The functioning of labour and investee companies in Spain
Since November 2014, the new Law 44/2015, of 14 October, of labour and investee companies, which requires existing companies to adopt the new law within two years after its entry into force, regulates labour companies in Spain.
Labour companies are mercantile companies, public or private limited companies, in which the workers who provide services for remuneration directly, personally and with a contract of indefinite duration, own most of the capital.
Prior to registration in the Spanish Mercantile Registry to obtain legal personality, these companies must register in the Spanish Administrative Registry. They will be named either a Public Limited Labour Company (SAL) if it is public or a Limited Liability Labour Company (SLL) if it is private.
Structure of a Labour Company
None of the shareholders may advertise ownership of more than one third of the shares or stocks comprising the share capital. This requirement can only be broken in two situations:
- When a labour company consists of only two shareholders, contracted indefinitely, and each own 50% of the share capital and voting rights, a situation that can last no more than a maximum period of 36 months.
- When one of the shareholders is a public or mainly public entity, a non-profit entity or an economic entity, but cannot hold more than 50% of the share capital.
In turn, we can distinguish two types of shareholders:
- Shareholder workers who provide services directly and personally through an indefinite contract.
The termination of the employment of a shareholder will require the shareholder to sell their shares or stocks. In the event that no one wants them, the shareholder shall retain their status as shareholder and the shares and the stocks become general class shares.
- Shareholders who are not workers, but are natural or legal persons without a working relationship with the company, that own shares or stocks.
For non-shareholder workers who are contracted indefinitely, it is required that the number of hours worked per year is no higher than 49% of the total hours worked by the shareholder workers.
The share capital
In Public Limited Labour Companies (SAL), the share capital is divided into registered shares. In Limited Liability Labour Companies (SLL), the share capital is divided into company shares. Regardless of whether it is a public or limited company, its stocks and shares must have the same nominal value and confer the same economic rights to its shareholders. In addition, all the shares or stocks are entitled to vote at the company’s annual meeting.
On the other hand, we can distinguish between two types of shareholders, depending on who has ownership of the shares:
- Shareholders that are workers for indefinite periods own “Worker Class” shares and
- Shareholders that do not have a working relationship with the company, or if they do it is for a defined period, own General Class shares.
The stocks and shares may be freely transmitted to working shareholders, unless the articles of associations provide otherwise. The law also regulates the transmission of stocks and shares to persons other than those mentioned above, establishing a pre-emptive right of acquisition in favour of certain people.
Special Reserve Fund
Labour companies must hold a special reserve fund of 10% of its net profit for each financial year, up to a maximum limit of double the share capital. This reserve may be used to acquire treasury stocks so that the company can sell its stocks or shares to its workers.
Investee companies are one of the major developments of Law 44/2015, although they are not considered a new type of company with a specific regulation. The law defines them as public limited companies or limited liability companies that do not meet the requirements established for labour companies, but that promote access to workers to the status of shareholder, and the various forms of participation thereof, in particular through the legal representation of the workers.
Furthermore, the company must fulfil the following requirements:
- Have workers who are partners in the company or participate in their results,
- Workers must have the right to vote or participate in making decisions,
- Foster inclusion of workers to the status of partners and
- Promote a set of principles of Corporate Social Responsibility.