Advantages of the purchase of commercial companies

Advantages of the purchase of commercial companies

Many times, opportunities arrive without a warning and it becomes indispensable to be able to rely on agile legal solutions that allow to avoid the slowness associated with the administrative procedures.

This is the case of those entrepreneurs who need to incorporate a limited liability company in Spain quickly to sign a contract, reach a commercial agreement or take advantage of a business opportunity and expand.

In today’s article we bring you the main considerations to keep in mind for the purchase of mercantile companies in Spain to shorten the time usually required for incorporation.

Why buy a mercantile company instead of incorporating one?

One of the main questions that we must solve is the one related to the suitability of buying a mercantile society.

Usually, and if there is enough time to incorporate a company, this will be the ideal way to start operating under the protection of a legal entity in Spain. This is mainly due to the possibility of delimiting all the relevant aspects of the company, as well as being able to select and include a set of provisions tailored to the specific needs of the company.

So, when is it convenient to buy a company in Spain?

In Spain it is well known that the incorporation of a limited company usually takes between 3 and 4 weeks on average. This is due to the time required by the Mercantile Registry to register the companies. If we also add the time required to process the necessary Foreigner Identification Number (NIE) and Tax Identification Number (NIF), this time can double or even triple. This is quite different from other European countries where it is possible to have a company in only three working days.

For these reasons many people often consider buying a company in Spain that is already incorporated to speed up the procedures and save time as it is an operation that only requires the signing of the purchase and sale before a Notary Public.

Unlike the 3 to 4 weeks, it takes to incorporate a company, buying one usually takes between 2 and 4 days, so it is more than advisable if time is against us.

Main considerations to keep in mind when buying a corporation

To continue with the purchase of a corporation, it is essential to bear in mind that this concept is correctly used to refer to the acquisition of companies with a single shareholder, since, in case of having more shareholders, we would be talking about a purchase of shares.

For this reason, when a company is usually acquired and to guarantee the agility of the process, it is done with companies that have a sole shareholder and a sole administrator.

Furthermore, according to the provisions of the Civil Code and the Commercial Code, we are only dealing with a purchase and sale of a company when the entire productive unit is transferred, that is, when it is possible to start or continue with the economic activity immediately after the acquisition.

Having these legal components clear, we must continue evaluating the characteristics of the contract of sale of the commercial company in question.

The contract of sale of companies is a commercial agreement between two parties, buyer and seller, pursuant to which, for an agreed price, the ownership of the company that is operative at the time of the agreement is transferred.

This contract must include some essential minimum aspects, among which, first of all, the description of the company that is the object of the transfer with its different characteristics and duly identified by virtue of its registration in the Mercantile Register.

In addition, it is possible to establish specific obligations for the seller and the buyer by virtue of the provisions of the parties. Naturally, the general obligations regulated by the Civil Code for contracts of sale will apply.

The seller will have the duty to deliver the company and the bank accounts used to operate it and the buyer will have the obligation to pay the price agreed between the parties.

Finally, all debts and obligations of the company will be transferred, which is the main risk involved in this type of transaction.

Main risks in the purchase of companies in Spain

Buying a company implies the transfer of all the obligations and, therefore, of the debts of the company. Often, even though certain legal provisions are included in the purchase contract, there are tax or civil obligations that go unnoticed and become real problems for the new owners of the company.

It is for this reason that having good legal advice is essential to be able to carry out this type of operations with the minimum necessary protections and guarantees.

In addition, it is quite common that different operators who do not have the necessary knowledge nor the required experience, carry out operations of sale of companies to desperate people, who in the end, will end up regretting it.

For this reason, it is fundamental that before buying a company it is necessary to go to lawyers specialized in this type of proceedings that allow to know and to evaluate the possible risks and that offer us solutions to our necessities.

It is also usually recommended to acquire companies that do not have any previous activity, since, in this way, the possibilities of having unknown fiscal obligations are diminished.

In LETSLAW we have our own service of sale of inactive companies to guarantee the maximum agility. In addition, our professionals will assist you throughout the process, resolving any doubts you may have and offering solutions tailored to your needs.