Spagna – Nuove norme per le imprese in materia di parità di genere

27 Luglio 2019

Spagna

Lavoro

Once the Agency agreement has terminated by the Principal, the Agent usually decides to claim for some indemnities or compensations. These include damages indemnities and goodwill (clientele) compensation.

In order to claim them it is very important to consider the limitation period in which both can be demanded. We have observed that agents usually take too long to decide whether or not claiming for such compensations, they start negotiations with their principals to find a solution to their conflict, sometimes they are re-negotiating their position for a new agreement, area or conditions; or sometimes they simply consider that there is no rush to proceed.

In similar terms as in the EC Directive on Agency Agreements (art. 17.5), the Spanish Agency Act (art. 31) expressly foresees a limitation period of one year from the termination of the agreement in order to claim both the damages indemnity and the goodwill compensation.

This means that after the expiration of such term, no claim will be admitted by our Courts. And in contracts ruled by Spanish law and submitted to arbitral procedures, the agent also risks finding his claim dismissed after that period. This duration cannot be modified by the parties in their agreement, but they can take some actions to extend it.

This limitation has, therefore, important consequences. Of course, there could be an infinite number of situations and we do not intend to cover all of them, but in case the Agency agreement terminates, the following ideas can be useful:

The one-year period starts from the day the agreement was terminated. This date should also be considered carefully if there was not a formal termination letter.
One year, according to the Spanish Civil code, implies that the period terminates the exact day one calendar year after (from date to date, for example, May 1 to May 1 next year) or the following day if that day does not exist (for instance, February 29^th to March 1 next year).
In general terms, the starting of this one-year period is the termination day and not the date in which the letter was sent or received or when the Principal urges the Agent to fulfil his obligations. The previous notice period (if any) shall be respected if included in the termination notice.
In case the letter contains an immediate termination, that day will be the starting date, even if the procedure reveals that the Principal should have given a termination notice.
Generally, this applies to each agency agreement. This means that in case of successive and not connected agreements (for instance, the first one ends and the second one starts 10 months later), the termination period will be considered for each separate agreement. Nevertheless, linked agency agreements (agreements with a specific duration that work one immediately after the previous one) are usually considered as one agreement.
Some activities of the Agent can interrupt this one-year period, re-starting a new one. For instance (some have been accepted by the case-law, others are expressly mentioned in different pieces of legislation):
- An extra-judicial claim sent by the Agent or by someone in his behalf claiming for the goodwill indemnity, even if the compensation is incorrectly qualified as employment dismissal instead of commercial agency compensation.
- Claiming the goodwill compensation as a labour indemnity before the labour courts when it was not clear the sort of relationship between the parties.
- Starting a conciliation procedure before a First Instance Court
- Starting a mediation procedure (when done by both parties or by one of them enforcing the mediation clause in the contract) will also interrupt the term during the mediation procedure from the moment in which the request for mediation has been received by the mediator or deposited at the mediation institution.
- The acceptance by the Principal of the debt or the goodwill compensation when asking the clients list.
Other actions by the Agent could have different results depending on the circumstances and some have not been accepted as valid to interrupt this limitation period:
- A claim started by the Agent before a non-competent court, will depend on the circumstances.
- A criminal prosecution does not interrupt the one-year period
- The starting of the preliminary procedure (diligencias preliminaries) has neither been accepted to interrupt the one-year period.

Therefore, as a conclusion, in the drafting phase of the agreement it seems to be a good idea to consider a mediation clause. This will grant the parties an additional and useful tool to solve their conflicts and a possible way to obtain extra time in case the courts will be called to intervene.

And when an agency agreement terminates (with or without mediation clause), our recommendation for the Agent is immediately submitting the case to a legal local advisor. When the Agent has, for example, received a promise for a new agreement and he is still discussing on it, or he is still negotiating the termination, it is advisable to be careful and to take the necessary actions at least to interrupt the lapse of the one-year period and not to lose the possibility of a future claim. A simple letter carefully drafted could be very useful for the Agent’s interests.

A final remark for Distribution Agreements

Although for some aspects, particularly the goodwill compensation, Spanish Supreme Court has admitted the analogy with Agency agreements, this is not the case for the limitation period of one year to claim it. The distributor claiming for the goodwill indemnity will not be limited to one year after the contract terminated. In cases like these, it is convenient, however, to have precise advice on the type of contract we are facing, since the border between the agency and the distribution is not always clear.

According to the well-established jurisprudence of the Spanish Supreme Court, a distributor may be entitled to compensation for clientele if article 28 of the Agency Law is applied analogically (the “inspiring idea“). This compensation is calculated for the agent based on the remunerations received in the last five years.

In a distribution contract, however, there are no “remunerations” such as those received by the agent (commissions, fixed amounts or others), but “commercial margins” (differences between the purchase and resale price). The question is, then, what magnitude to consider for the clientele compensation in a distribution contract: either the “gross margin” (the aforementioned difference between the purchase price and the resale price), or the “net margin” (that same difference but deducing other expenses and taxes in which the distributor had incurred in).

The conclusion until now seemed to be to calculate the compensation of the distributor from his “gross margins” since this is a magnitude more comparable to the “remuneration” of the agent: other expenses and taxes of the distributor could not be deduced in the same way as in an agency contract neither expenses and taxes were deduced.

The Supreme Court (November 17, 1999) had pointed out that in order to calculate compensation for clients “it is more appropriate to consider it as a gross contribution, since with it the agent must cover all the disbursements of its commercial organization“. In addition, the “earnings obtained” “do not constitute remuneration in the same sense” (October 21, 2008), given that such “benefits“, “belong to the internal scope of the agent’s own organization” (March 12, 2012).

Recently, however, the judgment of the Supreme Court of March 1, 2017 (confirmed by another of May 19, 2017) considers that the determination of the amount of clientele compensation in a distribution contract cannot be based on the “gross margins” obtained by the distributor, but in the “net margin”. To reach this conclusion, the Court refers to a judgment of the same court of 2016 and to others of 2010 and 2007.

Does this imply a change in the case-law? In my opinion, this reading that the Supreme makes is not correct. Let’s see why.

In the judgment of March 2017, the disjunctive between gross or net margin is mentioned in the Second Legal Argument and refers to the ruling of 2016.

In that judgment of 2016 it was said that although in another of 2010 it was not concluded whether the calculation had to be made on gross or net margins, in a previous one of 2007, it was admitted that what was similar to the remuneration of the agent was the net profit obtained by the distributor (profits once deduced expenses and taxes) and not the margin that is the difference between purchase and resale prices.

Now, in my opinion, in the judgment of March 2017 the Supreme Court is referring in last instance to the judgement 296/2007 for something that the latter did not say. In 2007, the Supreme Court did not quantify clientele compensation, but rather damages. More specifically, and after stating that “the compensation for customers must be requested clearly in the lawsuit, without confusion or ambiguity“, the Court concluded that the Chamber “must resolve what corresponds according to the terms in which the debate was raised…in the initial lawsuit. And since…an indemnity of damages was interested mainly based on the time that the relationship had lasted…the solution more adjusted to the jurisprudence of this Court…consists in fixing as indemnification of damages an amount equivalent to the net benefits that [were] obtained by the distribution of the products…during the year immediately prior to the termination of the contract“. Therefore, in that the judgment of 2007 the Court did not decide on clientele compensation, but on damages.

In this way, the conclusion reached in 2007 to calculate compensation for damages on net margins, was transferred without further analysis to 2016 but for the calculation of clientele compensation. This criterion is now reiterated in the judgments of 2017 almost automatically.

In my opinion, however, and despite the jurisprudential change, the thesis that should prevail is that in order to apply analogically clientele compensation in distribution contracts, the magnitude equivalent to the “remuneration” of the agent is the “gross margin” obtained by the distributor and not its “net margin”: it does not make much sense that if the analogy is applied to recognize the clientele compensation to a distributor, it is deducted from its gross margins amounts to reach its margin or net profit. The agent also has his expenses and also pays his taxes starting from his “remunerations” and nothing in Directive 86/653/EEC nor in the Agency Contract Act allows to deduce such magnitudes to calculate his clientele compensation. In my opinion, therefore, and in line with this, distributors should be equal: the magnitudes that could be compared should be the (gross) retributions of the agent with the (gross) margins of the distributor (i. e. the difference between purchase and resale price).

In conclusion, judgments of March 1 and May 19, 2017 insist on what I consider a prior mistake and generate additional confusion to an issue that has already been discussed: the analogical application of clientele compensation to the distribution contracts and the calculation method.

Updating Notice (January 27, 2020)

In a recent Order (“Auto”) of the Supreme Court of November 20, 2019 (ATS 12255/2019 of inadmissibility of an appeal), the Court has had occasion to return to this matter and to confirm the criteria of the last jurisprudence: that in the distribution contracts, the magnitude to consider to apply the analogy and calculate the goodwill indemnity are the “net margins”.

In this procedure, a distributor appealed the decision of the Provincial Court of Barcelona that recognized compensation based on net margins and not gross margins. Said distributor requested the Supreme Court to annul said judgment on the grounds that it was taken following the latest jurisprudence, erroneous according to previous one in the appellant’s opinion.

The Supreme Court, however, seems to confirm that, contrary to the thesis that I defended above in this Post, « there is no alleged error in the most recent jurisprudence in the analogical interpretation of art. 28.3 of the Agency Law for the distribution contract, nor, therefore, the need to review the most recent jurisprudence on the subject ». Consequently, if the Supreme Court does not review its latest jurisprudence and considers that the judgment that applied the net margins was acceptable, we must consider that the magnitude to be considered in the compensation for clientele in distribution contracts is that of the net margins and not gross margins

With this decision it seems (or just “its seems”?), therefore, that the Court settles the discussion that, however and in my opinion, will nevertheless continue to rise to numerous discussions.

Franchise contracts almost always incorporate post-contractual non-competition clauses.

The Franchisor intends to prevent that, once the contract is over, the Franchisee takes advantage of the “goodwill” generated by the franchised activity becoming an obvious competitor.
The Franchisee, on the other hand, intends to have his hands as free as possible in order to devote to any activity, whether or not it competes with the business of its former Franchisor.

The natural vocation of the Franchisor is to build these covenants in the widest possible way, both territorially and temporarily, but that attitude easily collides with the non- competition EU regulations.

In 2013, the EU Court of Justice issued (case La Retoucherie / Manuel C) an order answering a question submitted by a Spanish Court that ruled that such restrictions on post-contractual free competition would only be valid if they were preached only with respect to the “premises” in which the terminated franchise contract had been developed, while the prohibition could not extend its effects to the locality (town or city) or to a larger geographical territory (region or country).

On the other hand, the Franchisor usually requires that the franchise agreement is subject to the legislation and the jurisdiction of the country where its headquarters are located, avoiding the legislation and jurisdiction of the courts of the franchisee’s country.

A few months ago the Superior Court of Justice of Madrid issued an interesting ruling on this issue declaring void an arbitration award by the International Court of Arbitration of the ICC.

The arbitration award ruled about the contractual relation between a Spanish franchisor and an Argentine franchisee and a post-contractual non-competition clause that prevented the franchisee from performing competitive activities at the end of the contract throughout the territory of Argentina and Uruguay; the contract was subject to Spanish legislation and jurisdiction and, as mentioned above, it was obviously contrary to EU law.
The arbitration award considered that the aforementioned post-franchise non-competition clause was valid and accordingly ordered the former franchisee to pay the contractually provided penalty.
The arbitrator’s argument was that the rules of the European treaty on competition are limited to competition in the EU internal market and to trade among the Member States while the conflict judged in the arbitration was a franchise agreement that prohibited post-contract competition on the Argentinian and Uruguayan markets, which are not part of the EU internal market.
The Superior Court of Justice of Madrid did not share this argument and declared the arbitration decision void; the Judgment argued that Spanish law “ineluctably” incorporates the EU regulations beyond its territorial scope; therefore, if a restrictive agreement is authorized by European law, it must be considered lawful in Spanish domestic law; and vice versa, if the agreement is considered illegal or not authorized by community law, it will not be lawful in our domestic law.
Consequently, since Spanish law was applicable to the franchise contract in question, the arbitrator should have applied European law, and should have analyzed the non-competition agreement in the light of the European rules no matter if its effects were deployed in non-EU territories.

The relevant conclusion is clear: if the franchise contract is subject to the legislation of an EU country, even if the territory where the franchise deploys its effects is outside the EU, it will be unavoidably subject to the regulations of the EU on competition restrictive agreements.

The European franchisor must then decide if he prefers to submit to the legislation of his country or to the regulations of the country where the franchise is located, perhaps more permissive and less restrictive with respect to these types of agreements.

Questo articolo si propone di illustrare le nuove norme in materia di parità di genere introdotte dal RDL 6/2019 applicabili a tutte le tipologie di imprese (indipendentemente dal numero di dipendenti), ed in particolare alle imprese che occupino almeno 50 dipendenti.

La principale novità in questo senso consiste in un obbligo a carico delle aziende con almeno 50 dipendenti di attuare un Piano che promuova la parità di trattamento, in conformità alle disposizioni degli articoli 45 e seguenti della LOIEMH.

Per quanto riguarda i contenuti e le modalità di attuazione del Piano di Parità nelle aziende, segnaliamo le seguenti novità:

I temi ed i contenuti minimi che devono essere inclusi nel singolo Piano di Parità sono indicati in modo esaustivo.
E’ introdotta un’analisi della sotto-rappresentazione femminile in azienda quale tema da includere nel Piano.
La valutazione che le imprese devono compiere in fase di elaborazione del Piano di Parità deve essere oggetto di negoziazione con il rappresentante legale dei lavoratori.
È istituito un Registro dei Piano di Parità delle imprese, nel quale vanno iscritti tutti i Piani di Parità adottato dalle imprese, indipendentemente dal numero di lavoratori occupati.

L’RDL 6/2019 introduce peraltro una nuova formulazione dell’articolo 28 dello Statuto dei Lavoratori, la quale sancisce l’obbligo per le imprese di conformarsi al principio della parità retributiva tra uomini e donne, stabilendo una serie di misure e obblighi a carico delle imprese, al fine di garantire l’effettivo rispetto della parità retributiva.

In particolare, le nuove misure inserite nell’articolo 28 dello Statuto sono le seguenti:

Il testo definisce la nozione di “lavoro di pari valore“, al fine di promuovere un criterio unico ed eliminare ogni dubbio al riguardo.
Le imprese sono tenute a mantenere un Registro delle Retribuzioni, riportando i valori medi delle retribuzioni, delle componenti retributive supplementari e delle percezioni extra-salariali del proprio personale, differenziando i dati per genere e distribuendoli per gruppi professionali, categorie professionali o posizioni di lavoro di pari valore.
Il Registro delle Retribuzioni dovrà essere reso accessibile al rappresentante legale dei lavoratori.
Nelle imprese che occupano almeno 50 lavoratori con una retribuzione media relativa ai lavoratori di un genere superiore di almeno il 25% rispetto a quella dell’altro, è necessario inserire nel Registro delle Retribuzioni una motivazione di tale disparità, certificando che essa è dovuta a ragioni diverse dal genere dei lavoratori.

L’inosservanza degli obblighi in materia di parità e, in particolare, di quelli attinenti al Piano di Parità ed alla parità retributiva tra uomini e donne, può comportare l’applicazione di pesanti sanzioni da parte dell’Ispettorato del Lavoro e della “Tesorería General de la Seguridad Social”.

The Spanish Law of the Agency Contract and the European Directive provide for the agent -except in certain cases-, goodwill compensation (clientele) when the relationship is terminated, based on the remuneration received by the Agent during the life of the contract. It is, then, a burden that in general every Principal will have pending when the contract ends.

The temptation is to try to get rid of that payment and for this clients consult us frequently about strategies or tactics. I will try to summarize some of them indicating the chances of success (or not) that may have, both in the negotiation / drafting phase of the contract, and in the resolution phase.

Change the name of the contract

The first idea is to make a contract “similar” to the agency or call it in a different way (services, intermediation, representation contracts…). However, the change of name does not have any incidence since the contracts “are what they are” and not what the parties call them. So if there is a continued mediation in exchange for remuneration, there is a good chance that a judge will consider it an agency contract, whatever we call it, and with all its consequences.

Limitation of compensation in the contract

Another temptation in the drafting phase of the contract is to agree compensation less than the maximum legally envisaged, provide for payment in advance for the duration of the contract, or directly eliminate it.

None of these solutions would be valid if they try to reduce the possibility of the Agent to receive the legal maximum, or for reasons not foreseen in the Law or the Directive. The law is imperative.

Linking different agency contracts

Given that the compensation is calculated according to the remunerations of the last five years and the clientele created, the temptation is to link several shorter contracts to consider only the clients of the last period.

This will not necessarily be a good idea if most of the customers were created last year for instance, but it may also be useless because the Spanish law and the Directive provide that the fixed-term contract that continues to be executed becomes indefinite. The judge may consider all linked contracts as one.

For this strategy to have the possibility of being useful, it would be necessary to liquidate each substituted contract, declare that “nothing has to be claimed by the parties” and that the successive contracts are sufficiently separated and have different entities, drafting, extension, etc. If the procedure is well thought out, it could be a way to get rid of a greater indemnity by clientele: a well-written pact whereby the agent declares the compensation received, and the following contract does not mimic the content and immediately to the previous one.

Submitting the agreement to a foreign law

In international contracts the temptation is to submit the contract to a right that is not Spanish, particularly when the Principal has that citizenship.

The idea can be good or bad according to the chosen law and as long as it has some relation with the business. As is known, in the EU the Directive establishes minimum conditions that national laws must respect. But nothing prevents these laws from providing more advantageous conditions for agents. This means that, for example, choosing French law would be, in general, a bad idea for the Principal because compensation in that country is usually higher.

In some cases, the choice of a law outside the European Union that does not provide compensation for clientele when the agent is European has been rejected because that the minimum right recognized in the Directive has not been respected.

Submit the contract to non-national rules and judges

Another less frequent possibility is to submit the contract to rules not from a country, but to general commercial norms (Lex Mercatoria) and to agree on a lower compensation.

This is very uncommon and may not be very useful depending on who is to interpret the contract and where the agent resides. If, for example, the agent resides in Spain and who is going to interpret the contract is a Spanish judge, he will most likely interpret the contract according to his/her own rules without being bound by what the contract envisages. This clause would have been useless.

Submit the contract to arbitration

The question will be different if the contract is subject to arbitration. In this case, arbitrators are not necessarily subject to interpreting a contract according to their own national regulations if the contract is subject to different one. In this case, it would be possible that they felt freer to consider the contract exclusively, especially when the agent was not of their nationality, did not know what the law of the agent’s country and was not bound by the guarantees provided for his protection.

Mediation in the agency contract

Mediation is an alternative dispute resolution system that can also be used in agency contracts. In mediation, the parties resolve the dispute by themselves with the help of a mediator.

In this case, given that the mediator is not deciding, it is possible for the parties to freely reach an agreement whereby the agent agrees to a minor indemnification if, for example, other advantages are conferred upon him, if he comes to the conviction of having less right, difficulty of proof, if he prefers to save other costs, time, energy for your new business, etc.

Mediators ensure the balance of the parties, but nothing prevents them to agree a compensation lower than the legal maximum (after the conclusion of the contract it is possible to negotiate a lower than the legal maximum). To foresee the possibility of mediation in the agency contract is, therefore, a good idea: this will permit the parties to better address and negotiate this compensation. In addition, providing for mediation does not limit the rights of any of the parties to withdraw and continue through the courts demanding the legal maximum.

Imputing to the agent a previous breach

When the contract ends, this is undoubtedly the cause that is most often attempted: when the contract is to be resolved, the Principal tries to argue that the Agent has previously failed to comply and that this is why the contract is being resolved.

The law and the Directive exempt the payment of goodwill compensation when the agent has breach his obligations. But in that case, the Principal must be able to prove it when the agent discusses it. And it will not always be easy. The Principal must provide clear evidence and for this it will be convenient to collect information and documentation on the breach sufficiently and in advance and of sufficient importance (minor breaches are not usually accepted). Therefore, if the Principal wishes to follow this path it is advisable to prepare the arguments and evidences time before the agreement ends. It is strongly recommend contacting an expert advisor as soon as possible: he will help you to minimize the risks.

The procedure to incorporate a foreign owned company in Spain is, in principle, easy and straight forward, however it is necessary to take into account certain new requirements derived from the tax and the anti-money laundering regulations, which could cause long delays in the incorporation process, even to EU and US companies, if they are not well advised and managed from the beginning of the procedure.

The first step consist in collecting information about the foreign shareholder, in order to be able to prove its legal existence and activities: the foreign shareholder(s) will have to grant before a Notary Public in its country of residence a power of attorney authorising somebody in Spain to obtain its tax identification number (“NIE”), and also represent it before the Spanish notary when signing the deed of incorporation. In case the foreign shareholder is an individual person, the NIE should be applied for before the Spanish police or the Spanish Consulate at the country where the investor lives.

If the shareholder is a corporation, apart from the Power of Attorney, it will have to obtain a certificate from its Companies’ Registry or Chamber of Commerce, stating its legal existence and main characteristics. This document is called “good standing certificate” (in the UK and US), “K-bis” (in France), “KvK” (in the Netherlands) or “visura” (in Italy). These two documents, the Power of Attorney mentioned in the above paragraph and the certificate from the Companies’ Registry, will have to be Apostilled or legalized by the correspondent Ministry, and Sworn translated into Spanish. Please note that we use to draft bilingual powers of attorney in order to avoid its sworn translation.

The foreign shareholder will have to prove that its income is obtained from legal activities in order to be able to open a bank account in the name of the new company. The main document to prove this could be the Corporate or the Personal Income Tax return filed in its country of residence, but there could be other means, especially in case of individual persons.

In case of a corporate shareholder, it will be necessary as well to declare, in principle through a public deed granted in Spain, who are the individual persons who, directly or through other companies, will hold more than a 25% interest in the new company to be incorporated. In case nobody holds more than a 25% (i.e. because there are 5 individual shareholders, holding each of them a 20%), it is declared that the effective control of the new company corresponds to its director.

At this stage, it is also necessary to mention that the person(s) who will be the director(s) of the new company, in case they are foreigners, will also need to obtain their personal “NIE”. The NIE should be applied for before the Spanish police (this could be done by a proxy duly authorised though a Power of Attorney granted by the foreign director) or before the Spanish Consulate nearest to the city where the investor lives. In order to be a director of a Spanish company it is not necessary to be a shareholder, nor to have residence and work permit in Spain (provided the foreign director does not live in Spain).

Meanwhile the necessary documents (Powers of Attorney, Companies’ Registry certificate, etc.) are being prepared by the foreign shareholder, the lawyer in Spain will apply for the new company’s name. It is advisable to point out that generic or usual names are not available quite often, therefore it is necessary to think in original names. Three different names could be applied for simultaneously.

The drafting of the company’s Articles of Association or By Laws could be very quick, except if the company is going to have several shareholders and they wish specific clauses. In this case, it is also advisable to draft a Shareholders Agreement. The Shareholders’ Agreement could just contain some basic rules on dedication, compensation, non-competition, etc. and some more sophisticated rules on the sale of shares (tag along and drag along rights). As regards the By-Laws, they should mention the company’s name, its activity or activities, address in Spain –which cannot be just a P.O. Box-, share capital, number of shares and its face value, and starting date for the fiscal year, among other standard clauses.

The management of the company could be organized through a sole director, two directors who could act jointly or separately, and in case there are more than three directors, they should organize themselves through a Board of Directors, being usual in this case to appoint a C.E.O. In order to be a director it is not necessary to be a shareholder. Under Spanish laws, the director(s) could be held liable for some company’s debts under certain circumstances which are legally defined. For this reason, it is necessary that the directors formally accept their appointment (personally appearing before the Notary or through a Power of Attorney).

Before the incorporation, it will be necessary that either the new company’s director (the person to be appointed) or the representative of the corporate shareholder appears personally before the bank where the company will have its first bank account and signs the correspondent documents (KYC regulation). Once the bank account is opened, the shareholder will have to send a bank transfer for the new company’s share capital. In Spain, the minimum share capital for a limited company (S.L.) is Euros 3.000, while for a “Sociedad Anónima” (S.A.) it is Euros 60.000, but only 25% should be paid off at the incorporation moment. It is interesting to note that contributions to the share capital could be made in cash – which is the most common operation, especially at the incorporation – or in kind, with any type of assets: real estate, machinery, goods, trademarks, etc. The money for the share capital should be sent to the new company’s bank account from an account owned by the shareholder (or from each account owned by each shareholder, should they be several ones), not by any other different person. Once the Spanish bank receives the transfer, it will issue a certificate, which is necessary in order to incorporate the company.

Once all the documents are ready, it is possible within very few days (almost immediately) to make the appointment with the Notary and sign the public deed of incorporation. This can be done at any notary in Spain, not being necessary that the notary practises at the same city where the company will have its corporate address. In order to summarize, the list of the necessary documents is:

Power(s) of Attorney granted by the foreign shareholder(s), apostilled and sworn translated.
Certificate regarding the legal existence of the foreign shareholder (only if it is a corporation), apostilled and sworn translated.
Statement on who are the last individual shareholders holding more than 25% interest in the new company, directly or indirectly (only in case of corporate shareholders).
NIE of the foreign shareholder(s).
NIE of the new company’s director(s), should they be a foreigners.
Certificate for the new company’s name.
Articles of Association.
Bank certificate regarding the contribution to the new company’s share capital.

The deed of incorporation is signed by the proxy (or the individual shareholder(s), should they prefer to personally appear before the notary) before the chosen public notary, being also necessary to sign an official form to report the foreign investment to a public registry depending on the Spanish Ministry of Finance.

Once the deed of incorporation is signed, the next steps consist in applying before the tax authorities to obtain the new company’s tax number (NIF / CIF) and filing the deed of incorporation before the Companies’ Registry. Some banks do allow new companies to operate once they have the NIF (which could be 2-3 days after the incorporation), while others request to wait until the deed of incorporation is filed at the Companies’ Registry (2-3 weeks).

An estimation of the necessary time to complete all the procedure is 30-45 days, but of course the main delay is related to speed of the foreign investor in obtaining the necessary documents.

Please note that if you wish to incorporate a foreign owned company in Spain it is always necessary to seek specific professional advice, as each case is different and regulations and the application of such regulations vary from time to time. The above article just explains the main steps and requirements for the incorporation of a company.

Arbitration is a well-known system for dispute resolutions, and works as an alternative to judicial procedures. Parties are free to choose this system and to submit their conflicts to specific arbitrators or institutions.

It is usually considered that arbitration is a good way to solve conflicts but preferable to those arisen between big corporations or involving important amounts of money. Although this assumption is generally accepted, there is an alternative for distribution disputes suitable for smaller companies and cases with lower amounts claimed.

And here is the essential question: why a manufacturer/franchisor or a distributor/agent/franchisee should choose a specialized arbitration for their agreements instead of a more general one or, even, a judicial procedure? The answer seems clear: an arbitrator with knowledge not only in procedural questions but in substantive matters will be able to better understand the conflict between the parties and, therefore, to grant a better award. Take into account that, for instance in my Country, Spain, a Judge of First instance can deal in the same day with a distribution contract, a construction case, a conflict between heirs, and a discussion in a community of owners. All of this requires the analysis of different facts and completely different legislations and it is true that specific commercial problems do not usually have judges experts in international trading. But, how to choose a good specialized arbitrator? And, how to choose the arbitral procedure and the institution in terms of organization, neutrality, costs and time?

The IDArb was created in 2016 by the International Distribution Institute (www.idiproject.com) in collaboration with the Chambre de Commerce d’Industries et de Services de Genève (CCIG www.ccig.ch) and the Swiss Chambers’ Arbitration Institution (SCAI www.swissarbitration.org) and offers to the distribution sector (distribution, agency, franchising, selective distribution) a specialized, expedited and affordable arbitration procedure, not only for big international corporations but also for smaller cases. In fact, the expedited procedure is particularly foreseen for amounts below one million CHF (approx. 880.000 €).

The objectives and main characteristics of IDArb which make it suitable for all the distribution disputes are:

A list of specialized arbitrators experts in this particular field is available for ad hoc or institutional arbitration and IDArb is able to assist the parties to choose one of them.

Specialized arbitrators from different countries and legal cultures have been appointed by a Selecting Committee reviewing their experience in one or more fields of distribution law. Therefore, parties can trust that the arbitrator will have concrete skills in the business with an in-depth understanding of the disputed issues. This is not a general knowledge on commercial law, but a concrete one on distribution, expressly verified by the Committee. Parties can even examine some examples of cases in which every arbitrator has been involved in.

In order to maintain its high quality, the IDArb organizes training seminars for its appointed arbitrators. In these seminars, they are able to discuss about the general management of the arbitration, the procedural aspects and how to solve possible incidents in collaboration with the Institutions and their Rules. This will make all the proceedings more manageable and the possible difficulties more easily solved. Last seminar took place in Geneva in November 8, 2018 and participants have discussed, amongst other subjects, on evidences, witnesses and document production.
The expedited arbitration procedure permits the parties to have a tailored procedure managed by SCAI under the Swiss Rules of International Arbitration, specially adapted for small disputes in the field of distribution.
Time is also an essential element: the award in the expedited procedure will be issued in a maximum term of six months (only exceptional circumstances permit the Court to extend such time-limit), and, if parties agree, it can be decided only on documentary evidence.
Costs are reasonable and known in advance.
And, as final but important remark, IDArb has also adopted some recommendations where, upon request of the parties, mediation is favoured, the arbitrator my consider giving a preliminary non-binding and provisional assessment of the dispute and should have a pro-active position in order to facilitate an amicable settlement.

To have further information about the clause to use in the contracts, the list of specialized arbitrators, their skills, experience and complete CV, and the recommendations for expedited arbitration, you can follow the link: https://www.idiproject.com/content/idarb-idi-arbitration-project

Spanish Law on Entrepreneurship (Law 14/2013) has approved new cases where foreigners from non-European Union countries can obtain the residence permit in Spain through the execution of investments:

Investments in real estate for an amount equal or higher than € 500.000 (Five Hundred Thousand Euros). The investment can be made in one or more properties, but at least € 500.000 should be free of encumbrances (mortgage, i.e.). If the price is higher than € 500.000, the rest of the amount could be paid through mortgage.
Financial investments for a value equal or higher than 1 million Euros. This type of investment includes listed and non-listed shares, in case of non-listed shares they could be from already operating companies or newly incorporated ones, investment funds, and deposits in Spanish banks.
Investment in Spanish sovereign debt for an amount equal or higher than 2 million Euros.
To carry on a business project in Spain that was considered as being of public interest. To this purpose, one of these conditions should be met: creation of jobs, execution of an investment that has a positive impact in the region where it is located, or a relevant contribution to scientific or technological innovation.

The visa granted through the execution of these investments is valid during at least one year, and in order to obtain the residence permit some other requirements should be met:

to not stay previously in Spain in an illegal situation,
to have more than 18 years,
to not have criminal records,
to have a health insurance (hired from a company operating in Spain)
to have financial means for the stay in Spain (i.e. a bank deposit, or income from leases or dividends. Payroll does not qualify for this purpose).

If the above requirements are met, a two years residence and work permit could be granted. After this term, the residence permit can be extended for successive five years periods. The investments should be kept during all these periods. This permit does not request the foreigner to live in Spain for more than six months; therefore it will not be cancelled if the foreigner lives in another country.

The residence and work permit is granted to the individual who executes the investment. If he/she is married and/or has children or ancestors who depend on the investor, it is possible to apply for their visa at the same time or later on. It is possible to execute the investment through a company owned by the investor, provided it is not a company domiciled in a tax heaven country.

The Spanish visa allows free movements within the EU countries (Schengen space). The valid travelling document is the passport.

Foreigners who wish to carry on a self-employment project in Spain could obtain the work and residence permit, but through a different procedure than the above mentioned, and these cases the minimum investment amount is lower.

Investment in real estate

The investment in real estate could be in residential, commercial or industrial properties. The property could be leased to third parties before or after the acquisition, or used by the investor. For ambitious investors, there are several possibilities to structure the investment in buildings and apartments and to a higher return of the investment.

There are some costs related to the acquisition of real estate: the acquisition itself is taxed by Transfer Tax at rates ranging from 6 to 10% on the acquisition price, depending on each Spanish region where the property is located, to be paid by the buyer. Besides, the buyer should pay the Notary Public and Property Registrar’s fees, which approximately amount 3% of the acquisition price (the addition of both of them). These amounts are paid once, when the property is acquired.

The annual costs related to the ownership of real estate in Spain are the following ones:

IBI or local property tax, whose amount is calculated based on the value and location of the property.
“Community expenses”, that is those expenses related to the maintenance of the common areas of the building where the property is located: cleaning, lighting, etc.
In some cases, also a small tax for garbage should be paid to the Town Council.
Owners should file the Spanish Personal Income Tax Return, and pay a percentage between 1,1% and 2% of the property’s “cadastral value” (official value), in case the property is not leased to a third party. If the property is leased, the owner should also file the Personal Income Tax Return based on the amounts obtained from the lease.

Besides, owners should also pay the expenses related to their property: ordinary maintenance expenses, insurance, electricity and water, etc.

In Spain, the property right is considered as a full right, which implies that the owner can use the property by himself, can lease it to third parties, can mortgage or encumber it, can sell or gift it to any third party and can pass it to his heirs through a will.

The only limits to the use of the property by its owner or the persons appointed by him are those established by the civic rules regarding noises, pets, exterior image of the property, etc.

Regarding the lease of the property, in principle it is free, and the rights and obligations of landlord and tenant are those provided by the private lease agreement entered between both parties and the Spanish Urban Leases Law (Ley de Arrendamientos Urbanos). However, nowadays many Spanish cities (and specially Barcelona) have approved strong limits to the so called touristic leases, which are the short term (days or weeks) leases, and request a special license.

It is important to point out that foreigners who become residents in Spain can grant their will according to Spanish inheritance laws (according to EU Regulation 650/2012), which slightly vary depending on each Spanish region. In Catalonia, for example, the testator can freely appoint who will be his heirs.

Financial investment

Financial investments can be executed through different types of targets, being always the minimum amount 1 million Euros:

Shares of companies listed in the Spanish Stock Market.
Shares of non-listed companies, which could be already operating companies or newly incorporated ones. In both cases, there are no limits as regards the percentage of shares that can be owned by foreigners, and the activity sectors restricted to non EU foreign investment are very few (gambling, defense, aviation, TV and radio). Foreigners can be appointed Directors of Spanish companies with the only requirement of having previously obtained the so called “N.I.E.”, which is the Spanish identification number for foreigners.

In case of a newly incorporated company, the € 1 million requested as investment would constitute the company’s share capital, and can be used for the startup of the company’s activities: for example, acquisition of goods, payment of salaries and rentals, payment of purveyors and subcontractors, etc.

Spanish companies have access to all European markets and have a privileged position for trading with Latin American countries.

Investment funds: Spanish financial entities offer a very wide range of investment funds, from very conservative to high risk.

Deposit in a bank

The main advantage of a real estate investment compared to a financial investment is that the requested amount is only € 500.000 for real estate, while for a financial investment is twice this amount. During the past years since the Law on Entrepreneurship became in force, investment in real estate has been the most popular way for obtaining the residence permit in Spain, probably because at that time (2013-2016) real estate market prices were quite low due to the crash in 2008.

However, the process to acquire a property in Spain is not so easy compared to the acquisition of a share in an investment fund or making a bank deposit: the investor has to choose the property, which normally requires one or two visits to Spain, the price and sale conditions have to negotiated and drafted, the purchase deed has to be signed before a Notary Public (by the investor or his proxy), there are taxes and expenses related to the acquisition, and once the property is acquired, it is necessary to pay ongoing expenses and taxes, and maintain the property in good condition.

Compared to this, the investment in funds or making a bank deposit only requires one visit to the bank by the investor, in order to sign the correspondent documents. There are not related taxes or expenses, and the liquidity of the investment is full (that is, the investment can be sold at any moment, quite probably at the same or at a higher price, but this is not guaranteed for real estate investments).

How to open and operate a bank account in Spain

In Spain, banks apply the regulations regarding anti-money laundering, which include the KYC (Know Your Client) rules and the obligation to prove the legal origin of the funds. The KYC rules imply the need for the investor to appear personally before the bank at least once, previously to operating the bank account. The legal origin of the funds can be proved through different means:

In case of employees, through the payroll splits, or a certificate issued by the employer, or the investor’s personal income tax return.
In case of self-employed individuals, through their personal income tax return, or another type of documents proving their professional activity.
In case of company owners, through the company’s financial statements.
If the investor has obtained the funds necessary for the investment through personal loans, the loan agreements should be provided, plus the documents proving the legal origin of the funds provided by the lenders.
Other documents, for example, regarding dividends or income from the lease of properties owned by the investor could be provided.

All documents should be legalized by a Notary Public or the Spanish Consulate, and sworn translated into Spanish.

Please note that this article is aimed to provide a general overview on Spanish rules regarding the above matters, but it does not constitute any kind of comprehensive information on them, and in any case specific legal advice should be sought prior to taking any decision.

Jose Luis Herrero

Aree di attività

Agenzia
Immigrazione
Proprietà intellettuale
Lavoro
Diritto penale d’impresa

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