What Are Company Stockholders?

One of the most common ways of engaging in business activities is through a trading company. There are several types of trading companies (such as limited companies, known in Spanish as a sociedad limitada, and joint-stock companies, known in Spanish as a sociedad anónima), although limited companies are the most common in Spain.

Typically, when a person starts a business on their own, they register as self-employed, but if they do so with more people, a company is created and each of these people has a share in the company according to the contribution they have made to the share capital. In the case of a limited company, the share capital is divided into shares (participaciones) and in the case of a joint-stock company, into stocks (acciones).

For joint-stock companies, we talk about stockholders (accionistas), and for limited liability companies, we talk about partners (socios). This stockholder concept is explained below.

What is a company stockholder?

A stockholder is a natural or legal person who owns part or all of the stock of a trading company enterprise.

A limited company may have just one partner and in such a case the company would be a sole proprietorship and would be called a sole proprietor limited company (or a sociedad limitada unipersonal).

The stock held by each person in the company gives them a number of rights as well as a series of responsibilities.

What rights does a company stockholder have?

A company stockholder has two groups of fundamental rights that are regulated in the company’s articles of association and are as follows:

• Financial rights. In general, these are:
  • The right to receive dividends according to their share in the company and the agreement reached at the general stockholders’ meeting.
  • The right to sell stock in compliance with the requirements of the company’s articles of association.
  • The right to receive their corresponding percentage in the event that the company is liquidated.
  • The right to preferential subscription. In the event of a capital increase or the issuing of convertible bonds, partners have a preferential subscription right to prevent their share in the company from being weakened.
• Rights relating to the management of the company. These rights are:
  • The right to obtain information about ongoing company management. This means that the company must make its annual accounts and management report available to its stockholders.
  • The right to attend general meetings and vote on applicable entity decisions.
  • The right to challenge corporate resolutions. In the event that a stockholder considers a resolution to be in violation of the law or the company’s articles of association, they may challenge it in the courts.
  • The right to corporate liability actions. Stockholders can use these when they consider the company’s managers to be acting against the company’s interests.
  • The right to call meetings. Shareholders holding 5% of the share capital may request that a meeting be convened by the directors.

There may be preference stockholders in the company who have a number of financial or political rights that are superior to those of ordinary stockholders. For example, stockholders’ meeting decisions could be made, as set out in the entity’s articles of association, requiring qualified majorities or giving more privileges to some stocks over others.

What are the responsibilities of a company stockholder?

In general, company stockholders have a number of responsibilities, in addition to the rights described in the previous section:

• To pay their contribution. Each of the company’s stockholders must pay their contribution to the share capital.
• To comply with the agreements. The stockholders will have to comply with the agreements made at the stockholders’ meeting.
• To be liable for the company’s debts. This responsibility is limited to the share capital contributed.
• To occupy positions. In the event that a stockholder is elected to a position in the company, they must occupy that position.
• To fulfil any ancillary duties. In the event that the articles of association establish ancillary duties, they must be respected and complied with by the shareholders.

Do stockholders or partners have to work for the company?

A trading company’s partners or stockholders can work for the company. Depending on the specific circumstances, they may be engaged in an employment or business relationship and may, therefore, be self-employed (freelance) or an employee.

Do you need a Spanish partner or stockholder to create a limited company?

Spanish legislation allows both Spanish citizens and foreigners to set up trading companies, although foreign partners must have a Spanish tax identification number (NIE). It is also possible for 100% of the partners in a Spanish limited company to be foreigners.

To incorporate a limited company, foreign partners need the following documentation:

• If they are a legal person:
  1. Limited company tax identification number (NIF)
  2. Non-resident NIE for the foreign company’s legal representative
  3. Articles of association of the Spanish limited company to be incorporated
  4. Negative name certification issued by the Central Mercantile Register
  5. Certificate proving the existence of the foreign company translated and with an Apostille of The Hague
  6. Declaration of foreign investments.
• If they are a natural person.
  • Non-resident NIE.
  • Other documents detailed in points 3 to 6 of the above section.