Corporate Structures in Spain - PDF Free Download

European Regional Meeting - Lucerne / Switzerland Corporate Structures in Spain 09.15 09.35

These presentations are informational only. They do not constitute legal or professional advice. You are encouraged to consult with a lawyer if you have specific questions relating to any of the topics covered in these presentations.

Corporate Structures in Spain Index I. Start in the Spanish market Distribution Agent (Ley 12/1992 sobre Cto. De Agencia) II. Long-term establishment Branch Sociedad Anónima S.A. Sociedad de responsabilidad limitada S.L. III. Cooperation with local companies M&A (Legal and tax DueDiligence, Shareholder Agreements)

I. Start in the Spanish market Spain The business activities in Spain : can be managed from abroad and be executed directly through a distributor: Resells goods acquired from the Principal agent / representative: sells on behalf of the Principal who is the seller. Law grant agents some rights regarding indemnities. A permanent establishment can be created: a branch (Sucursal) a Spanish subsidiary: S.A., S.L. We can also adquire an existing spanish company via:asset or Share deal or we can agree upon an Joint Venture colaboration.

II. Long-term establishment 1. Branch (Sucursal) Spain A Overview no legal personality the parent company stays responsible for all the activities in Spain for all the debts and liabilities incurred registered at the Commercial Registry of domicile by filing the following documents of the foreign company setting up the branch: certificate of registration of the mother company copy of articles of association of the mother company name and particulars of the directors document (notarial deed) for incorporate the branch

II. Long-term establishment 1. Branch (Sucursal) Spain B Registration (1/2) necessary documents for setting up the branch: name of the branch domicile of the branch activities to be carried on representatives of the company and their respective powers of representation Assets (in cash or kind) ascribed to the business of the branch. document must be in Spanish language registration takes up to 10-15 days notary and registration costs

II. Long-term establishment 1. Branch (Sucursal) Spain B Registration (2/2) Important note: any changes of the name/domicile of the parent company, any removal/nomination of directors, any nomination of liquidators, and any termination of liquidation/bankruptcy...must be registered at the Spanish Commercial Registry! Furthermore, the foreign company has to deposit at the Spanish Commercial Registry: its annual accounts the consolidated accounts

II. Long-term establishment 2. Joint Stock Company (S.A.) and Limited Liability Company (S.L.) Spain S.A. min. capital of 60.000 EUR S.L. min. capital of 3.000 EUR at least one shareholder (same for both) no personal liability of the shareholders

II. Long-term establishment 2. Joint Stock Company (S.A.) and Limited Liability Company (S.L.) Spain A Incorporation Incorporation deed has to be granted before a public notary and registered in the Commercial Registry of the domicile of the company with following requirements: a) name and age of the grantors (individuals); nationality and domicile (legal entities) b) name of last physical person who owns shares of more than 20% directly or indirectly. c) willingness of the grantors to incorporate the joint stock company d) cash, assets, rights of each shareholder and the number of shares e) total amount of the capital f) articles of association g) name and age of the persons entitled to present the company (individuals); nationality and domicile (legal entities) h) NIE for non residents (shareholders, administrators individuals or entities) The incorporation of a Limited Liability Company is similar, but with less stringent requisites

II. Long-term establishment 2. Joint Stock Company (S.A.) and Limited Liability Company (S.L.) Spain B Corporate Governance Representation Body of the Company The company can be represented by: a) one sole director (administrador único) b) two or more directors with individual unlimited powers (administradores solidarios) c) two directors with joint powers (administradores mancomunados) d) a Board of Directors (at least three members) (Consejo de Administración) power of representation of the company to one or more of its members (must be registered in the Commercial Registry) The duties and liabilities: the Corporate Enterprise Act (CEA) the Amendments of Act 31/2014 (modification of the CEA) the Spanish Criminal Code The same rules apply to a Limited Liability Company, but more than two directors with joint powers can be appointed

II. Long-term establishment 2. Joint Stock Company (S.A.) and Limited Liability Company (S.L.) Spain C Corporate Governance Shareholders Resolution The General Shareholders Meeting or the sole shareholder is responsible for: a) the approval of annual accounts b) the application of the result c) the approval of the management activity in the financial year d) the amendment of the articles of association: corporate name, address, object, increase or decrease of share capital, the transformation, merger, demerger, winding-off or liquidation of the company e) the appointment and withdrawal of the directors and liquidators f) the appointments of the company s auditors The same rules apply to a Limited Liability Company

II. Long-term establishment 2. Joint Stock Company (S.A.) and Limited Liability Company (S.L.) Spain D Corporate Governance Annual Accounts The annual accounts have to be adopted and signed by the directors within three months after ending the financial year In case of application they have to be audited and finally they have to be approved by the General Shareholders Meeting (or sole shareholder) within six months after ending the financial year The approved accounts have to be registered at the Commercial Registry

III. Cooperation with local companies Spain A M&A (1/2) Introduction in the Spanish market through acquisition of an on going business: Sale and purchase agreement Acquisition of shares in a Increase of Capital of a pre-existing company Merger of companies ( EU and Non EU Cross-border merger)

III. Cooperation with local companies Spain A M&A (2/2) Merger of companies ( EU and Non EU Cross-border merger) Due Diligence work is essential in order to evaluate the convenience of the business and in order to negotiate Warranties to be given in the SAP Requirements for Foreign investments in Spain shall be fulfilled: NIE are required for entities or individuals investing in Spain Declaration of the origin of the investment Declaration of last partners Declaration of the foreign investment

Corporate Structures in Spain Questions? WE STAY AT YOUR DISPOSAL! consulting@astriddorfmeister.com

European Regional Meeting - Lucerne / Switzerland Thank you for your interest. Get more information in our Online Handbook about International Corporate Structures www.consulegis.com Chapter News & Dialogue http://www.consulegis.com/wpcontent/uploads/2013/06/titel_handbook3.png

European Regional Meeting - Lucerne / Switzerland Italian Corporate Structures Gad Matalon Lawyalty MCM Avvocati 09.40 10.00

Procedures and formalities for setting up a new company in Italy The formalities to set up a new company: The deed of constitution must be drafted by a Notary Public and registered with the Companies register Registro Imprese ; Taxation documents are filed at the Incomes Agency Agenzia delle Entrate ; Social security and social insurance information at the relative public offices: Istituto Nazionale della Previdenza Social (INPS) and Istituto Nazioanle Assicurazione Infortuni sul Lavoro (INAIL). Moreover, mandatory formalities are the following: Opening a bank account; Obtaining an Italian fiscal code or VAT number; Registering the company in the Companied Register.

Business Structures The choice of the business structure will depend on the kind of business, the investor s strategy and the degree of independence that the Italian operations will be given by the parent company or by the shareholders. To conduct business in Italy a foreign company may choose between establishing a: 1. BRANCH; or 2. SUBSIDIARY

1. BRANCH Sede Secondaria Does not have its own legal personality; so the foreign company is responsible and if the branch encounters financial problems, the foreign company has unlimited liability for its debts; Must be registered with the Italian Companies Register; Must make an application for its own Italian VAT number and fiscal code; The foreign company has to appoint a permanent representative of the branch; Must file its own accounts with the Italian Companies Register on an annual basis. It must also file the accounts of the foreign company translated into Italian; The branch which conducts active business constitutes a permanent establishment and it is subject to the Italian corporate income tax and VAT and may be subject to withholding tax on the branch s profits; Pros and cons: Pros: one legal entity Cons: reporting ad administrative requirements Unlimited liability for the foreign company with an Italian branch

2. SUBSIDIARY Creation of an Italian Company There are different kind of companies: I. Joint Stock Company - Società per Azioni S.P.A. II. Limited Liability Company Società a Responsabilità Limitata S.R.L. III. Limited Partnership by Shares Società in Accomandita per Azioni S.A.P.A. IV. Simple Company Società Semplice V. Commercial Partnership Società in Nome Collettivo S.N.C. VI. Limited Partnership Società in Accomandita Semplice S.A.S.

I. Joint Stock Company - Società per Azioni S.P.A. General Requirement: i. Minimum capital stock: 50,000 (N.B.: the capital of all Italian companies must be denominated in Euros); contribution in kind in the form of assets or receivables are permitted; ii. Down payment of stock capital before the incorporation: 25% minimum and 100% in case of sole shareholder; iii. Minimum number of shareholder: 1. Shareholder participation in the company s capital is represented by stocks; iv. Liability of the shareholders: limited to shareholder s participation in the company; v. Directors can also be shareholders and do not have to be Italian citizens; vi. Directors may be removed at any time; however, directors may have a claim for damages against the company if removed without just case; vii. Appointment of an external auditor or a firm of external auditors, each of them qualified to act in such capacity under Italian law that verifies during the fiscal year that (i) the company s accounting records are correctly kept and accurately reflect the company s activities and (ii) the financial statements correspond to the accounting records; viii.the transfer of shares, bearer and nominative, is free of restrictions, unless otherwise stated in the by-laws. Registration duties and notary fees are due upon the transfer of nominative shares. Specific rules apply to listed public companies.

I. Joint Stock Company - Società per Azioni S.P.A. Corporate Governance/management: A. There are 3 types of governance models; the choice among one of them is decided by the shareholders upon incorporation and subsequently could be amended by shareholders resolution: i. ORDINARY SYSTEM: the joint stock company is managed by a sole director or by a board of directors ( BoD ), both appointed by the shareholders. The BoD is chaired by the chairman who is the legal representative of the company. The company s shareholders elect a board of auditors or a single auditor; ii. DUAL SYSTEM: the shareholders elect a supervisory board, formed by a minimum of 3 members, in charge for the supervision and control of the company, which appoints an executive board, who is in charge of the management of the company. The shareholders appoint also an external auditor or a firm of external auditors; iii. SINGLE SYSTEM: the shareholders elect a board of directors ( BoD ) for the management of the company. The BoD appoints among its members a supervisory board. The company s shareholders elect a board of auditors or a single auditor; B. Shareholders meetings Assemblea Soci. There are 2 types: 1) Extraordinary shareholder s meeting: in general, mandatory when a decision is required to modify the company s by-laws; 2) Ordinary shareholders meeting: when the decision do not trigger a modification of the by-laws.

I. Joint Stock Company - Società per Azioni S.P.A. Pros and cons of choosing an S.P.A.: Pros: suitable for large companies. An S.p.A. structure is sometimes mandatory, such as for example when the company must be listed on the stock exchange or in order to operate banking activities Cons: S.p.A. rules are less flexible and generally inadequate for medium sized and smaller companies

II. Limited Liability Company Società a Responsabilità Limitata S.R.L. General Requirement: i. Minimum capital stock: 10,000 in case of contribution in cash and in kind in the form of assets or credits balances. If the contribution is done exclusively in cash, it is permitted a minimum capital stock of 1; ii. The shareholders participations in the company s capital is represented by quotas; iii. Down payment of stock capital before the incorporation: minimum of 25%. 100% in case of sole shareholder or in case of a minimum capital stock of 1; iv. Minimum number of shareholder: 1. There is no limit on the maximum number of shareholders; v. Liability of the shareholders: limited to shareholder s participation in the company; vi. Directors can also be shareholders and do not have to be Italian citizens; vii. The transfer of quotas is free of restrictions, unless otherwise stated in the by-laws. Registration duties and notary fees are due for the transfer of quotas.

II. Limited Liability Company Società a Responsabilità Limitata S.R.L. Corporate Governance/management: A. The company is run by 1 Director or several Directors. Each company director has the general power to represent the company, unless otherwise provided by the by-laws; B. The Articles of Incorporation can state whether management must act collectively by board resolutions or individually by each manager independently or by 2 or more managers with a joint signature. Most of the provisions relevant of the S.p.A. s ordinary system of corporate governance are applicable to S.r.l.; C. Board of Statutory Auditors: not required as a rule, unless the company exceeds certain thresholds provided for by the Italian legislation, with regards to assets, sales and employees; D. Shareholders decisions: the following items are reserved to the exclusive decision of the quotaholders and cannot be enacted by a directors resolution: modifications to the by-laws, decisions substantially altering the company s purpose or a fundamental right of the quota-holders, the approval of the annual accounts, appointment or dismissal of director(s) or statutory auditors.

II. Limited Liability Company Società a Responsabilità Limitata S.R.L. Simplified type of Limited Liability Company - Società a Responsabilità Limitata Semplificata S.R.L.S. General Requirement: i. The Simplified type of Limited Liability Company is formed only by physical persons; ii. The Articles of Incorporation must be done according to a standard form provided for by a Ministry Decree; iii. Minimum capital stock: between 1 and 10,000; the contribution must be done exclusively in cash; iv. Down payment of stock capital before the incorporation: 100% v. Minimum number of shareholder: 1. There is no limit on the maximum number of shareholders; vi. Liability of the shareholders: limited to shareholder s participation in the company; vii. Directors can also be shareholders and do not have to be Italian citizens; viii.the transfer of quotas is free of restrictions, unless otherwise stated in the by-laws.

III. Limited Partnership by Shares Società in Accomandita per Azioni - SAPA General Requirement: i. Minimum capital stock: 50,000; ii. This type of company has 2 different kinds of shareholders: The limited shareholders, whose responsibility with respect to corporate liability is limited to what has been conferred as equity; The unlimited shareholders, whose responsibility with respect to corporate liability is unlimited. iii. The company name contain at least the name of one of the unlimited shareholders; iv. The creditors of a company cannot claim payment from the unlimited shareholders without first requesting payment from the company. Corporate governance/management o The general shareholders meeting function like that of an SpA, but the unlimited shareholders cannot vote on decisions concerning the appointment and the dismissal of auditors and any action for damages against them; o The unlimited shareholders are by right directors and are subject to the same responsibilities as directors of SpA s.

IV. Simple Company Società Semplice General Requirement: i. Used for non trading activities such as holding of real estate, portfolio and real estate management, professional services; ii. Unlimited personal liability; iii. Each partner has the power to fully represent the company, unless differently provided by the Deed of Incorporation. Pros and cons: Pros: Good vehicle for holding real estate and for portfolio holding. No need to register this company or to file annual accounts with the Companies register. Cons: Restricted scope of activities; if the company is commercially active, risk of requalification for corporate tax. Personal unlimited liability of the partners.

V. Commercial Partnership Società in Nome Collettivo S.N.C. General Requirement: i. Shareholders are natural persons and, subject to certain conditions, may be legal entities; ii. Shareholders are all eligible to be directors; iii. Unlimited joint liability of all partners; iv. The company name must contain at least the name of one of the shareholders; v. Used for trading activities. Pros and cons: Pros: Adequate structure for joint-ventures and for achieving a form of tax consolidation when the parent has a substantial control over the subsidiary; Cons: Risky structures when the partners are not legal entities subject to limited liability due to the joint unlimited liability

VI. Limited Partnership Società in Accomandita Semplice S.A.S. General Requirement: i. The type of company, like the SAPA, has 2 different categories of shareholders: The limited shareholders whose responsibility with respect to corporate liability is limited to what has been conferred as equity; The unlimited shareholders, whose responsibility with respect to corporate liability is unlimited.; ii. Only the unlimited shareholders are only eligible to be appointed as directors; iii. The company name must contain at least the name of one of the unlimited shareholders; iv. The creditors of a company cannot claim payment from the unlimited shareholders without first claiming payment from the company.

Relevant tax aspects linked to corporate law Corporate tax The standard corporate tax rates are: 27.5% IRES and 3.9% IRAP. The IRAP tax rate could vary pursuant to regulations adopted by the Italian regional Public Administrations. Taxable income is almost always higher than the income resulting from the financial statement, because there are several limitations to the deductibility of certain costs. Tax losses can be carried forward for no more than 5 years. However, tax losses in the first 3 fiscal years following incorporation can be carried forward indefinitely. An optional tax consolidation regime applies to companies subject to Italian corporate income tax when the parent has substantial control over the subsidiary. Transfer taxes on the sale of shares A gain on the sale of company s shares is taxed as set out below: if a share is deemed as unqualified (which normally is less than 20% of share capital or less than 25% of right to vote in the shareholder s meeting ), the gain is subject to fixed proportional taxation at a rate of 26%. If a share is deemed as qualified, 49.72% of the gain concurs to the shareholder s personal taxable income and consequently is taxed the progressive personal income tax (IRPEF) rate. If the share is held by another company, under certain conditions, the participation exemption rule applies, whereby only 5% of the gain is subject to taxation. Dividends are normally taxed pursuant to the same rules applicable to capital gains.

End [SUBJECT OF SLIDE] Thank you for your attention The information contained in this presentation is not comprehensive and does not purport to give nor does it constitutes professional advice. Gad Matalon

European Regional Meeting - Lucerne / Switzerland Doing business in Poland Dr. Katharina Lasota Heller HütteLaw, Cham/Zug 10.05 10.25

Poland Member of the EU (still) Population: around 38 Mio. GDP (nominal) estimate for 2016: - Total: USD 508.857 billion - Per Capita: USD 13,390

Index Entities Transactions Assets deals v. Share deals Mergers Don ts Current developments, legislative outlook

Entities [SUBJECT OF SLIDE] Simple partnership Registered partnership Limited partnership Limited liability company Corporation plus mixed forms of the above

Shares Deal v. Assets Deal An acquisition in Poland could take the form of a purchase of the shares of a company, its business or particular assets. In a share acquisition, the purchaser is taking over the target company together with all related liabilities (including tax). The purchaser of a business or an organized part of a business is jointly and severally liable with the seller for the tax liabilities relating to the acquired business activity that arose prior to the purchase, up to the amount of the purchase price As of 1 January 2009, the purchaser of assets not constituting a business or an organized part of a business is no longer jointly and severally liable with the seller for the tax liabilities that arose prior to the asset purchase

Mergers transfer of all assets of the acquired company to the acquiring company for shares in the acquiring company (merger by acquisition) formation of a new company where go all of the assets of all emerging companies for the shares in the new company (merger by creation of a new company) the acquiring or the new company enters on the date of the merger in all rights and obligations of the acquired company or merging companies; this in particular includes permits and licenses, however in case of permits and licenses relating to financial activities - only if the regulator does not disagree within one-month time from the date of the merger, important: the board of directors of the merging or the new company can be personally liable for employees social security and tax payments existing before the merger

Other Issues Poland Intellectual Property (i.e. lack of compliance with specific formal requirements related to transfer of copyrights) User Data Bases (i.e. often lack of compliance with data protection related regulations)

DON TS DON T acquire or merge with a company DON T let to appoint you as a member of the board on the basis of delivered confirmations even if supported by representations and/or guaranties that fiscal obligations (tax, social security etc.) of the companies taken over are paid; if this is not the case the board members are personally liable for the outstanding payments; always require a PoA to check with the authorities as provided confirmation might be out of date DON T acquire or merge with a company solely on the basis of of representations and guaranties that the target owns the IP rights; this is oft not the case due to lack of compliance with formal requirements

Current Developments and Legislative Outlook Currently the most important bodies (President, Parliament and Government) in Poland are controlled by one political party, which is: conservative, populist, driven by revenge and nationalistic Poland (unfortunately) expects legislative or regulatory proposals aiming for: - more state interference into private businesses, - limitation of transfer of capital out of Poland - increase of the tax rate on companies with foreign capital - more frequent tax related controls However, they would most probably not go trough. Poland still encounters a high economic growth and is a very interesting destination for investment purposes.