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Over much of the last year, we have brought you various reports concerning the planned changes to Spanish company law aimed at making the set up and running of companies in the various strands of the new economies, including specifically, digital transformation, software, cyber security and, more generally, the furnace that is wide-ranging technology, more streamlined and user friendly.
Please see here How will you benefit from Spain’s “Startup Act”? and Spain’s new Start-Up Law
One of the key elements in advancing this new ecosystem was an evaluation by a Spanish state agency of whether the prospect that you were advancing was indeed innovative. To undertake this role, on Friday 21st July 2023, the outgoing Spanish Government, in a final process before the weekend’s general election, published an Order PCM/825/2023 to regulate the certification procedure for new start up companies. This flows from the new legal framework established on 21st December 2022 by Law 28/2022, concerning the expansion of the ecosystem of emerging companies.
The Government agency who will handle this certification process is called ENISA – not to be confused with the European Union Agency for Cyber Security – they provide financial support to small and medium-sized companies that want to promote innovative entrepreneurship prospects. They see themselves as a complementary option to possible alternatives of public or private sources of investment. Above all they are committed to the potential for transformation through entrepreneurship and innovation. They are part of the Ministry of Industry, Commerce and Tourism.
What does it take to get your company certified by ENISA? This is not an exhaustive list but you should bear in mind, if you have the ambition to qualify under the new legislation for StartUp status you will need to be able to demonstrate the following:
- Be newly created company or have been registered as a company for no more than 5 years or for Spanish biotech, energy and industrial companies, 7 years.
- Not to have arisen as a result of a merger, spin-off, transformation, concentration or segregation of another operation with the exception of those arising from other emerging companies or spin-offs from technology-based companies originating from public universities.
- Not to distribute or have distributed dividends since incorporation.
- Not to be listed on a regulated stock market or similar.
- The company is required to have its HQ, registered office or permanent establishment in a Spanish territory.
- Not less than 60% of the workforce to have a Spanish employment contract.
- The business model requires it to innovative and scalable model.
- To have a turnover of less than €10m per annum.
- It may be a group company with others but each company in the group is required to satisfy the above criteria.
- The principals need to have up to date tax, social security records and no major criminal convictions. Save that not more than 5% of the companies capital should be owned, directly or indirectly, by an individual who has committed a proscribed offense.
There are a series of administrative steps to the application that are outside the scope of this general note. However, the aim is positive and its does seem to streamline and standardize an otherwise complicated process.
There have been various criticisms of this new law which also developed the Digital Nomad Visa scheme, due to a lack of clarity in the regulations concerning the application process for these new visas has proven problematic for some. Indeed, it has been suggested that the promulgation of this new legislation may have stemmed from a desire to be seen to be embracing the new opportunities in the world of tech without having really consulted with the community of potential applicants. No doubt in time further clarity as to the qualification process will be forthcoming. This news concerning the certification process seems part of a continuing administrative process.
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Please note that our posts are for general interest. There is no substitute for proper legal advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
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All details have been reasonably fact-checked and all efforts have been taken to ensure that facts are accurate as at the date of publication.
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