Preliminary draft of the Law on Business Creation and Entrepreneurship approved

The Council of Ministers has approved the publication of the Preliminary Draft of the Law on Business Creation and Entrepreneurship, which will be submitted to public consultation before its final approval. It is one of the most ambitious laws aimed at changing the Spanish business paradigm, so dependent on administrative red tape, and thereby making it easier to set up companies and help them grow

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The preliminary draft rests on three fundamental pillars: streamlining the formalities for incorporating a company, financing business growth, and combating late payment.

The target: 2022

This initiative forms part of Component 13, “Boost for SMEs” (Impulso a la Pyme), of the Recovery, Transformation and Resilience Plan submitted to Brussels, which seeks to improve business demographics and the business climate, make it easier to create and grow companies, promote innovative entrepreneurship and digitalization, attract talent and capital, and reduce the incentives to set up companies in other countries.

Once approved by the Council of Ministers, the “Crea y Crece” (Create and Grow) preliminary draft bill will be put to a public hearing so that its processing can be completed before the end of the year, allowing it to go to the Congress of Deputies and become a reality as a bill in 2022.

Streamlining and facilitating the creation of companies

The Ministry of Economy’s aim is for a company to be incorporated in 10 days, digitally, and with an investment of just €1. Accordingly, the minimum capital contribution requirement of €3,000 to incorporate a limited liability company (S.L.) is eliminated. It will therefore be possible to carry out the incorporation procedure with a contribution of just €1 as functional capital.

Financing business growth

The law includes measures to diversify sources of financing and promote non-bank financing, on which the vast majority of companies depend, and thus improve the business climate.

Among the actions set out in the preliminary draft bill is support for the NextTech fund, intended to finance innovation and technology initiatives. This is a public-private capital fund whose purpose is to provide capital for disruptive initiatives. The law also seeks to strengthen the regulation of crowdfunding platforms.

Combating late payment

Another problem affecting self-employed workers that the Ministry of Economy intends to address is late payment. The Ministry has found that payment deadlines have frequently not been met, which entails subsequent statutory penalties.

This causes both growth and liquidity problems for companies, especially SMEs. For this reason, the Government will also implement measures against late payment, both between businesses and by public bodies: rolling out a system of incentives for meeting payment deadlines, introducing electronic invoicing, strengthening the penalty system to resolve these disputes, and establishing better business practices.