Sole Proprietorship Declaration
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Declaration of Sole Proprietorship
What is the declaration of unipersonality?
Recognition of the acquisition of the sole proprietorship of a company, whereby the legal ownership ? The formal ownership of the shares or participations of the company is vested in a person, whether natural or juridical.
The unipersonality can be:
Original, when the company is formed by a single partner and all the shares or participations are subscribed or assumed by the same.
Supervening, when all the shares or stocks in which the capital stock of a company formed by a plurality of partners has been represented, become the property of a single person.
The incorporation of a sole proprietorship, as well as the declaration of such situation, will be recorded in a public deed that will be registered in the Mercantile Registry, necessarily expressing the identity of the sole shareholder, as well as the date and nature of the act or business by which the acquisition or loss of the sole proprietorship or the change of sole shareholder occurred, thus protecting the interests of third parties and especially of the corporate creditors.
CONSEQUENCES
The small entrepreneur is allowed to compete in the market on an equal footing with plural companies, with the benefit of the patrimonial responsibility.
It facilitates the preservation of the company beyond the life of the sole partner, simplifying the inheritance process.
It allows the legal autonomy of business units, facilitating their transfer.
Promotes the creation and development of small and medium-size enterprises.
It is a structuring instrument in the area of corporate groups.
If after six months have elapsed since the acquisition by the company of its sole proprietorship it has not been registered in the Mercantile Register, the sole shareholder will be personally, unlimitedly and jointly and severally liable for the corporate debts incurred during the period of sole proprietorship. Liability shall cease at the time of registration (effects of the supervening sole proprietorship).
This situation does not alter the organizational structure of the company, since the corporate bodies remain as such, although with certain particularities, since the sole shareholder may adopt decisions personally or through a representative with sufficient power of attorney, although he/she does not have the power to formalize and execute the resolutions of the administrative body.
Nothing prevents the position of director from being held by the sole partner.
LEGAL REGULATION
Royal Decree 1/2010, of July 2, 2010, approving the revised text of the Capital Companies Act, art. 12 to 17 (in force).
Royal Decree 1784/1996, of July 19, 1996, approving the Regulations of the Mercantile Registry, articles 174 and 203.2 (in force).
Limited Liability Companies Law art. 125 to 129 (repealed)
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