What is the difference between a Sociedad Limitada (SL) and a Sociedad Anónima (SA)?

If you’re thinking about starting a company in Spain, it’s important to pick the right business structure to suit that business. The two most popular types of limited liability companies are the Sociedad Limitada (SL) and the Sociedad Anónima (SA). While both options protect your personal assets, they are suited for different types of businesses.

At Gascón Bernabéu, our English-speaking solicitors regularly help clients from the UK and around the world start businesses in Spain. Choosing the right kind of company from the beginning is a necessity as it impacts your business’s flexibility, tax responsibilities, and investment possibilities. If you’re not sure which type to choose, let’s break down the main differences between two common options: an SL and an SA.

What is a Sociedad Limitada (SL)?

The Sociedad Limitada, or SL, is the most commonly chosen company structure for entrepreneurs and small to medium-sized businesses (SMEs) in Spain. Designed with simplicity and practicality in mind, it offers the most accessible route into the Spanish market without an excess of administrative overheads.

If you’re starting a new business, looking to grow your current one, or you want to set up a local office in Spain, the SL is a great option. It offers limited liability for shareholders, which means personal assets are protected. Plus, it has a lower capital requirement and a flexible management structure, making it easier and more affordable to set up. This is what makes it ideal for smaller businesses that want to maintain control while keeping costs down.

It’s particularly well-suited to businesses that have no plans to seek outside investment or go public in the future and offers a clear, secure way to operate while keeping the day-to-day more manageable.

Here are some of the main features of an SL:

• Minimum share capital: €3,000
• Shares are not freely transferable, offering greater control over ownership
• Management structure can be more informal and flexible
• Not eligible for listing on the stock exchange
• Less strict reporting and governance requirements

An SL is a great choice if you want to run a small, family-owned business and you don’t need outside investors. It lets you create a more tailored shareholder agreement, meaning fewer regulatory hurdles and a smoother operation, which in turn will help you save time and money in your daily business activities.

What is a Sociedad Anónima (SA)?

The Sociedad Anónima (SA) is a type of company structure that’s ideal for larger businesses, especially those looking to grow quickly, attract outside investors, or go public. It provides a more formal legal setup, which helps raise funds and meet stricter rules and regulations. Companies in industries like banking and insurance often choose the SA because they have higher legal and governance standards to follow.

If a business wants to be listed on the stock exchange, it must be set up as an SA, making it the go-to choice for companies aiming to expand by attracting shareholders. While this structure requires more paperwork, a higher initial capital, and a stricter organisational structure than smaller company types, it offers more benefits like increased credibility and transparency.

Here’s how an SA compares:

• Minimum share capital: €60,000, with 25% paid in at the time of incorporation
• Shares are freely transferable which is better for attracting investors
• Can be listed on the stock market
• Requires a board of directors or appointed sole administrator
• Subject to stricter accounting, governance, and reporting obligations

If your business needs to gather a lot of money, work in regulated industries, or has plans to go public later, using a corporation structure (SA) can help you achieve these goals.

Which structure is right for your business?

When deciding between an SL (Sociedad Limitada) and an SA (Sociedad Anónima) for your business, think about your goals, the size of your enterprise, and your growth plans. If you’re starting a small business, want to keep things simple, or you prefer to run it privately, an SL is often the better option. However, if you aim to grow quickly, attract investors, or enter a regulated industry, an SA might be a better fit.

Both types of companies protect your personal assets, meaning your personal finances are safe from business liabilities. The main differences between the two are how formal they are, their ownership structures, and how flexible they are for the future.

How we can help at Gascon Bernabeu

At Gascón Bernabéu, we specialise in helping international clients set up businesses in Spain. Whether you’re thinking about forming an SL or an SA or simply need advice on which structure works best for your plans, our English-speaking solicitors are here to help every step of the way.

We’ll simplify the process by explaining your options clearly, preparing all necessary paperwork, and handling the registration on your behalf. We can help make sure everything proceeds smoothly and without stress so you can focus on other facets of your business.

To get started, you can reach out to us through the contact form on our website, send us an email at info@gbabogados.co.uk, or give us a call on +44 (0)20 3137 1320 for a free no-obligation consultation. Our expert team will help you confidently transition into the Spanish market.