Introduction: In Spain, grappling with suboptimal legislation has become an unfortunate norm, leading to legal frameworks that often lack precision, use inadequate terminology, or are outright impractical. A glaring example is found in the 8th Additional Provision of the recently enacted “Create and Grow” law, which came into effect in October 2022. This provision introduces the possibility of registering civil societies in the Mercantile Registry, revealing flaws in its drafting and raising concerns about its impact on legal certainty and societal costs.
Historical Context and Legislative Journey of the 8th Additional Provision: The inclusion of civil societies in the Mercantile Registry is not a novel demand, with a similar initiative proposed twenty-five years ago in the Regulation of the Mercantile Registry. However, the previous attempt failed due to legal shortcomings. The current endeavor, while correctly positioned in terms of legal hierarchy, suffered from a hasty and flawed legislative process. The 8th Additional Provision originated as an amendment from the Republican Group in the Congress, drawing attention to the lack of public debate and its incongruity with the original legislative proposal. Interestingly, the amendment faced opposition in the Senate from nationalist groups, leading to modifications that raise questions about the constitutional validity and technical quality of the resulting norm.
Voluntary Nature of Registration: Initially proposed as mandatory, the registration requirement faced opposition in the Senate, leading to a shift towards voluntary registration. This change diluted the intended purpose of the provision, primarily aimed at protecting the tax authorities from fiscal evasion. The initial argument emphasized that registration would enable tax authorities to identify the partners of a civil society, facilitating tax assessment. However, the voluntary nature of registration diminishes its practical impact, as taxpayers may opt to avoid this additional scrutiny.
Comparisons have been drawn between the voluntary registration of civil societies and the registration obligations of individual entrepreneurs. However, a crucial distinction lies in the discretionary access to the Mercantile Registry for civil societies, not only concerning the entity itself but also regarding subsequent events or actions. This distinction has implications for the practicality of the reform, particularly concerning opposability and negative publicity effects.
Prerequisites for Registry Access: Priority of Special Rights and Regulations: The 8th Additional Provision stipulates that registration is only possible after meeting legal requirements established by civil, foral, or special rights, which take precedence over Mercantile Registry regulations. This safeguard, added during Senate negotiations, appears redundant and may even face constitutional challenges. While it aims to preserve the autonomy of substantive law in areas like constitution, internal organization, and representation, it may contradict the constitutional distribution of competencies, particularly in matters of registry organization reserved exclusively for the state.
Limited Effects of Registration on Legal Personality and Registry Capacity: Understanding the consequences of civil society registration requires a focus on what registration does not affect rather than its limited affirmative effects. Notably, legal personality and the capacity to be a registry holder of real property rights, specifically immovables, remain unaffected by registration.
a) Legal Personality Independent of Registration: Contrary to a misinterpretation suggested by some, legal personality of a civil society is not contingent on registration in the Mercantile Registry. Past notions associating personality with registration have been dismissed, emphasizing that the irregularity is a registry issue, affecting the validity of contracts against third parties acting in good faith. Modern doctrine rejects tying the legal personality of civil societies to registration, asserting that it arises naturally from the contract’s execution.
b) Capacity for Registry Ownership Unaffected by Registration: The capacity of a civil society to hold registry ownership rights over immovable property remains intact regardless of Mercantile Registry registration. Arguments proposing an analogous application of Article 383 of the Mortgage Regulation, which prohibits registering real property rights of mercantile societies without Mercantile Registry registration, are debunked. The outdated foundation of Article 383 has been superseded by subsequent legal provisions recognizing the personification of irregular societies.
Limited Effects of Material Publicity for Civil Societies: While registration fails to impact legal personality and registry capacity, proponents argue that it provides material publicity benefits, including opposability, negative publicity, and positive publicity effects, typical of a registry system. However, the voluntary nature of registration curtails the practical significance of these effects.
a) Opposability Limited to Mandatory Registration: The power of opposability, a key feature of registered acts, is contingent on their mandatory registration. Acts or events related to civil societies, being subject to optional registration, lack opposability against third parties acting in good faith. The voluntary nature of registration diminishes the presumption that third parties are aware of the registered acts.
b) Limited Negative Publicity Effects: Negative publicity, shielding third parties against silent registry changes, only applies to acts or events subject to mandatory registration. In the case of civil societies, where registration is voluntary, third parties cannot presume the accuracy of the registry information.
c) Positive Publicity or Registry Feasibility: Positive publicity, characterized by the presumption of validity and accuracy of Mercantile Registry content, operates as a presumption in favor of third parties acting in good faith. This positive effect remains applicable to voluntary registrations of civil societies, providing protection to third parties who rely on the registered information, even if it later proves to be incorrect or invalid.
Conclusion: The “Create and Grow” law’s 8th Additional Provision, allowing the registration of civil societies in the Mercantile Registry, reflects an attempt to address longstanding demands. However, its voluntary nature significantly diminishes its practical impact, particularly regarding the opposability and negative publicity effects typical of mandatory registration. While the provision aims to balance autonomy in substantive law with registry requirements, it introduces complexities that may raise constitutional concerns. The nuanced effects of registration on legal personality, registry capacity, and material publicity underscore the need for careful consideration of the implications for civil societies and third parties engaging with them. As Spain navigates the challenges posed by this legal provision, stakeholders must be vigilant to potential gaps and ambiguities in its application.