Share capital: how much you need and how to pay it in

Key rules

• Minimum capital: An SL needs only 1 euro of capital, paid in full at subscription.
• Proof of cash: Cash capital is normally proved with a bank certificate of deposit in the company's name, obtained before you sign the deed.
• Assets in kind: No expert report is required, but founders are jointly liable for overvaluation for five years.
• Under 3,000 euros: Extra rules apply on reserves, dividends and liability in a wind-up.

How much capital do you need?

The minimum share capital of an SL is 1 euro, and it must be paid in full when the shares are subscribed. This is the current law. The old minimum was 3,000 euros.

You can pay nothing in installments. Partial payment is not allowed at any amount, even 1 euro. This differs from an SA, where part can be paid later.

Why 3,000 euros is still a useful line

A low capital is allowed, but while it stays under 3,000 euros, extra rules apply:

• You must set aside at least 20 percent of each year's profit as legal reserve, until capital plus reserve reaches 3,000 euros.
• The company cannot pay dividends if its equity falls below 3,000 euros.
• If the company is wound up and its assets do not cover its debts, partners and administrators are jointly liable for the shortfall, up to 3,000 euros.

If you want none of these rules, set the capital at 3,000 euros or more. The checklist below turns this into steps.

Paying in cash

Pay the capital into a bank account in the name of the company in formation, by deposit or transfer. Do this before you sign the deed. Then ask the bank for a certificate of deposit and take it to the notary.

Keep the certificate recent. Notaries set their own limit on its age, and about two months before signing is typical, so ask your notary.

For capital below 3,000 euros, your notary may accept a statement in the deed that the founders have paid, instead of a certificate. Ask the notary before relying on this.

Paying with assets (contributions in kind)

You can contribute assets instead of cash. No bank certificate is needed. The deed must describe each asset, its value, and the number of shares you receive for it.

An SL does not need an independent expert to value the assets. But the risk stays with you. The founders, and the partners who contributed the assets, are jointly liable to the company and to its creditors if the value is wrong. This lasts five years from the date of the contribution. The liability covers the gap between the stated value and the real value.

So use a value you can justify, such as an invoice or a recent valuation, and keep the paperwork.

Which option fits?

The decision block below compares the three ways to pay. For most newcomers, cash with a bank certificate is the simplest and the easiest to prove. The documents block lists what to bring to the notary.

Choosing between options

How will you pay in your share capital?

• Cash with a bank certificate: Best for most founders: deposit the cash in the company's account before signing and give the notary the bank certificate.

• Assets in kind: Fits when you want to contribute goods or rights instead of cash. No bank certificate or expert report is needed, but the deed must describe each asset, its value and the participaciones issued.

Use cash unless you hold assets the company needs. If you contribute assets, state an honest value: founders and contributing partners are jointly liable to the company and its creditors for five years for any overvaluation, meaning the gap between stated and real value.

Timeline and deadlines

• Pay the cash capital into the company's account, by deposit or transfer: Before the deed is signed

• Ask the bank for the certificate of deposit: Issued about two months or less before you sign

• Sign the deed at the notary with the certificate: After the deposit and within about two months of the certificate's date

• Present the signed deed for registration at the Registro Mercantil: Within two months of signing before the notary

Documents you need

• Bank certificate of deposit, issued by the bank in the name of the company in formation, showing the cash capital has been paid in. It must be recent: issued about two months or less before you sign the deed.

• Founders' statement of payment, made in the deed instead of a certificate. Your notary may accept it only when capital is below 3,000 euros.

Checklist

• Decide your share capital: the minimum is 1 euro, but a higher amount avoids the extra rules below 3,000 euros.

• Plan to pay the whole capital in before signing, because partial payment is not allowed at any amount.

• If capital is below 3,000 euros, avoid paying dividends whenever equity is under 3,000 euros.

• Tell every partner and administrator that they are jointly liable up to 3,000 euros if a wound-up company's assets fall short.

Frequently asked questions

Can I pay in only part of the share capital when the company is formed?

No, an SL's share capital must be paid in full when the shares are subscribed. This applies at any amount, even capital as low as 1 euro. Only a different company type, the SA, lets you pay part of the capital at the start.

Do I need an independent expert to value assets I contribute instead of cash?

No, an SL does not need an independent expert report for non-cash contributions. The deed must describe each asset, its value and the number of participaciones (the SL's shares) you receive for it. Founders and contributing partners stay jointly liable for five years if the value is overstated.

Do I need a bank certificate if I contribute assets in kind?

No, contributions in kind need no bank certificate. The bank certificate only covers cash contributions.