Incorporation/ Register/ Shares

Overview

The formation of corporations in Andorra is under the auspices of the Corporations Act of 1983 which outlines three types of companies: the Societat de Responsabilitat Limitada, the Societata per Accions, and the Societat Colectiva.

Types of corporations

Andorra Societat Limitad (SL)

• Primarily used for local trading

• Type of liability: limited

• Minimum paid up share capital: 6,000 euros

• Minimum 2 shareholders

• Fees

  • Annual tax fee for registration: 463 euros annually

  • Registre de Comerc: 670 euros annually

  • Various other professional fees

• Amount of time to incorporate:

  • Simple holding company: 2 – 3 months

  • More complex business: 3 months up to a year or more

Andorra Societat Anomima (SA)

• Larger companies or many share holders

• Type of liability: limited

• Minimum paid up share capital: 30,000 euros

• More stringent government supervision

• Fees

  • Annual tax fee for registration: 1,000 euros annually

  • Registre de Comerc: 670 euros annually

  • Various other professional fees

• Amount of time to incorporate:

  • Simple holding company: 2 – 3 months

  • More complex business: 3 months up to a year or more

Andorra Societat Colectiva

• Type of liability: unlimited

• Multiple partners

• Share capital

• Amount of time to incorporate:

  • Simple holding company: 2 – 3 months

• More complex business: 3 months up to a year or more

The incorporation process for all three types of corporations is roughly similar. The following is an overview of this process.

• Obtain approval of the proposed name. This is important as certain generic words are banned. Also, the name will not have local protection until it has been approved and registered.

• Petition the Andorran government for incorporation by presenting the company’s Memorandum and Articles. If a holding company is being created for local assets, this is a simple step. However, the government tends to look closely at petitions involving foreign parties who are being given “rights” by the titular as well as companies with complex external financial situations.

• As soon as the Government’s approval is granted, the capital can be deposited. A notary will then formalize both the incorporation and the “nominee” paperwork.

• In the case that there is going to be any sort of tangible activity or trading in Andorra, the company will have to apply for a trading license or “Registre de Comerc permission. This is done with a “suplica” at the Commercial Register in the appropriate commune. Lastly, the Commune must approve the proposed premises and this process means more paperwork.

• When everything is ready, the Government must approve the formal opening of the business.

Privacy/ Capital/ Currency

Privacy

Offences against banking secrecy are defined in terms of the existing Penal Code and clearly exclude tax matters from the scope of the Law.

Financial institutions and intermediaries are required by law to “know their customers”.

Any disclosure of information related to financial transactions must happen only in the context of a judicial proceeding as a response to an order from and Andorran court.

Financial institutions and intermediaries do not have a passive duty; they are only required to report, preferably in advance, suspicious transactions to the court. It is then up to the court to either take appropriate action or authorize the transaction. In either case, the financial authorities are kept informed. Any one reporting a suspect transaction is prohibited by law from giving any information about it to either the subject or the suspicions or a third party.

Both financial institutions and intermediaries which infringe upon the Law are subject to fines of up to 250,000 euros and penalties including suspensions ranging from six months to permanent.

Malicious infraction of the privacy law results in imprisonment of up to 4 years. Infraction of the privacy law for gain may result in up to 7 years of imprisonment.

Capital

The amount of capital required to incorporate depends upon the type of corporation. An Andorra Societat Limitad (SL) requires only 6,000 euros whereas an Andorra Societat Anomima (SA) requires 30,000 euros. In any case, this capital must be paid in full in advance of incorporation. The money should be deposited into an Andorran bank in a specially designated incorporation type bank account. The bank will then issue a special certificate to the designated notary who is responsible for concluding the incorporation activities.

Currency

Although the Euro is most commonly used throughout Andorra and its national accounts are kept in Euros, Andorra does not have an official currency and a multitude of currencies are accepted internally. In addition to lacking a national currency, there are no exchange controls within Andorra.

Shareholders/ directors/ officers

According to Andorran law, two-thirds of any company with commercial or profit-seeking goals must be owned by an Andorran citizen, i.e. someone born in Andorra or a Privileged Resident. However, the Andorran majority owner, or titular, is not required to retain operational control of the business and may hand this control over to the foreign owner by signing a share transfer in blank in return for a fee. Thus, in practical but not legal terms the titular is a nominee. Despite the fact that this is a common business arrangement complete with a formal contract, it is important to remember that the titular has the possibility to wield great power thus it is important to use a professional, established titular.

Since March of 2004, there have been discussions about changing the law to allow foreign business partners to control 40% of the shares of most businesses and 100% of certain types of companies including audio-visual production and marketing, technological and scientific research, production of medicines, E-commerce, and broadcasting. It is possible that further sectors may open in the future.

All corporations are required to have a minimum of two officers, a president and a company secretary, at all times. Persons of Andorran nationality should fill both of these positions. It is necessary to have information about the officers available for public inspection at the registered office address.

Taxation and Fees