 1 euro, compared to the legal minimum that was established until now at 3,000 euros. This measure significantly reduces the cost of incorporation.
The “Create and Grow” Law also aims to simplify the incorporation procedures through the single window of the Information Center and Business Creation Network (CIRCE).
In our opinion, this law includes appropriate measures to favour the creation of companies and adapt to a greater extent to our European neighbours.
However, we could highlight the fact that, in practice, the relationships between partners and other stakeholders that orbit around the constitution of a new company, on many occasions creates the need to seek legal assistance to overcome complexities that cannot be dealt with by a notary through a computer portal.
Lastly, we understand that the creation of “empty” capital companies may pose an initial operational problem, since the new entity will not be able to pay the first invoices (notary, Commercial Registry, and other providers).
Only time will tell regarding the degree of implementation of these measures and their acceptance by entrepreneurs.
