Prikhodko&Partners
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International corporate law
Business Setup and Support in Spain LEGAL AUDITS OR DUE DILIGENCE OF BUSINESS IN SPAIN

Taras Miroshnychenko

Head of practice

E-mail

miroshnychenko@prikhodko.com.ua

Phone numbers

Head of Corporate Law and Fintech Practice. Expert in the creation and reorganization of companies, support of M&A transactions, as well as legal support for opening and running a business in the EU, Asia, and North America.

LEGAL AUDITS OR DUE DILIGENCE OF BUSINESS IN SPAIN

Spain remains one of the most attractive markets for foreign investors due to its stable economy, developed infrastructure and advantageous geographical location.

However, investing in a Spanish business or concluding large deals requires careful preparation. One of the key tools for ensuring the security of investments is a legal audit, known as Due Diligence.

The law firm “Prikhodko & Partners” offers professional Due Diligence services that help minimize risks and ensure the success of business projects in Spain.

What is Due Diligence?

Due Diligence is a comprehensive examination of the legal, financial and commercial status of a company before concluding a deal, investing or acquiring a business.

This process is aimed at identifying potential risks, analyzing the legality of the company’s activities, its financial stability and compliance with local legislation. In Spain, where specific legal regulations apply, Due Diligence is a critically important stage in avoiding legal and financial problems.

The main goal of a legal audit is to provide the investor or buyer with a complete picture of the subject of the transaction, including its assets, liabilities, contracts, licenses and possible risks.

This allows them to make informed decisions and avoid hidden pitfalls.

Why is Due Diligence important in Spain?

Spain has a unique legal system that combines European standards and national characteristics. For example, Spanish legislation on taxation, labor relations and intellectual property protection has its own nuances that may be incomprehensible to foreign investors.

Conducting Due Diligence allows:

Check the legality of the company. This includes reviewing the company’s incorporation documents, licenses, permits, and asset ownership. For example, you need to make sure that the company has the right to operate and is free from restrictions such as injunctions or asset seizures.
Assess financial risks. Reviewing financial statements can reveal hidden debts, tax liabilities, or discrepancies in reported financial indicators.
Analyze contracts and agreements. A thorough review of contracts with partners, suppliers, or customers helps identify unfavorable terms, risks of non-fulfillment of obligations, or potential litigation.
Check for legal compliance. Spain has strict regulations regarding environmental, labor, and tax laws. Violations can result in fines or even the termination of a company’s operations.
Assess reputational risks. Analyzing the reputation of the company and its counterparties allows you to avoid cooperation with unreliable partners.

Stages of Due Diligence in Spain

The law firm “Prikhodko & Partners” has developed a clear algorithm for conducting Due Diligence, adapted to the specifics of the Spanish market.

The main stages include:

Determining audit objectives and scope

Before starting the audit, we work with the client to identify the key aspects that need to be analyzed. This can be a full audit of the company or a review of specific areas, such as corporate governance, real estate or intellectual property.

For example, if the client is planning to invest in a Spanish real estate company, we focus on checking ownership rights and permits.

Information collection

At this stage, we request the necessary documents from the company, including articles of association, certificates of incorporation, financial statements, contracts, licenses, etc.

We also analyze data from Spanish public registers, such as the Registro Mercantil (Commercial Registry), to verify the company’s legal status and history.

Documentation analysis

Our lawyers conduct a detailed analysis of the collected documents.

We check:

Corporate structure: management authority, ownership structure, legality of decisions made.
Assets: The legal ownership of property, including real estate, equipment, or intellectual property.
Liabilities: the existence of debts, loans, guarantees, or litigation.
Legal compliance: compliance with labor, tax and environmental laws.

Risk assessment

Based on the analysis, we identify potential risks such as license inconsistencies, hidden tax liabilities or disputed contracts.

For example, in Spain it is important to check whether a company complies with the Data Protection Law (LOPD) and the General Data Protection Regulation (GDPR).

Report preparation

After completing the audit, we provide the client with a detailed report that includes:

Description of identified risks.
Recommendations for their elimination.
Conclusions on the feasibility of concluding a deal or investing.

Support in decision-making

We advise the client on further actions, help adjust the terms of the deal or develop a strategy to protect interests. For example, if tax risks are identified, we can offer restructuring of the deal or additional guarantees from the seller.

It will also be useful: COMPANY REGISTRATION IN SPAIN

Features of Due Diligence in Spain

The Spanish market has its own characteristics that must be taken into account during a legal audit:

Tax legislation. Spain has a complex tax system, including Value Added Tax (IVA), Corporate Tax (Impuesto de Sociedades), and Property Taxes. Failure to file tax returns correctly can result in significant fines.
Labor relations. Spanish labor law protects the rights of employees, so it is important to check contracts with personnel, compliance with working conditions, and the absence of labor disputes.
Real estate. If the business is related to real estate, we verify property rights, mortgage obligations, and compliance of the facilities with building codes.
Intellectual Property: In sectors such as technology or creative industries, we analyze trademark rights, patents, and copyrights.
Environmental requirements. Spain has strict environmental regulations, especially for industrial companies. Violations can result in fines or the suspension of operations.

Advantages of cooperation with “Prikhodko & Partners”

The law firm “Prikhodko & Partners” has many years of experience working with international clients and a deep understanding of Spanish legislation.

Our advantages:

Individual approach. We adapt the audit to the client’s needs, taking into account the specifics of the business.
Comprehensiveness. We work with financial and tax experts to provide a complete picture of the company’s condition.
Confidentiality. We guarantee the security of information obtained during the audit.
International experience. International experience. Our lawyers have experience working with Spanish companies and know how to avoid common mistakes.

Conclusion

Due Diligence is an integral part of successful investment or transaction in Spain. This process allows you to identify risks, ensure legal security and make informed business decisions.

The law firm “Prikhodko & Partners” is ready to become your reliable partner in conducting Due Diligence, guaranteeing quality, transparency and protection of your interests.