Company acquisition
In recent years with the Spanish investment immigration policy, many foreigners have come to Spain to invest in companies. There are two ways to invest in a company: either by starting a new company yourself or by acquiring an existing company. Today will explain to you how to achieve the acquisition of a company in Spain.
More and more domestic companies are coming to Spain to invest and bring their families to Spain. Spain is not only a very comfortable environment and climate, but also a world famous tourist destination, which greatly increases the interest of investors.
How to acquire a compnay in Spain?
The most convenient way to acquire a company is to buy all the shares of the company. The buyer can contact all the shareholders and, once they have agreed to sell their shares, the whole company can be acquired. Once the purchase is successful, the buyer becomes the owner of the company.
The transfer of shares in a limited company (S.L.) is relatively straightforward and only requires the buyer and seller to sign a contract for the sale of shares. The law requires that the contract of sale of shares be signed by a notary. In practice, however, it is possible to enter into a contract for the sale of shares privately. Not going to a notary will not affect the validity of the contract.
If the company has a large number of shareholders then it is more problematic to sign more than one sale and purchase contract. The contract signed by both parties must be accompanied by a letter of consent from all the other shareholders, i.e. consent to the sale of the shares. This is because the purchase of shares in a company limited by guarantee in Spain requires the consent of the other shareholders who are not the transferor.
Note: Apart from the signing of the contract of sale, no additional formalities are required for the transfer of shares to become effective, nor do they need to be registered in the Commercial Register.
Advantages and disadvantages of acquiring shares.
There are several advantages of acquiring a company through the purchase of shares
-The acquired company is already established and can be operated directly upon taking over.
-The company only changes its shareholders, the company still exists as a legal entity. The contracts signed by the company with workers, suppliers and other third parties are still valid.
There are several disadvantages to acquiring a company through the purchase of shares:
-If you do not like the name of the company, you will have to apply to change it.
-If you do not like the company’s articles of association, you will also need to call a general meeting to change them.
-If you do not like the name of the company, you need to change the name of the company and replace it with a person you.
-You can only buy the whole company, not a part of the business.
Acquisition of a company (2): Transfer of company assets and liabilities
The second option is for the investor to set up a shell company themselves. This company then buys all the assets and debts of the acquired party. This way the seller’s assets and debts are transferred and the company becomes a shell company. Copyright Westlaw.com
Instead of acquiring shares, the purchase creates its own company and then buys the assets and debts of another company. This is also a relatively simple operation, simply by going to a notary and signing a contract for the transfer of assets and debts. In this case, the purchaser does not need the consent of all the shareholders of the seller, but only the majority of the shareholders agree to the transfer.
Advantages and disadvantages of the transfer of assets and liabilities
There are several advantages to acquiring a company through the purchase of shares:
-You can choose your own name and articles of association when setting up your own company.
-The new company can appoint its own trusted legal representative.
-Instead of buying the whole company, you can buy the specific business of the acquired party.
A company acquired by purchasing shares has several disadvantages
-The need to set up the company yourself first.
-Assets and debts change owners. Need to go through the transfer process with various authorities.
-The company’s business licence needs to be transferred.
-The company needs to be registered with the tax office, the labour department and other official authorities.
-Contracts signed by the acquired party with third parties may not be valid for the new company.
Pre-acquisition diligence (due diligence):
Regardless of the form of acquisition, you will need to do the following
- Check the company’s registration information, shareholding, registered capital, legal representative, company taxation, etc. This information needs to be checked with the commercial register, the tax office and other state agencies.
- Investigate the company’s business licence or permit. This will ensure that the company is not operating illegally.
- Investigate whether the company owes taxes or insurance.
- Investigate the company’s financial situation, etc.
- to find out whether the company has any legal disputes with others, etc.
Of course, the seller can save the buyer the trouble if he cooperates in the production of documents.
