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General Partnership

The General Partnership is seen as the traditional trading company in which the partners intervene directly in the management and are personally and jointly liable to an unlimited extent with respect to the company’s debts.

The highly personal character of this kind of company stands out, given the importance acquired by the individual partner, not only on account of the capital contributed but also due to his personal collaboration or work. This is the reason why the status of a partner cannot be freely transferred and gives rise to the concept of the industrial partner, whose contribution is limited exclusively to his work.

The high degree of liability acquired by the partner and the intensive participation required of him in the management of the company render a general partnership appropriate only in cases where a small number of partners are involved, although there is no maximum limit.

The general partnerships are not obliged to audit their annual accounts or to deposit them in the Mercantile Registry.

However, this is not applicable to those general partnerships in which, as of the closing of the business year, all of the partners are Spanish or foreign companies. Such general partnerships will be governed by the rules applicable to public limited companies (they must audit their annual accounts, unless they submit an abridged balance sheet, and must deposit them in the Mercantile Registry).

The incorporation of the company must be formalised through a public deed, to be registered in the Mercantile Registry, at which time it will acquire its legal personality.

The following details must be included in the deed of incorporation:

  • The name, surnames and address of the partners.
  • The trade name.
  • The name and surnames of the partners to be entrusted with the management of the company and the use of the company signature.
  • The capital contributed by each partner in cash, loans or commercial paper, stipulating the value given to such contributions or the bases on which their assessment is to be made.
  • The duration of the company.
  • The amounts, if any, assigned to each managing partner for their individual expenses.
  • Any other legal agreements deemed advisable by the partners.

The general partnerships pay tax under the Company Tax system and do not have access to the Simplified Regime or to the Equivalence Surtax under the Value Added Tax. The rate applicable under the Company Tax system is 30 percent. There is a special tax regime within the Company Tax system for small companies, which are those companies whose net turnover does not exceed ten million euros, whereby the first 300,000 euros of profit are subject to a reduced tax rate of 25 percent.

The rules that regulate the legal relations of the general partnership are contained in articles 125 to 144 of the Commercial Code and in article 209 of the Mercantile Registry Regulation, with respect to their registration.

Characteristics
  • Its own legal personality.
  • Incorporation agreement formalised in a public deed and subsequent registration in the Mercantile Registry.
  • The name of the company will be comprised by the names of all of its partners, or one or some of them, in which case the expression "y Compañía" (& Company) must be included.
  • The name of the company may not include the names of persons who are not partners.
  • The status of a partner cannot be freely transferred.
  • The general partnerships cannot issue or back the issuance of debentures or other negotiable securities grouped in issues.

Partners rights
  • To participate in the management of the company, unless some other management system is stipulated in the partner’s agreement.
  • To examine the status of the administration and accounting at all times.
  • To share in the profits.

Partners duties
  • To participate in the management whenever so stipulated.
  • To make the contribution committed at the time of incorporation.
  • To refrain from competing with the company.
  • To be liable with their personal assets for the company’s debts.
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