Capital Increase (Ampliación de Capital)

What Is a Capital Increase?

A Ampliación de Capital (capital increase) is the process by which a Spanish company formally raises its registered share capital. In a Sociedad Limitada (SL), new participaciones are issued; in a Sociedad Anónima (SA), new acciones are issued. The increase may be:

• Cash contribution (dineraria): New or existing shareholders pay cash in exchange for new shares.
• Non-cash contribution (no dineraria): Shares are issued in exchange for assets (real estate, equipment, intellectual property, shares in another company). In an SA, non-cash contributions require an independent expert valuation.
• Offset of credits (compensación de créditos): Shares are issued in exchange for the cancellation of debt owed by the company to the subscribing shareholder. Requires a certification from the auditor (in an SA) or a statement from the directors (in an SL).
• Against reserves (con cargo a reservas): Existing reserves are capitalised into share capital — new shares are issued for free to existing shareholders proportionally. No new money enters the company; the balance sheet simply reclassifies reserves as share capital.

Legal Requirements

General Meeting Resolution

A capital increase requires approval by the General Meeting of Shareholders (Junta General) by qualified majority (at least 50%+ of voting rights in an SL, or the majority required by the articles — often higher for significant increases). The board may be delegated authority to increase capital within a defined limit over up to five years (a capital autorizado delegation).

Notarial Deed

The capital increase must be formalised in a public deed (escritura pública) executed before a Spanish notary, documenting the resolution, the new capital structure, and confirmation that contributions have been made (bank certificate for cash contributions, or expert report for non-cash).

Commercial Registry Filing

The deed must be filed at the Registro Mercantil within one month of execution. The increase is not fully effective against third parties until registered.

Pre-Emption Rights

Existing shareholders of an SL have a statutory right of first refusal (derecho de suscripción preferente) to subscribe to new shares pro rata to their current holding, maintaining their ownership percentage. This right can be excluded by a qualified majority resolution of the General Meeting when there is a justified cause (e.g., attracting a strategic investor).

For SAs, the pre-emption right is also statutory but can similarly be excluded with appropriate justification — a common feature in investment rounds.

Tax Treatment of Capital Increases

• For the company: Cash received for new shares is not taxable income. Share premium (the amount paid above nominal value) is recorded in equity and is not taxed.
• For the contributing shareholder: Subscribing cash investors have no immediate tax event. Non-cash contributions are treated as a disposal of the contributed asset at fair market value — potentially triggering a capital gain if the asset has appreciated.
• Capital increase tax (Impuesto de Operaciones Societarias — IOS): Historically, capital increases attracted a transfer tax (IOS), but this has been exempt from IOS since 2010 in Spain. No stamp duty or transfer tax applies to Spanish capital increases.

Capital Increases in Investment Rounds

For startups and growth companies raising venture capital or private equity:

• The investment is structured as a capital increase (new shares issued at a premium to book value).
• The price per share reflects the agreed pre-money valuation.
• The pacto de socios (shareholders’ agreement) is signed simultaneously, governing investor rights.
• Anti-dilution provisions, information rights, and board representation are agreed alongside the capital increase documentation.

Timeline

A standard cash capital increase in an SL takes approximately 2–4 weeks from board/shareholder resolution to Commercial Registry registration, assuming no complications. Complex transactions (non-cash contributions, investor negotiations, structural changes) take longer.

How BMC Can Help

We manage the full capital increase process: shareholder meeting management and documentation, notarial coordination, Commercial Registry filing, tax compliance, and coordination with investors’ legal counsel on transaction documentation.