Consequences of failing to register in the Commercial Registry

Consequences of failing to register in the Commercial Registry

Registering certain corporate acts in the Commercial Registry (Registro Mercantil, RM) is a legal requirement for capital companies in Spain. Omitting this step can lead to significant legal consequences, whether during the company’s formation, capital increases, appointments of corporate officers, or amendments to the company’s bylaws. Let’s explore these scenarios in detail.

Company formation

When a capital company is established through a public deed, the Spanish Companies Act (Ley de Sociedades de Capital, LSC) requires that the deed be submitted for registration within the legally established timeframe. Specifically, Article 51 of the LSC states:

“The deed must, in any case, be submitted for registration at the Commercial Registry corresponding to the company’s registered office within two months from its execution.”

In turn, Article 4.1 of the Commercial Registry Regulations (RRM) states:

“Registration in the Commercial Registry shall be mandatory, except in cases where otherwise expressly provided.”

Similarly, Article 33 of the LSC establishes:

“Upon registration, the company shall acquire the legal personality corresponding to the chosen corporate form.”

Consequences of not registering the incorporation of the company

Until registration takes place, the company is considered “in formation.” Therefore, contracts and actions necessary for registration that are carried out by administrators, within the limits authorized by the formation deed or by a mandate from all partners, are the responsibility of the pre-incorporated company. If the pre-company’s assets are insufficient, the partners will be personally liable up to the amount of their agreed contributions.

If it becomes clear that the company will not be registered, or if more than one year passes without registration being requested, the company becomes ‘irregular’. Article 39 of the LSC provides that the rules of a general partnership (sociedad colectiva) or, where appropriate, a civil partnership (sociedad civil) will apply. In these cases, partners may be held personally liable if the company’s assets cannot cover its debts.

Additionally, third parties acting with the company may be exposed to uncertainty, as the absence of registration prevents reliance on the legal existence and content of the company’s acts.

In short: registration is not a mere formality—it is a pillar of legal certainty in commercial transactions.

Capital increase

A capital increase is a registrable act whose legal effects toward third parties also depend on proper registration. For example, Article 34 LSC states:

“Until the company or, where appropriate, the resolution to increase the share capital is registered in the Commercial Registry, the company’s shares or participations may not be transferred, nor may they be delivered or assigned.”

Both case law and doctrine affirm that a capital increase without registration has no effect against third parties acting in good faith. Spain’s Central Economic-Administrative Court (TEAC) has held that both a public deed and registration are constitutive requirements for a valid capital increase.

What happens in the event of failure to register capital increases

The capital increase cannot be deemed effective against third parties until it has been registered.
Transfers based on an unregistered capital increase may be deemed invalid against third parties unaware of the resolution.

Administrators and the company may be held liable for damage caused by failure to register.

Registrars may suspend the registration of a capital increase if the resolution does not meet LSC or RRM requirements. Thus, increasing capital without registration presents a significant risk in terms of legal validity and enforceability.

Appointments and dismissals of corporate officers

The appointment or removal of directors or other governing bodies is also subject to registration in the RM. If these changes are not registered, they may have adverse effects on third parties. As legal scholars point out, the failure to register a director’s removal may lead third parties to mistakenly initiate individual liability actions against someone who is no longer legally in office.

An unregistered appointment may be difficult to prove to third parties, affecting the company’s representation.

The limitation period for liability actions may not begin until the removal is registered, as third parties may not be aware of the change.

In summary, failing to register appointments or removals can create legal uncertainty and heighten the risk of conflict.

Amendments to bylaws and other internal acts

Changes to the company’s bylaws—such as its registered office, corporate purpose, governance structure, or capital—require a shareholders’ resolution and registration, as per Article 290 LSC and related provisions.

Legal commentary emphasizes that while such amendments may be valid internally among shareholders, their enforceability against third parties depends on registration. For third parties acting in good faith, unregistered amendments may not be enforceable—for instance, a new shareholder unaware of the change may not be bound by unregistered clauses.

The validity of rights or shareholder resolutions based on unregistered bylaws may be challenged.

Registration may be blocked if annual accounts are not filed, and sanctions may apply. Therefore, registering bylaw amendments enhances enforceability and legal clarity for third parties.

What happens if I do not register with the Companies Registry?

Registering corporate acts—whether company formation, capital increases, officer appointments, or bylaw amendments—is not a secondary formality. It is a fundamental mechanism for legal publicity and commercial certainty. As Spain’s Association of Registrars states, the Commercial Registry is “the main legal instrument to ensure safety in commercial transactions.”

Failure to register exposes a company and its representatives to multiple risks: unenforceability of acts, personal liability, and an inability to assert rights against third parties relying on registry data.

From a practical standpoint, companies should:

• Ensure that adopted resolutions are notarized (where required) and submitted for registration promptly.
• Address any comments or suspensions issued by the Registrar (especially in capital increases or bylaw updates).
• Register all appointments or dismissals to guarantee proper legal representation.
• Register bylaw amendments to ensure they are enforceable against third parties.

In conclusion: registration protects your business. Ignoring it can lead to lost rights, personal liability and avoidable legal uncertainty.