The deed of incorporation or the deed of execution of the capital increase must describe the non-cash contributions with their registration data.
A limited liability company (SL) can receive non-cash contributions, which are those assets other than money that the partners contribute to the company to acquire shares. These contributions may consist of movable property, real estate, intellectual property rights, machinery, vehicles or other tangible or intangible assets… Contrary to what happens in corporations (SA), in the case of non-cash contributions in a SL it is not necessary to make a report by an independent expert.
As we already know, the capital stock of a Limited Liability Company (SL) is always constituted with the contributions made by the partners. As established in the Capital Companies Law (LSC), the capital stock can be subscribed by means of two types of contributions: monetary and non-monetary contributions.
In no case shall the work or services rendered by a member be considered as a contribution to the capital stock.
In these contributions, it is necessary to know that in the deed of incorporation or in the deed of execution of the increase of the capital stock, the non-monetary contributions must be described with their registry data, if any, the valuation in euros attributed to them, as well as the numbering of the shares or participations attributed.
These contributions may consist of movable property, real estate, intellectual property rights, machinery, vehicles or other tangible or intangible assets.
Subsequently, the LSC specifies how to act in the case of certain specific contributions:
- If the contribution consists of movable or immovable property or rights assimilated thereto: the contributor will be obliged to deliver and clean up the object of the contribution in the terms established by the Civil Code for the contract of sale, and the rules of the Commercial Code on the same contract will be applied regarding the transfer of risks.
- If the contribution consists of a claim: the contributor shall be liable for the legitimacy of the claim and the solvency of the debtor.
- If an enterprise or establishment is contributed: the contributor shall be obliged to make good the damage or eviction affecting all or any of the elements essential to its normal operation.
The individualized write-down of those elements of the contributed company that are of importance due to their equity value shall also be carried out.
In limited liability companies (as opposed to public limited companies, in which non-monetary contributions, whatever their nature, must be the subject of a report prepared by one or more independent experts with professional competence, appointed by the commercial registrar of the registered office in accordance with the procedure to be determined by regulations), the report of an independent expert is not required and is replaced by a liability regime set out in Articles 73 to 76 of the Capital Companies Act.
Liability for non-monetary contributions
The founders, the persons who held the status of partner at the time of the capital increase and those who acquire any paid-up participation by means of non-monetary contributions, will be jointly and severally liable before the company and before the company creditors for the reality of such contributions and for the value attributed to them in the deed.
The liability of the founders shall extend to the persons on whose behalf they have acted.
If the contribution has been made as a countervalue of an increase of the share capital, the partners who have recorded their opposition to the agreement or to the valuation attributed to the contribution in the deed will be exempt from this liability.
In the case of an increase in capital stock charged to non-monetary contributions, the administrators will also be jointly and severally liable for the difference between the valuation made and the real value of the contributions.
Regarding the legal standing for the exercise of the liability action:
- The liability action must be brought by the administrators or liquidators of the company. For the exercise of the action, it will not be necessary the previous agreement of the company.
- The liability action may also be brought by any shareholder who has voted against the resolution, if he represents at least five percent of the share capital, and by any creditor in the event of the company’s insolvency.
Liability towards the company and towards the corporate creditors will expire five years from the time when the contribution was made.
The partners whose non-monetary contributions are subject to expert appraisal in accordance with the provisions for corporations are excluded from joint and several liability.
For further information, please consult with Legal advice