ANDORRA Law and Practice Contributed by: Oriol Giró, Laia Bertran, Yaumara Toledo and José Luis Andrés, Emindset Law Firm
2.3 Commitments Required From Foreign Investors Foreign investment approvals may be made subject to compliance with the conditions stated in the applica - tion and authorisation. In practice, investors may be expected to demonstrate effective economic activ - ity, adequate financing, genuine business substance, employment creation, sustainability and consistency with Andorra’s public and economic interests. Com - panies with foreign investment must generally com - mence effective activity within 18 months and comply with ongoing reporting and operational requirements. For certain real estate investments, commitments may include maintaining the asset, using it for an author - ised business purpose or creating and preserving employment. The government has recently intensified its scrutiny and may reject projects that fail to meet statutory requirements or do not generate sufficient added value for Andorra. 2.4 Right to Appeal A refusal of foreign investment authorisation is a rea - soned administrative act and may be challenged for errors of law, fact, procedure or misuse of adminis - trative discretion. The investor must generally file an administrative appeal before the government. Once the administrative route has been exhausted, judicial review may be sought before the Administrative Sec - tion of the Batllia . 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The principal corporate vehicles are the societat de responsabilitat limitada (SL) and the societat anònima (SA). Both may be incorporated by one or more share - holders, whose liability is generally limited to their capital contributions. An SL requires minimum share capital of EUR3,000, while an SA requires EUR60,000, fully subscribed and paid in. Both are governed by the shareholders’ general meeting and may be managed by a sole director, joint or several directors, or a board of directors. The SL is the most commonly used form because of its lower capital requirement and flexible governance,
making it suitable for greenfield projects, family busi - nesses, holdings and joint ventures. The SA is generally preferred for larger projects, broader investment structures and businesses requir - ing more sophisticated governance. Certain regulated activities, particularly in the financial sector, must be carried out through an SA or another specifically pre - scribed legal form. 3.2 Incorporation Process The process to set up a company generally begins with the reservation of the company name and, where applicable, obtaining prior foreign investment author - isation. The founders must then open an Andorran bank account and deposit the required share capital. Once the bank certificate and corporate documents are available, the articles of association are executed before an Andorran notary. The company is subse - quently registered with the Companies Registry and obtains its tax and administrative identification details. Before commencing operations, it must complete the commercial opening procedure and secure any municipal or sector-specific authorisations required for its activity. In practice, the process usually takes approximately three to four months and remains rela - tively documentation-intensive. Administrative proce - dures are, however, being digitised in Andorra, with the objective of enabling more stages to be completed online. 3.3 Ongoing Reporting and Disclosure Obligations Private companies are subject to ongoing filing and disclosure obligations. Changes to the manage - ment body, including appointments and removals, and amendments to the articles must generally be approved by the shareholders’ general meeting, for - malised before an Andorran notary and registered with the Companies Registry. Companies must also file their annual accounts and periodically confirm or update their beneficial owner - ship information, which are publicly recorded in the Companies Registry and generally include key corpo - rate data, as well as the identity of registered share - holders and directors. Failure to comply may result in sanctions and restrictions on further registry filings.
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