The new law for the creation and growth of companies, known as ‘Law creates and grows’, with measures to fight against business default, promoted by the Government and validated in the General Courts, will enter into force within 20 days after its publication this September 29 in the Official State Gazette (BOE). The government approved the regulations at the end of last year.
However, the regulation established by some chapters will come later. For example, Chapter V of the law will come into force on November 10, 2022. This section introduces a new legal regime for crowdfunding platforms. These platforms, also known as ‘crowdfunding platforms’, are companies whose activity consists of putting in contact, in a professional manner and through web pages or other electronic means, a group of natural or legal persons who offer financing with other natural persons or legal entities that request it in their own name to allocate it to a specific project.
On the other hand, the entry into force of article 12, relating to electronic invoicing between businessmen and professionals, is subject to obtaining the community exception to articles 218 and 232 of Directive 2006/112/EC of the Council of 28 November 2006 on the common system of value added tax.
The cost of creating a company is reduced to 1 euro
The new law contemplates different reforms to facilitate the creation of companies, their growth and expansion, streamline procedures and also measures to combat delinquency. In fact, the cost to set up a limited liability company is reduced to a share capital of one euro, compared to the legal minimum of 3,000 euros established up to now.
In addition, the telematic incorporation of companies is facilitated through the one-stop shop of the Information Center and business creation network (Circe), simplifies procedures, expands the catalog of license-exempt activities and various aspects of the Guarantee Law are modified by the Market Unit.
Incentives and guarantees to prevent delinquency
As for delinquency, the rule does not contemplate a sanctioning regime such as the one demanded by a large part of the Chamber, but up to five regulations are modified to combat it, classifying it as an illegal competition practice in the Unfair Competition Law, and promoting restrictive measures from the General Subsidies Law, the Public Sector Contracts Law or electronic invoicing.
In this way, incentives are contemplated such as the requirement of a certificate of payments to subcontractors by a successful bidder, the retention of guarantees once legal proceedings are initiated against a contractor for failing to comply with payments or the prohibition of access to public procurement.
Penalties of up to 50% of the contract and a blacklist
In addition, regardless of whether they are included in the specifications or not, penalties of up to 50% of the amount of the contract will be applied when there is a firm resolution and, when requesting a subsidy, it will be required to prove that all eligible expenses are paid in term.
There will be a black list of delinquencies (companies with 600,000 euros and 10% of their invoices after the deadline will enter), the obligation to reveal their website and annual accounts report of the total and relative volume of invoices paid after the deadline and the prohibition of forcing a company to use a specific electronic invoicing platform.
Reinforcement of financing
Improvements are also incorporated in the financing instruments for companies that are alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.
Regarding ‘crowdfunding’, it relaxes the rules for platforms to provide their services in Europe, allows the creation of vehicles to group investors and reduce management costs, raises the investment thresholds per project (from 2 to 5 million euros) and the investment limits per project for retailers are modified, which become the highest between 1,000 euros or 5% of wealth.
In addition, the type of companies for venture capital investment is expanded, including financial companies with a high technological component; the recognition of closed-end funds (debt funds that can invest in loans, invoices or commercial paper) and the requirement for a quarterly report is eliminated for Sicavs, making investment diversification requirements more flexible.
