When establishing a company in Spain, choosing the appropriate legal structure is one of the first and most crucial steps. Among the most common options are the Sociedad Limitada (SL) and the Sociedad Anónima (SA) – two types of companies that share some similarities but also have key differences that can significantly affect the operation, control, and growth of the business.
The choice between them is not only a formal one, but also a strategic decision. Below, we analyze the main advantages and disadvantages of each option.
Minimum Share Capital
SL: Requires a minimum share capital of €3,000, which must be fully paid in at the time of incorporation.
SA: Requires a minimum share capital of €60,000, of which at least 25% must be paid in at the time of incorporation.
Advantage for entrepreneurs: With an SL, a company can be established with a much lower initial investment.
Transfer of Shares or Stocks
SL: Company shares (participaciones) are not freely transferable. There are significant restrictions, especially regarding transfers to third parties.
SA: Shares are freely transferable, making it easier to attract new partners or investors.
Conclusion: If expansion with multiple partners or even a stock market listing is planned, the SA provides greater flexibility.
Management Bodies
SL: Offers greater flexibility in its structure. It may have a sole director, multiple directors, joint directors, or a board of directors.
SA: Subject to stricter rules, particularly if a board of directors is chosen. More formalities and requirements apply.
Practical note: SLs are usually more agile and easier to manage in day-to-day operations.
Audit and Oversight Requirements
SL: Not required to have annual accounts audited unless certain financial thresholds are exceeded.
SA: Subject to stricter auditing and oversight obligations, even if the company is not listed on the stock exchange.
Implication: SAs provide greater transparency but also entail higher administrative costs.
Image and Perception
SL: The most common choice for SMEs and start-ups.
SA: Conveys a stronger and more formal corporate image, which can be advantageous for attracting investors or securing financing.
Strategic decision: In some sectors, an SA may inspire greater trust at the institutional or international level.
Which Structure Suits You Best?
If you are looking for agility, lower costs, and a simpler structure, the SL is likely the best choice.
If you are aiming for large-scale expansion, attracting external capital, or projecting a stronger corporate image, the SA may be the more strategic option.
Conclusion
The decision between incorporating an SL or an SA should be based on the specific requirements of the project, the profile of the shareholders, the size of the initial investment, and future expansion plans. In any case, specialized legal advice is essential to make the right decision from the very beginning.
At Dr. Frühbeck Abogados, we support entrepreneurs, SMEs, and large companies throughout the entire process of company formation and development, ensuring compliance with legal requirements and aligning the legal strategy with business objectives.