When creating an SL in Palma de Mallorca, many entrepreneurs do so with the idea of separating their personal assets from business risks, but the real extent of that protection is not always fully understood.

This is a very common question in a gestoría in Palma de Mallorca, as poor incorporation or incorrect management of a limited company can end up having serious financial consequences for partners or directors.

General rule of liability in a limited company

In a limited company, the basic rule is that partners’ liability is limited to the contributions made to the share capital.

• The company’s debts are paid exclusively with the SL’s assets.
• Partners’ personal assets are, in principle, protected from company creditors.
• Creditors can only claim against the company, not against the individual partner.

Exceptions where the partner is liable with personal assets

Irregular or non-registered company

When operating as a limited company without being properly registered in the Commercial Register, the law may apply the regime of a civil or general partnership.

• Partners are personally and jointly liable for the debts.
• There is no separation between company and personal assets.

Single-member SL not registered

If there is a sole shareholder and the single-member status is not registered within six months, liability changes significantly.

• The sole shareholder becomes personally, unlimitedly and jointly liable.
• The liability covers debts generated during the unregistered period.

Share capital below 3,000 euros

While the share capital is below €3,000, there are consequences in the event of liquidation.

• If company assets are insufficient, partners are jointly liable.
• The liability reaches the difference needed to complete €3,000.

Overvalued or non-existent non-cash contributions

Non-cash contributions must be real and properly valued.

• Partners are jointly liable for the reality of the contribution.
• The liability extends to the attributed value vis-à-vis the company and creditors.

Capital reduction with return of contributions

When share capital is reduced by returning contributions to partners, there are legal risks.

• Partners who receive the return are jointly liable.
• The liability is limited to the amount received.
• It only affects debts prior to the capital reduction.

Lifting of the corporate veil

In certain situations, courts may disregard the legal personality of the SL.

• Use of the company for fraud.
• Abuse of rights.
• Use of the SL to evade legal obligations.

In these cases, partners and/or directors may be held directly liable with their personal assets.

Personal liability of directors

The asset protection of an SL does not always extend to its directors.

• They are liable to the company for acts contrary to the law.
• They are liable to partners for breaches of the articles of association.
• They are liable to creditors for damages caused by breach of duties.

According to article 236 of the Spanish Companies Act, liability can be direct and personal.

In situations such as failure to address grounds for dissolution, tax debts or Social Security debts, liability is often transferred to the director.

Practical conclusion to protect your assets

A limited company that is properly incorporated, duly registered, with effectively paid-up capital and diligent management, largely protects personal assets.

This protection disappears when there are formal irregularities, fictitious capital, poorly executed corporate operations or fraudulent use of the company.

Therefore, when creating an SL in Palma de Mallorca, having specialised professional advice is essential to avoid financial risks and penalties that may directly affect your personal assets.

In a gestoría in Palma de Mallorca specialised in company law, each step can be reviewed to ensure that the legal protection of the SL truly works in your specific case.