In December every company does the same thing: it balances the books, talks to the accountant and works out the tax bill. That is what needs doing, and almost everyone does it well.
What almost nobody does is the other half of the year-end. The corporate half. The part that does not appear in the corporate tax return but does appear, in great detail, the day a shareholder falls out, a bank asks for paperwork or a buyer commissions a due diligence.
There are seven checks. None takes more than an afternoon.
1. Is net equity above half the share capital?
This is the first and the most important, because it is the only one that can cost you your own money.
Article 363.1(e) of the Spanish Companies Act says a company is in a statutory ground for dissolution when losses reduce net equity to less than half of the share capital. From that moment the director has two months to call the general meeting that resolves to dissolve or remedies the situation (article 365). If they do not, article 367 makes them jointly and severally liable for the company's debts arising afterwards, and the law presumes those debts are subsequent unless the director proves otherwise.
Look at what starts the clock: not a missed payment, not a lawsuit. A number on the balance sheet. We explain it at more length in our piece on director liability for company debts.
With the provisional year-end balance sheet in front of you, the sum is simple: net equity against half the capital. If it falls short, there is still time to fix it with a capital increase or reduction, a contribution from the shareholders, or by converting an ordinary loan into a participating loan, which counts as net equity for these purposes. And if your accountant was leaving the 2020 and 2021 losses out of the calculation, check whether that rule still applies to this year-end.
2. Have last year's accounts been filed?
It seems obvious. It is not always so.
Accounts are drawn up within three months of the year-end (article 253), approved by the general meeting within the first six months of the financial year (article 164) and filed with the Companies Register within a month of approval (article 279). If they are not filed, article 282 closes the company's register sheet: while the default lasts, almost nothing the company resolves afterwards can be registered. Not an appointment, not a capital increase, not a change of registered office. Article 283 also provides for a fine.
A five-minute check with an extract from the Register settles it. It is worth asking for one even if you are sure, because sometimes the filing went in and a defect was never cured.
3. Is the director's appointment current and registered?
In a Spanish limited company (SL) the appointment is indefinite unless the articles set a term (article 221). Many older articles do, and nobody remembers.
When the term ends, the appointment lapses as soon as the next general meeting is held or the deadline for the accounts meeting passes (article 222). From then on the director signs contracts, takes out loans and grants powers of attorney with a lapsed appointment, and the notary or the bank finds out at the worst possible moment. Check the articles and the Register extract: date of appointment, term, registration.
4. Is the director paid? Then do the articles say so?
The office is unpaid unless the articles say otherwise and set out how the director is paid. On top of that, the general meeting must approve the maximum annual amount for the directors as a whole (article 217).
In practice, in many family companies the director has been paid for years without any of that in writing. While everyone agrees, nothing happens. When a shareholder stops agreeing, it is one of the first things they raise, and the problem can reach the accountant too, because it affects how the expense is treated for corporate tax. If that is your case, the fix is an amendment to the articles and a shareholders' resolution. Better now than in the middle of a dispute.
5. Is the shareholder register up to date?
Every Spanish limited company must keep one (article 104). It records the original holders and every transfer of shares, as well as any security interests and other charges over them. Any shareholder may inspect it and ask for a certificate of their shares (article 105).
It is one of the first documents anyone asks for before buying, investing or lending. If it does not exist, or does not match the deeds, the rest of the review starts with suspicion. And it is one of the easiest things to bring up to date.
6. Are loans between shareholders and the company documented?
The shareholder who put money in during a bad month. The company that paid a personal expense of the director. The shareholder current account nobody has looked at in three years.
None of this is irregular in itself, but all of it needs to be in writing: amount, term, interest, and who approved it. If the director lends money to, or borrows from, their own company there is a conflict of interest, and the law requires the general meeting to authorise it without the conflicted person voting. Without paperwork, in a dispute or a sale all of it becomes arguable, and arguable gets paid for in the price.
7. Is there a shareholders' agreement, and does it still work?
If there are two or more shareholders and no agreement, this is the check with most to gain. What is signed while there is still agreement prevents the lawsuit once there is not. We cover it in the four clauses of a shareholders' agreement and, for the most delicate case, in 50/50 shareholders.
If there is an agreement, read it against today's company. Are the shareholders still the same? Has someone come in who never signed it? Does it say what happens if one wants out, or if they cannot agree? A ten-year-old agreement may be describing a company that no longer exists.
The calendar that starts on 1 January
If the financial year is the calendar year, these are the 2027 dates worth noting:
- 31 March: last day to draw up the 2026 accounts.
- 30 June: last day for the general meeting to approve them.
- One month after approval: filing with the Companies Register. If the meeting is held on 30 June, filing is due at the end of July.
And, throughout the year, the two months under article 365 every time net equity falls below half the capital. That deadline does not wait for year-end.
Five minutes to start
We have turned these checks into a year-end review: eight yes-or-no questions that tell you what is worth looking at. Your answers never leave your browser.
If anything comes up, the first ten-minute call is free. Before 31 December there is still time for almost everything.
This article contains general information for informative purposes and does not constitute legal advice or an investment recommendation. The rules cited may have been amended after publication; always check the text in force before taking a decision.