• Fri. Sep 24th, 2021

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Spanish Government Plans To Approve Law On Tuesday That Will Allow Creation With 1 Euro

BySam Brad

Jul 26, 2021

The Government plans to approve in the Council of Ministers on Tuesday the Law of Business Creation and Growth that will allow companies to start up with just 1 euro, promote their growth and establish measures to combat bad debts.

The main objective of the standard will be to remove obstacles to the creation and viability of the company. Defaults are precisely one of the problems that often threaten your solvency by limiting or strangling your liquidity because the maximum legal term of 60 days is not met.

This is a problem that especially affects SMEs and the self-employed, who allow large companies to take much longer to attend to their invoices for fear of deteriorating commercial relations. For this reason, they do not usually demand the legal compensations provided for in the regulation in the event of non-compliance, such as recovery costs or indemnities, although they put pressure on their margins.

To combat the generalized non-compliance with this maximum period between companies, the regulations will deploy an incentive system for meeting payment deadlines and will implement electronic invoicing.

On the one hand, the regulations foresee taking into account the term payments to be able to access public subsidies, by linking it with the fulfillment of the payment terms to its subcontractors. On the other hand, the generalization of electronic invoicing will help to make transparent the deadlines with which companies comply with their invoices.

It is also expected to increase transparency in payments and establish a system of infractions and sanctions or an extrajudicial system for conflict resolution.

The regulations will also eliminate the requirement of having 3,000 euros to set up a company , reducing to a minimum of 1 euro the amount necessary to set up a Limited Company, and will allow the process to be solved electronically in just 10 days.

The law includes measures to diversify financing sources and boost non-bank financing, on which the vast majority of companies depend, and to improve the business climate.

Precisely this week the Ministry of Economic Affairs and Digital Transformation has constituted the Sectorial Conference on Regulatory Improvement and Business Climate , which will be the body of direct dialogue between the Government, the autonomous communities and local corporations for cooperation in the field of economic regulation.

With this law, together with that of ‘startups’ and the bankruptcy finalized by the Ministry of Justice, the Government plans to cover the full range of measures to promote entrepreneurship and tackle the problems faced by Spanish companies that make it difficult for them to gain size, go international or even restructure the debt so that a crisis is not a corporate death sentence.

The text of public consultation prior to the draft that will now take the Council of Ministers already recognized that “a larger company size would allow increasing productivity, resistance to potential crises and the ability to undertake the necessary investments to remain competitive in the context of the double digital and green transformation “, and pointed out that Spain ranks 30 in the 190 ranking of the World Bank’s ‘Doing Business’ report in terms of business climate.

In addition, he pointed out that “the lack of an efficient procedure to tackle a company restructuring that guarantees their future viability is pointed out as an element of legal insecurity and vulnerability that hinders growth”, while excessive delinquency prevents many SMEs ” solid balance sheets that allow addressing its growth “.

To reduce administrative burdens, a reduction is also addressed, a substitution of certain authorizations or ex ante control systems of economic activity with responsible declarations.

Sam Brad

The Great Writer and The Passionate Poet As Well, He Graduated from University Of Florida in Journalism and Brad have around 12 years of experience in news and media section.

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