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Company Formation Andorra

Company Act Andorra

Updated on Wednesday 12th June 2013

The central document governing the Andorran commercial activity is the Corporation Act 1983. According to it, there are three types of company a business can take in Andorra: the Limited Liability Company(Sociedad Limidad-SL); the Public Limited Liability Company(Societat per Accions) and the Collective Company (Societat Colectiva). As a particularity of the Andorran commercial system, the limited partnerships are not allowed here, unlike other jurisdicitions.
 
These companies have the liability of its members limited by their contribution to the capital, an advantageous fact for the investors willing to open an Andorran company here. There are also requirements for a minimum share capital, 3000 EUR for SL and 60000 for SA. The base of each company is constituted by the Memorandum of Association, known as “rao social” in which are stipulated all the company’s particularities and regulations.
 
According to the Corporation Act, the Andorran government must agree with opening the new business. Two approvals are necessary: one before applying to the Commercial Registry and one after receiving the approval from the Register.
 
The companies can suffer mergers, transformation or liquidations, also governed by the Corporation Act. All these changes must be announced to the Commercial Register before put into practice.
 
When a company wants to change its profile it can opt to change it from SL to SA and reverse or can merge with another company in order to increase its capital and have the possibility to register its shares at the stock market (only the SA are allowed to do this).
 
All the companies with commercial or profit-seeking objectives must be owned at least two-thirds by Andorran citizens (born in Andorra, or living in Andorra for more than 20 years, or a minimum 10 years in the case of Spanish and French nationals). 
Usually in order to avoid the above requirements, the foreign entities chose to use a nominee, an Andorran citizen, which will cede the operational control of the company in exchange of a fee to the foreign representative. He/she can do this through Power of Attorney.
 
Certain sectors are allowing the 100% foreign ownership of the companies, due to the Foreign Investment Law, which came into effect on November 2008. This law was looked as a sign that the Andorran government is trying to attract new investments even foreign. Other measures are the newly signed double tax treaties with Austria, France, Monaco, Liechtenstein and San Marino.
 
 

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