Why won't the Spanish Companies Registry register my company if its corporate purpose includes insurance mediation, and how can it be fixed?

When incorporating a Spanish limited company (S.L.) whose corporate purpose includes insurance mediation (for example, as a tied agent of an insurer), it is common for the Registro Mercantil (Spanish Companies Registry) to reject the deed as defective. The Registrar will also maintain the objection if a corrective deed is filed that keeps that activity.

Why the Registrar suspends registration

Royal Decree-Law 3/2020 of 4 February (Spanish insurance distribution law) treats any legal entity that distributes insurance in exchange for remuneration as an insurance intermediary. Intermediaries are classified as agents and brokers. Article 133 requires registration on the administrative register of insurance distributors (kept by the DGSFP, the Spanish insurance regulator, or the competent regional authority) before starting activity.

The Registrar demands this requirement at the point of company registration whenever the activity appears in the corporate purpose. Furthermore, the generic clause excluding activities with unmet special requirements is not enough to avoid the objection.

What the alternatives are

• Register first on the distributors' register, usually arranged through the insurer, if the company wants to operate as an insurance agency.
• Appeal the Registrar's decision. The provision literally refers to starting activity, not company registration, and the company only acquires legal personality upon registration. It is a defensible argument, although there is no known doctrine from the Dirección General de Seguridad Jurídica y Fe Pública (Directorate-General for Legal Certainty) supporting it.
• Remove all insurance distribution activity from the corporate purpose. This is the quickest route if you want the company registered now.

Until the company is registered, the company in formation is only liable with its assets for acts essential to registration and the others set out in article 37 of the Ley de Sociedades de Capital (Spanish Companies Act).

How to draft the new corporate purpose and CNAE code

The articles of association must specify the activities precisely, without generic wording such as "any lawful business activity". It is advisable to include an express exclusion of any insurance or reinsurance distribution activity regulated by RDL 3/2020: exclusive or tied agency, brokerage and mediation of ancillary insurance.

Under article 20 of Law 14/2013, the company must identify its main activity with the CNAE code (Spanish business activity classification) that best describes it. The codes must appear in the deed and in the first registration entry. If the insurance activity is removed, you must delete the CNAE code for insurance agents and brokers (66.22) and designate the new activity's code as the main one, ideally listing it first in the corporate purpose.

How to carry out the correction

The articles of association form part of the deed of incorporation. You therefore need to execute a corrective deed or notarial correction (diligencia de subsanación) that:

• incorporates the new corporate purpose article;
• amends the CNAE codes in the deed;
• revokes any earlier correction that failed to cure the defect.

The power usually granted to the notary to cure registry defects covers the removal of the insurance activity with reasonable certainty. It is more doubtful whether it covers a change of main activity or the addition of new activities. The safest option is for all founding shareholders to execute the deed, in person, by power of attorney or with subsequent ratification.