Public limited company (S.A.): is it the right fit for your business?

Choosing the right legal structure is one of the most important steps when launching a business. If you're weighing your options, you've likely come across the public limited company, or sociedad anónima (S.A.). But what makes it different from other structures? And is it the right fit for your business goals?

In this guide, we break down what an S.A. is, its core features, advantages and disadvantages, and the process for setting one up.

Summary

1. What is a public limited company (S.A.)?
2. Key features of a public limited company
3. Advantages of a public limited company
4. Disadvantages of a public limited company
5. Step-by-step: how to form a public limited company
6. Should you choose a public limited company?

Considering which business structure suits your needs? Explore our comprehensive Complete guide to understanding the types of companies in Spain for a broader perspective.

What is a public limited company (S.A.)?

A public limited company (S.A.) is a commercial legal structure where ownership is divided into shares. These shares represent each shareholder’s stake in the company. Shareholders are liable only up to the amount they invest, protecting their personal assets.

This structure is ideal for businesses with significant financial volume or ambitious growth plans — including corporations, banks, insurers and companies operating on an international scale.

Key features of a public limited company

Share-based structure: The company’s capital is split into equally valued shares that can be freely transferred unless restricted by the company’s bylaws.

Limited liability: Shareholders are not personally responsible for company debts — their liability is limited to their shareholding.

Mandatory governing bodies:

• General shareholders’ meeting (ordinary or extraordinary): approves annual accounts, appoints board members, and sets major strategic direction.
• Board of directors or sole director: responsible for daily management and representation of the company.

Specific regulations: S.A.s are subject to stricter legal and tax regulations compared to other structures like the limited company (S.L.).

Want to know how the public limited company compares with other legal forms? Check out the legal and tax aspects of different companies in Spain for detailed insights.

Corporate taxation: S.A.s pay corporate income tax, and shareholders are taxed individually on dividends received.

Long business lifecycle: The company’s existence is not tied to its founders — shares can be inherited or transferred without dissolving the business.

Advantages of a public limited company

Attracting investors: The share-based structure makes it easier to raise capital by selling shares.

Limited liability: Investors don’t risk personal assets, which lowers financial risk.

Credibility and trust: The S.A. format conveys professionalism and stability — helping build trust with clients, suppliers and investors.

Scalability: Issuing new shares allows for capital growth and business expansion.

International potential: The structure supports cross-border operations and the possibility of listing on stock exchanges.

Not sure a public limited company is the right fit? Learn about the limited liability company (S.L.), a simpler alternative.

Disadvantages of a public limited company

High initial capital requirement: In Spain, the minimum is €60,000 — at least 25% must be paid at the time of incorporation.

Administrative complexity: S.A.s are governed by more complex legal and tax regulations, and must prepare detailed bylaws and complete public registration.

High setup costs: Fees for public notaries, legal documentation, registration, and compliance can be significant.

Risk of governance conflict: When decision-making is split between shareholders and managers, strategic disagreements may arise.

Step-by-step: how to form a public limited company

Draft the deed of incorporation and bylaws

This legal document must include:

• The business name, followed by “S.A.”
• Shareholders’ identities and capital contributions
• Governance model (board, sole administrator, etc.)

Secure the minimum share capital: Raise the required capital, ensuring that the initial legal contribution is paid.

Formalise public deed with a notary: Certify the company’s creation in front of a notary.

Register with the mercantile registry: Official registration gives the company legal personality and allows it to trade.

Apply for a tax ID (CIF/NIF) and register with tax authorities: This is the fiscal identifier for the business.

Open a business bank account: You’ll need this to deposit share capital and for operational banking.

Should you choose a public limited company?

Choose an S.A. if your business aims to:

• Scale to a large market
• Attract major investors
• Project strong financial credibility

Avoid it if you prefer:

• A simpler legal structure
• Lower initial and operational costs
• A more flexible business model

The right choice will depend on factors like the scale of your business, available resources, and the level of regulatory complexity you're ready to handle.