Flexibility in the Spanish Company Law, 1885-1936

ABSTRACT The Spanish business code allowed firms two types of organizational flexibility in the late 19th and early 20th century. Firms enjoyed great leeway in adapting rules to their needs. The corporation was especially flexible in this way. Spanish law also allowed firms to in effect crea- te their own legal form. Until 1920, firms faced the choices typical of civil-law countries, na- mely, the corporation, and the ordinary or limited partnership. But the Spanish business code was explicitly “open,” allowing firms to do something else if they wished. This second type of flexibility reached its zenith in the Sociedad de Responsabilidad Limitada (SRL), a form simi- lar to Germany’s GmbH or Britain’s PLC. For its first decades the SRL was a creation of no- taries and entrepreneurs, and was not written into Spanish law until 1953. This paper descri- bes the law governing formation of Spanish companies, and documents the choices firms used