Purchasing a company or its stakes in the Kingdom of Spain is a process which can involve multiple participants from different countries. Unlike acquiring a company, purchasing a business via selling assets in the Kingdom of Spain is rarely used. Being an alternative, this approach centers around transferring partial, and not complete, ownership of a business.
Buying a business or its assets in the Kingdom of Spain depends on:
- how many buyers there are;
- whether a transaction involves negotiations;
- whether an auction will be held.
When it comes to selling major transnational corporations, each of the above steps may require a lot more time.
Spain: Regulation of M&A Transactions
Normally, M&A transactions in the Kingdom of Spain are regulated by contractual terms. Despite containing several provisions regulating the selling & buying of assets in the Kingdom of Spain, Civil & Commercial Codes can be superseded by the basic terms of an M&A agreement.
Spanish law regulates the majority of M&A transactions; however, other countries’ laws may be applied, too. Buying a business in the Kingdom of Spain requires fulfilling legal formalities applicable to a transfer of assets/stakes of a Spanish company. The said formalities may be different & depend on:
- if it’s a transfer of stakes of an LLC in Spain;
- if it’s a transfer of stakes of a JSC in Spain.
Please note that acquiring a stake in a Spanish company means purchasing all rights assigned to it, such as.
- selling/transferring stakes;
- participating in GSMs & voting;
- receiving information about a company's activities;
- getting dividends & other economic rights.
By acquiring ownership of shares, buyers become entitled to full legal protection. They also agree to cover any outstanding debts that existed at the time of concluding an M&A agreement in the Kingdom of Spain. Please note that Spanish tax authorities are allowed to demand disclosure of information pertaining to any unpaid debts.
Restrictions
Selling a stake in an LLC in the Kingdom of Spain means that its owner must offer it to other stakeholders prior to selling it to a 3rd party. No such restrictions are applicable to Spanish JSCs.
Taxation
Normally, property transfer tax isn’t applicable to the transfer of a company in the Kingdom of Spain. That said, if a deal includes immovable assets to which VAT isn’t applicable, transfer tax gets levied. Property transfer tax is applicable if the assets of a company mainly consist of real estate in the Kingdom of Spain.
Personnel
Buying a stake in a Spanish company doesn’t have any impact on its relationship with its personnel. Because there’s no change of an employer, a transfer of a company’s shares isn’t deemed as a complete transfer. However, when it comes to acquiring a Spanish business, a new employer bears responsibility for providing social security, jobs & pension payments to their personnel.
Looking to buy a company in the Kingdom of Spain? Need advice on the regulation of M&A transactions in the Kingdom of Spain? Please consider contacting YB Case.
