Crea y Crece Law approved to make it easier to set up companies

The Congress of Deputies has given final approval to the Law on the Creation and Growth of Companies (Crea y Crece). The law is intended to make it easier to set up companies, reduce regulatory obstacles, combat late payment, and boost business growth and expansion.

The Crea y Crece Law is one of the main reforms under the Recovery, Transformation and Resilience Plan. It is intended to foster the dynamism of the business fabric and to respond to the demands and recommendations of various international bodies. The law received broad support in the Congress of Deputies as a result of intense parliamentary dialogue and collaboration with the Autonomous Communities (regions) and all economic stakeholders, which allowed improvements to be incorporated during its passage.
Setting up a company will be easier and faster
The Crea y Crece Law will make it easier to set up a company by reducing the financial costs involved and simplifying the incorporation formalities.
It will therefore be possible to incorporate a limited liability company (S.L.) with share capital of €1 (the current statutory minimum is €3,000), making it much easier to create new businesses and encouraging entrepreneurship.
The law will also make it easier to incorporate companies online through the one-stop shop. This will shorten incorporation times and reduce notarial and registration costs.
However, the following enhanced creditor-protection measures are introduced for companies with capital below €3,000:
• The obligation to allocate at least 20% of the profits obtained to the legal reserve until capital and legal reserves together reach the €3,000 minimum
• In the event of liquidation, if the company’s assets are insufficient to meet its payment obligations, the shareholders will be jointly and severally liable for the difference between the subscribed capital and €3,000
Measures to promote business growth
In addition, the draft bill makes the regulatory framework for economic activities more efficient by simplifying existing legislation, eliminating unnecessary regulations, and establishing more streamlined procedures.
The Law on Trade Liberalization Measures is amended to expand the list of economic activities exempt from licensing. Activities that have been deemed harmless by at least one Autonomous Community are added to the list in the basic state legislation.
Likewise, the Law on Guarantee of Market Unity is amended to strengthen cooperation among the various public administrations and to reinforce the mechanisms protecting companies and consumers against measures that do not respect the principles of proportionality and necessity.
Strengthening financing
The law also includes measures to improve instruments for financing business growth as an alternative to bank financing. The most notable are:
• Crowdfunding or participatory financing: national regulation is aligned with European rules, introducing more flexibility so that these platforms can provide their services in Europe. Investor protection is strengthened, and vehicles may be created to pool investors and reduce management costs. To broaden the range of eligible business projects, the investment thresholds per project are raised (from €2 million to €5 million), and the per-project investment limits for retail investors are amended (the higher of €1,000 or 5% of their wealth).
• Boosting the venture capital industry: the range of companies in which these entities may invest is broadened to include financial companies with a high technological component.
• Collective investment undertakings: the quarterly report is no longer mandatory, electronic means become the default means of communication, and the investment diversification rules for venture capital entities are made more flexible.
Measures to combat late payment
The new legislation also includes measures to make progress in combating late payment in commercial transactions. The most important are:
• The obligation to issue and send e-invoices in all commercial relationships with companies and self-employed workers, to ensure greater traceability and control of payments.
• Companies that fail to comply with the payment periods established in the Late Payment Law will not be able to obtain public subsidies or act as collaborating entities in their management.
• The creation of a State Observatory on Private-Sector Late Payment, which will monitor and analyze payment-period data and promote good practices.
The new Crea y Crece Law was approved by Congress this week, thereby completing its passage through Parliament. All that remains is its publication in the Official State Gazette (BOE) and its entry into force.
As you can see, this opens up a great opportunity to launch that new project to set up an SME that you have in mind.