News of the Law of Creation and Growth of Companies

On June 30, the Congress of Deputies approved the draft Law for the Creation and Growth of Companies, known as the "Create and Grow Law", in order to improve the conditions for the constitution of new Limited Liability Companies, as well as to promote its expansion and growth.

Taking into account the delicate economic situation that exists as a result of the serious health impact caused by COVID-19, the aforementioned bill was born with the objective of promoting the creation of companies and the expansion of businesses, through a set of measures that we will mention below focused on improving the process of business growth.

In this sense, the Law introduces a series of novelties in order to reduce costs and expedite the procedures for the creation of new companies, increasing both productivity and competitiveness in the sector.

Thus, some of the main aspects incorporated in the aforementioned legal text are the following:

• Telematic constitution: in order to facilitate the creation of new companies, their constitution is facilitated through the one-stop shop of the Information Center and Business Creation Network, greatly reducing the time and costs of their creation.
• Anti-delinquency measures: through requirements such as the obligation to issue and remit electronic invoices in all kinds of commercial relationships between companies and the self-employed, as well as the creation of a series of sanctioning measures for those who fail to comply with the provisions of the Late Payment Law 3/2004. In addition, it is established that it will be the State Observatory for Private Delinquency that will be in charge of carrying out the monitoring and analysis of all the data and payment terms that must be carried out, publishing annual lists of the companies that are in a situation delinquency (legal entities that do not pay a percentage greater than 5% of their invoices on time and that the total amount of unpaid invoices is greater than 600,000 euros).
• Decrease in regulatory capital stock: Until now, it was required that, in order to be able to establish a Limited Company, a minimum share capital of 3,000 euros had to be started. As a result of the Create and Grow Law, this amount is reduced to the amount of 1 euro, although with a legal reserve of at least 20% of the profits obtained from the creation of the company, until said reserve and the share capital reach the 3,000 euros.
• Unlicensed Activities: thanks to the expansion of the list of activities that do not require a license for their creation, thus facilitating the constitution of new companies.
• Financing. The initiative adapts Spanish legislation to European regulations regarding crowdfunding, giving these platforms greater flexibility to provide their services in Europe. In addition, it broadens the type of companies in which venture capital companies can invest, including financial ones with an activity that is sustained "mainly in the application of technology." In addition, investor protection is reinforced and the creation of vehicles to group investors is allowed and thus reduce management costs. To expand the universe of eligible business projects, the investment thresholds per project are raised (from 2 to 5 million euros) and the investment limits per project for retail investors are modified, which become the highest of 1,000 euros or the 5% of wealth.

Thus, all the measures included in the Create and Grow Law make up a major structural reform of the Recovery Plan, with which it is expected to reinforce, energize and facilitate the business solvency of the State.