This section and the two following ones summarize some of the most significant substantive aspects that commonly interest foreign investors with respect to the most widely used form of business entity in Spain, the S.A.

For the most part, the issues discussed below are applicable to the S.L. as well, although some of the most significant rules and exceptions applicable to the S.L. are dealt with in Section VII below.

1. Minimum capital
The minimum amount of capital stock required for an S.A. pursuant to the Corporations Law is €
60,101. The capital must be fully subscribed and at least 25% of the par value of the shares must be paid in.

When the capital stock is not fully paid up, the bylaws must state the manner and time period for the payment of the remaining portion of subscribed capital. No maximum time period for payment of calls on capital by contributions in cash is stated in the Law but five years is the maximum term for full payment of contributions in kind.

2. Shareholders
No minimum number of shareholders is required by Spanish law to incorporate an S.A., although sole shareholder companies are subject to a special system of publicity discussed in further detail in Section VIII.
Shareholders can be individuals or companies of any nationality and residence.

3. Formalities of incorporation
The shareholders or their representatives must appear before a notary public in order to execute the public deed of incorporation.
Subsequently, the public deed of incorporation has to be registered in the Mercantile Register. Upon registration, the company acquires legal status and capacity.

There is an alternative procedure for incorporation called "successive formation".
Essentially, this procedure involves an offering to the public at large by the promoters to subscribe shares before the execution of the public deed of incorporation. To this end, means may be used such as publicity or financial brokers.This system is rarely used in practice and much less so in the case of foreign investors.

4. Contracts made in the corporation’s name prior to registration

The formation of a S.A. is a two-step process involving, as noted, execution of the public deed before a notary public and registration in the Mercantile Register. It is only upon registration of the public deed of incorporation that the corporation acquires legal capacity and becomes a legal entity.

Persons who enter into contracts on behalf of the corporation prior to its registration are jointly and severally liable for their performance, unless such performance was made conditional on the corporation’s registration and, if applicable its later assumption of liability.

Contracts made in the corporation’s name and on its behalf prior to its registration in the Mercantile Register may generally be accepted by the corporation within three months from registration.

However, a corporation in the process of formation and its shareholders, up to the limit of the amount they have undertaken to contribute (but not directors or representatives), are liable for the following types of contract prior to registration:
– Contracts that are indispensable for registration.
– Contracts entered into by the directors within the scope of the powers granted to them for the pre-registration stage.
– Contracts entered into by virtue of a specific mandate granted by all the shareholders.

Upon registration, the corporation becomes bound by the foregoing acts and contracts.

In these cases, and if the corporation accepts acts performed prior to its registration within three months from the date of registration, the joint and several liability of shareholders, directors or representatives lapses.

5.Acquisitions performed after registration

During the two years following incorporation, the corporation’s shareholders’ meeting must grant its prior approval for acquisitions of assets for a consideration involving amounts in excess of 10% of the capital stock, unless such acquisitions are within the ordinary scope of business of the corporation or the purchase is made on a stock exchange or by public auction. In the cases in which prior shareholders’ meeting approval is required, the requirements are basically as follows:
– Issuance of a report prepared by the directors.
– An independent valuation by the expert appointed by the Mercantile Register.