Corporate Law at Andorra
Here’s a detailed overview of Corporate Law in Andorra:
Corporate Law in Andorra
1. Legal Framework
Corporate law in Andorra is governed primarily by:
The Law on Public Limited Companies (Llei de Societats Anònimes i de Responsabilitat Limitada), originally passed in 1995 and subsequently amended.
The Companies Act (updated in 2018) regulates company formation, operation, and dissolution.
Andorra’s corporate legal system is influenced by civil law traditions, particularly from neighboring France and Spain.
2. Types of Business Entities
The most common types of companies in Andorra include:
| Entity Type | Abbreviation | Minimum Share Capital | Key Features |
|---|---|---|---|
| Societat Anònima | SA | €60,000 | Public limited company; allows share issuance. |
| Societat Limitada | SL | €3,000 | Private limited liability company; simpler structure. |
| Branch Office | N/A | No minimum | For foreign companies; must register locally. |
| Sole Trader | N/A | No minimum | Individual businesses; personal liability applies. |
3. Corporate Formation
Incorporation is handled by the Companies Registry (Registre de Societats).
Steps include:
Name reservation
Drafting and notarizing articles of incorporation
Opening a corporate bank account and depositing capital
Registration with the Ministry of Economy
Foreign investment is allowed but subject to prior government authorization, particularly if the foreign ownership exceeds 10%.
4. Corporate Governance
SA (Public Company) requires:
A board of directors (minimum of 3 members)
Annual general meetings
Annual financial statements and audits if thresholds are exceeded
SL (Private Company) has simpler governance:
One or more administrators
Reduced audit and disclosure obligations
5. Tax and Regulatory Compliance
Corporate income tax (IS): 10% standard rate, with some exemptions and incentives.
Annual financial statements must be submitted, and certain companies are subject to audit.
Companies must maintain corporate records and comply with AML/CFT regulations.
6. International Considerations
Andorra is not an EU member but has a customs and monetary agreement with the EU.
The country has taken steps to align with OECD and EU standards on transparency and tax cooperation.
The Foreign Investment Law (2012) has significantly opened the economy to international business.
Summary
Andorra offers a modern and flexible corporate legal system.
SLs and SAs are the most common corporate forms.
Foreign investment is welcome but regulated.
Taxation is favorable, and transparency has improved to meet international norms.
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