Provided the company meets the requirements to distribute dividends (either ordinary or interim), the process is quick and straightforward. Payment may be made immediately upon the approval of the dividend distribution by the General Meeting or the Directors, as the case may be, and in no case later than 12 months since the date of the resolutions of the General Meeting or the Directors approving the distribution.

There are no mandatory waiting periods prior to resolving to approve a dividend distribution; however, once the distribution of dividends has been approved, the payment cannot be made later than 12 months from the date of the resolutions of the Shareholder(s) or the Directors approving such distribution. The resolution approving the distribution of dividends should include date and payment mechanics. Otherwise, the dividend will be payable at the company's registered office as from the day following the date of approval.

In the case of interim dividends, the unaudited management accounts for the current year which have not yet been approved are required. These accounts must show that the company has sufficient liquidity (cash) for the distribution. In the case of annual or ordinary dividends, the required annual accounts are those which have already been approved by the Shareholder(s). In this case, the accounts must have been previously audited (in case the company is required to have statutory auditors for its annual accounts).

Yes

The distribution of ordinary or interim dividends is subject to the following solvency test:

• net equity of the Company cannot fall below the share capital figure, before or after distribution;
• legal reserve and any other mandatory reserves established by law or by the corporate by-laws should have been duly allocated prior to the dividend distribution:
  1. (i) legal reserve: an amount equal to 10% of the profit of the fiscal year must be allocated to the legal reserve, until it reaches, at least, 20% of the company's share capital; and
  2. (ii) reserves established by the corporate by-laws (if any)
• research and development expenses: dividends cannot be distributed unless the amount of the distributable reserves is the same (or higher) than the research and development expenses recorded under assets in the balance sheet.

In case of interim dividends the amount to be distributed as dividend cannot exceed the total profits obtained since the end of the last fiscal year, after having deducted accumulated losses and mandatory reserves (established by law or by the corporate by-laws), and the estimated tax payable on such result.

Yes, Capital reductions to increase voluntary reserves to any amount equal to or above the legal minimum (EUR 3,000 in public limited companies, and EUR 60,000 in limited liability companies) are doable from a Spanish corporate perspective.

In terms of timing, it will take approximately 4-5 weeks to complete the capital reduction (including 3 weeks to register same with the Commercial Registry).

The reduction may be implemented by reduction of par value of the existing shares or cancellation of existing shares.

Process:

• The reduction of the corporate capital must be approved by the General Meeting. Minutes must specify the amount of the capital reduction, its aim and the implementation mechanism (i.e., reduction of the par value of the existing quotas or cancellation of existing quotas). Minutes must also indicate that the shareholders receiving reimbursements become jointly and severally liable together with the company, for a term of 5 years, for company's debts arising after the registration of the public deed of capital reduction with the Commercial Registry, and up to the limit of the amount received as reimbursement. Such liability may be avoided if, at the time of the capital reduction, a non-distributable reserve is created for the same amount of capital being reimbursed. This reserve will not be distributable for a term of 5 years.
• The execution of a public deed must be registered and filed with the Commercial Registry (registration usually takes place within 15 business days as from filing).
• Balance sheet: required for public limited companies. For limited liability companies, although not strictly required from a Spanish corporate legal perspective, in practice some Registrars require a balance sheet to undertake the capital reduction to create voluntary reserves (unaudited / audited depending on whether the company is required to have statutory auditors for its annual accounts). This balance sheet should be dated within the 6 months of the date on which the capital reduction is approved by the General Meeting.

The capital reduction will be exempt for Transfer Tax and Stamp Duty purposes. Nevertheless, the reduction will not be tax exempt if it implies a refund of the shareholders' contributions.

If the dividend is distributed to a foreign company, the amount distributed should be taken into account to determine if any of the thresholds set forth in Circular 4/2012 of the Bank of Spain are exceeded by the company and, accordingly, whether the transaction gives rise to any reporting obligations. The Foreign Investment authorities must be notified of the reduction through standard form D1B.

No, there are no foreign exchange requirements on paying dividends to foreign parent companies.

Yes. However, funds can only be borrowed for the distribution of an "ordinary" dividend, payable against freely distributable reserves. The distribution of an interim dividend requires sufficient liquidity for payment.

Yes dividend in kind is possible in the following cases:

1. unanimously approval by the General Meeting.
2. company by-laws include the option to pay in kind dividends instead of cash. 

Additionally, if it is an interim dividend, then the liquidity test should be met regardless of the decision to effect the dividend payment in kind.

Before the year ends, it would be advisable for the company to review potential dividend distributions since tax amendments could enter into force as of January, 1st of the following year and previous planning could provide tax advantages/savings (i.e. participation exemption regime, etc.). 

Furthermore, it is better to distribute dividends by the end of the year to avoid financial burden on CIT payments on account.

No, there are no restrictions from a corporate law perspective on lending funds intra-group but cross-border.