Part IV

A long-standing aspiration of individual merchants has been to find a legal form that would free them from personal liability for the company’s debts.

This aspiration was first enshrined in European law in Germany in 1980, in a law that allowed for the creation of these single-member limited liability companies, and subsequently in Community Decision XII, which enabled the widespread adoption of this sui generis form across member states—a form that, until then, had faced considerable resistance and a lack of trust.

Pressure from small and medium-sized enterprises led to the creation of the single-member company, but this legal form has also proven useful for large enterprises when they wish to separate their areas of activity—the industrial from the commercial—as well as for multinational corporations if they wish to establish their own country-specific subsidiary.

The recognition this form of company has received through the European Directive is significant, since previously, under most European laws, the establishment of such a company was not possible.

For example, in Spain, the Commercial Companies Act provided for the possibility of establishing a limited liability company if there were at least two shareholders and a joint-stock company if there were at least three shareholders. A single-member company could only be formed if the shareholders sold their shares and those shares were consolidated in the hands of a single person, since the law did not require maintaining a minimum number of shareholders throughout the company’s existence.

According to the European directive, there are two forms of single-member companies: the original form (established as such) and the derivative form (when the contributions come to be owned by a single member—a natural or legal person).

There are differences between the two forms regarding formation, disclosure, and the nature of limited liability, all of which are analyzed in this study through a comparison of German and Spanish legislation and an examination of how the two legal systems reflect the provisions of the European directive.