ANDORRA Law and Practice Contributed by: Albert Hinojosa and Marc Ambrós, Cases Lacambra
5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity The main features of each type of entity used to invest in real estate are as follows. • Limited liability company ( societat limitada ) – a company whose share capital is divided into com - pany shares ( participacions ). Members in the com - pany benefit from the limitation on personal liability from the company’s debts. Overall, limited liability companies have a closed structure that restricts the transmission of company shares outside the company, and the representation and faculties of shareholders in general meetings are limited. • Public limited company ( societat anònima ) – a company whose share capital is divided into shares ( accions ). Partners in the company benefit from the limitation on personal liability from the company’s debts. Overall, public limited com - panies have an open structure that allows the transmission and traffic of shares as negotiable securities and a broader intervention scope for shareholders in general meetings. • SICAV – an open-ended collective investment scheme whose share capital is divided into shares ( accions ) and whose general legal regime is deter - mined by corporate regulations applicable to public limited ( societat anònima ), with specific regulatory requirements. Its government and management may be performed by a management company ( societat gestora ) if provided for by the SICAV’s articles of association. • Real estate fund – a collective investment scheme whose assets are governed and managed by a management company ( societat gestora ) and held in custody by a custodian ( societat dipositària ). Their relationship is governed under a written agreement the legal content of which is legally determined. SICAVs and real estate funds are subject to Corpo - rate Income Tax at a nominal rate of 0%. Although, CFC rules may apply if the taxpayer, whether by itself or jointly with certain related persons or entities, holds 50% or more of the share capital, equity, voting rights or results of the Andorran collective investment scheme.
5.3 REITs See 5.1 Types of Entities Available to Investors to Hold Real Estate Asset . 5.4 Minimum Capital Requirement The minimum capital required to set up each type of entity used to invest in real estate in Andorra is as follows: • Andorran limited liability company ( societat limi- tada ) – EUR3,000 fully paid upon incorporation; • Andorran public limited company ( societat anòni- ma ) – EUR60,000 fully paid upon incorporation; • Andorran self-managed SICAV – EUR300,000, with a minimum of 10% of such estate disbursed upon incorporation; • Andorran SICAV managed by an Andorran man - agement company – EUR1.25 million with a minimum of 10% of such estate disbursed upon incorporation; and • Andorran real estate fund – EUR6 million, and a minimum of 10% of such estate must be disbursed on the date of incorporation. 5.5 Applicable Governance Requirements Governance requirements for a limited liability com - pany ( societat limitada ) and a public limited company ( societat anònima ) are quite flexible and allow their setting up and organisation mainly on a shareholder’s consensus basis (through the articles of association) and, residually, on an imperative basis determined by provisions of Act 20/2007 on limited liability compa - nies and public limited companies. Shareholders must determine the structure and the scope of the board of directors’ representation powers in the articles of association prior to the incorporation by means of granting a public deed before a notary public. In syn - thesis, the governing body may take the form of: • a sole director; • two or more directors acting jointly; • two or more directors acting jointly and severally; or • a board of directors. Governance requirements for SICAVs and real estate funds differ from mercantile companies due to their condition as regulated entities. Governance require -
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