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Is it necessary to register in the Mercantile Registry to incorporate a company?

If you are thinking of creating a company, and it is your official year as an entrepreneur, you should consider several steps before doing so. To create a company nowadays it is no longer enough to open your business and wait for customers to come to you.

Following the correct procedures when setting up a company is essential for the business to start in the best possible way.

That is why our specialists in commercial law are going to solve in this post one of the most important and essential questions in the starting up of your business, the inscription of the company in the Commercial Registry.

 
Is it essential to register the company in the Commercial Register?

The Law on Corporations (hereinafter, LSC), provides in its articles a series of fundamental phases or milestones to be achieved in order to incorporate a company, not only from an internal and structural point of view, but also in its external aspect, in light of the principle of registry publicity.

From our office we warn the businessmen/entrepreneurs that the inscription of the company in the Commercial Registry is an indispensable requirement at the time of notarizing the deed of incorporation. In order to carry out the registration, a certificate must be obtained accrediting that the name of the company is not identical to any of those already included in the names section of the Central Mercantile Register. This certificate will include the name by which the company will be identified as having rights and obligations in all its legal relationships.

In the case of Cooperatives, the negative certificate of the name is obtained from the Register of Cooperative Societies, which must inform the Central Mercantile Register of the name requested prior to issuing the negative certificate.

In any case, the negative certificate must be issued in the name of one of the founding members of the company, and the original must be presented to the notary who authorised the deed of incorporation and notarised with the parent deed.

 
What if I do not register the company in the Commercial Registry?

Failure to register a company in the Commercial Register will have consequences, and that is that the company will be considered irregular. In this case, the rules of the partnership or civil partnership will be applied to the regulation of the company, so that in the case of company debts, the partners will be responsible for them, in accordance with the provisions of Articles 119 and 120 of the LSC. Unlike the Irregular Company, the Company that is formally well constituted by means of registration with the Commercial Registry, whether it is a Public Limited Company or a Limited Company, in the case of corporate debts, the partners will not be liable for the Company's debts, but rather the Company's own assets will be liable.

Therefore, in order to consider the company as irregular, it is necessary that one year has passed since the granting of the deed without having requested the registration or that, before the end of this period, the will not to register the company has been verified. As long as the subjective element (wish not to register) or the objective element (one year) is not present, a limited liability company in formation will be present and will not be submitted to the Register.

The name Irregular Company is attributed to the company that does not observe the legal requirements for incorporation, i.e. the company that has not fulfilled the incorporation formalities. But, in plain language, the irregularity can only be preached of those companies whose registration is constitutive, that is to say, required for the acquisition of legal personality, as is the case of corporations and limited liability companies.
 

What acts of the company must be registered in the Commercial Register?

- The constitution of the company.
- The modification of the contract and the articles of association, as well as the increases and reductions of the capital.
- The extension of the term of duration.
- The appointment and dismissal of administrators, liquidators and auditors.
- General powers of attorney and delegations of authority, as well as their modification, revocation and replacement.
- The opening, closure and other acts and circumstances relating to the branches.
- The transformation, merger, spin-off, partial termination, dissolution and liquidation of the company.
- The designation of the entity responsible for keeping the accounting records in the case of securities represented by book entries.
- The judicial decisions which may be entered in the register concerning the voluntary or necessary, principal or cumulative insolvency of the company and the administrative measures of intervention.
- Judicial or administrative decisions, under the terms established in the Laws and Regulations.
agreements on the involvement of employees in a European Company and subsequent amendments thereto
- Submission to the supervision of a supervisory authority.
- In general, acts or contracts that modify the content of the entries made or whose registration is provided for by laws or regulations.


We would like to remind you that at Forcam Abogados our lawyers, specialists in commercial law, will be able to clarify any doubts you may have in your specific case.

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