It has been 13 years since Law 2/2007 of March 15, of professional societies (LSP) came into force. At the time of its approval, many companies adapted to the LSP but others understood that the professional societies Law was not applicable to them.
The consequence of not adapting to the Law, after the period granted for the adaptation, which ended on June 16, 2008, is none other than the dissolution of full rights of the company. In this way the Registrar can cancel the registration seats of the company ex officio.
In a previous article on the LSP Law, we questioned whether the Registrars would act ex officio by dissolving the companies, considering the seriousness of that situation for any company.
Well then, today there are many qualifications of Registrars throughout Spain that cancel the registration seats of companies for lack of adaptation to the LSP.
Analyzing one of the last resolutions of the General Directorate of Registrars and Notaries (DGRN), specifically the resolution of June 14, 2017, we know of one of many cases in which the registrars have dissolved a company.
In the case analyzed, a Limited Company whose main activity was the sale of electric energy, appealed to the DGRN against the qualification of the Commercial Registrar of Burgos Mr. Ramón Vicente Modesto Caballero, who dissolved the company, denying the registration of a notarial document of write-off and appointment of company administrator.
The cancellation of the registration occurred because, in the opinion of the registrar, one of the activities contained in the corporate purpose is a professional activity and therefore requires adaptation to the LSP.
The activity of the company was the following: “Provision of advisory services in the financial, accounting and fiscal areas”.
The company appealed to the DGRN alleging that they were not a professional company because they were not carrying out professional´s activities and there were no professionals among its members or in the board of directors.
However, the DGRN gave the reason to the Registrar and states:
- In the first place, that the dissolution of a company is a positive qualification of the registrar and not negative, so that the company cannot complain to the DGRN that should only know of the resources to negative ratings of the Registrars.
In this way, the DGRN indicates to the appellant company that it had to go to the Courts in application of article 218 of the Spanish Mortgage Law.
- And, secondly, they understand that the activity stated in the articles of association is obviously a professional activity and therefore requires adaptation to the corresponding Law.
It should be remembered that professional societies are those “whose purpose is the joint exercise of a professional activity that requires official or professional qualification and registration in the corresponding Professional Association”.
The DGRN states that the LSP was approved with a clear objective that is to double the protection to users against professional services, as the debts incurred from professional activities not only responds the professional society, but also the acting professional partner.
It is therefore professional societies are required to subscribe to civil liability insurance throughout their entire social life.
Compared to professional societies, there are media companies, profit communication companies and intermediary companies whose purpose is to share infrastructure and distribute their costs.
The DGRN remembers that as a result of the Judgment of the Supreme Court of July 18, 2012, there are many resolutions of the DGRN in this regard so for example, July 2 and October 9, 2013, March 4 and August 18, 2014, July 20, 2015, October 17 and December 16, 2016, March 2, 2017, etc.
Therefore, they understand that if there are doubts about whether certain activities of the corporate purpose may be professional activities, subject to the LSP or are simple intermediation companies to which the LSP is not applicable, should be express statement of the company. Therefore, the lack of a declaration means that we are faced with a professional society and therefore obliged to adapt to the Law.
In conclusion, there are three possible solutions that a company should adopt if its social object contains a professional activity:
- Modify the corporate purpose by eliminating professional activities.
- To adapt to the Law of professional societies (LSP), so the majority of liberal professions have been architects, lawyers, dentists, engineers … even to civil societies the LSP is applied and therefore they are obliged to register in the mercantile register and in the Professional Association correspondent.
- Make an express declaration stating that it is an intermediary, media or profit communication company.
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