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Creating the Sociedad de Responsabilidad Limitada: The Use of Legal Flexibility in Spanish Company Law, 1869–1953

  • Susana Martínez-Rodríguez
Abstract

Spain approved the first law of Sociedad de Responsabilidad Limitada (SRL)—a legal form similar to the German GmbH—in 1953. However, the SRL had already been used, albeit without its own legislation, since the 1920s. How was this possible in a country whose legal system was based on civil law? Its 1885 Commercial Code lacked the numerus clausus principle for enterprise forms, a feature that gave entrepreneurs unusual freedom in organizing their firms, and in adopting new business forms not defined in the code. It also invites us to rethink the notion of rigidity in civil law.

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2 La Porta, Rafael, Lopez-de-Silanes, Florencio, and Shleifer, Andrei, “The Economic Consequences of Legal Origins,” Journal of Economic Literature 46, no. 2 (2008): 285332 ; La Porta, Rafael, Lopez-de-Silanes, Florencio, Shleifer, Andrei, and Vishny, Robert W., “The Quality of Government,” Journal of Law, Economics, and Organization 15, no. 1 (1999): 222–79, Law and Finance,” Journal of Political Economy 106, no. 6 (1998): 1113–55, and Determinants of External Finance,” Journal of Finance 52, no. 3 (1997): 1131–50; Arruñada, Benito, “Pitfalls to Avoid When Measuring Institutions: Is ‘Doing Business’ Damaging Business?Journal of Comparative Economics 35, no. 4 (2007): 729–47.

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4 For relevant examples of this recent literature, see Aurora Gómez-Galvarriato and Aldo Musacchio, “Organizational Choice in a French Civil Law Underdeveloped Economy: Partnerships, Corporations and the Chartering of Business in Mexico, 1886–1910” (Harvard Business School Working Paper 05-024, Harvard Business School, Boston, 2004); Tom Nicholas, “The Organization of Enterprise in Japan” (Harvard Business School Working Paper 14-037, Harvard Business School, Boston, 2013); Abramitzky, Ran, Frank, Zephyr, and Mahajan, Aprajit, “Risks, Incentives, and Contracts: Partnerships in Rio de Janeiro, 1870–1892,” Journal of Economic History 70, no. 3 (2010): 686715 ; Hilt, Eric and O'Banion, Katherine, “The Limited Partnership in New York, 1822–58: Partnerships without Kinship,” Journal of Economic History 69, no. 3 (2009): 615–45; Hannah, Leslie, “Pioneering Modern Corporate Governance: A View from London in 1900,” Enterprise & Society 8, no. 3 (2007): 642–86; Timothy W. Guinnane, Ron Harris, and Naomi R. Lamoreaux, “Contractual Freedom and the Evolution of Corporate Control in Britain, 1862–1939” (NBER Working Paper 20481, National Bureau of Economic Research, Cambridge, Mass., 2014).

5 Guinnane, Timothy, Harris, Ron, Lamoreaux, Naomi, and Rosenthal, Jean-Laurent, “Putting the Corporation in Its Place,” Enterprise & Society 8, no. 3 (2007): 687729 .

6 This article is part of a larger project on the development of company law in Spain during the nineteenth and twentieth centuries. Timothy Guinnane and Susana Martínez-Rodríguez, “Choice of Enterprise Form in Spain (1886–1936)” (in progress, 2015) uses econometric modeling approaches to dig into the determinants of legal form; Timothy Guinnane and Susana Martínez-Rodríguez, “Making Up the Rules for the Private Limited Liability Company in Spain (1920–1953)” (in progress, 2015) uses samples of the articles of association of Spanish firms to understand how firms organized themselves, focusing on situations where the Spanish code was silent. Other papers published under the same project are Guinnane, Timothy and Martínez-Rodríguez, Susana, “Flexibility in Spanish Company Law (1886–1936),” Revista de Historia Industrial, no. 56 (2014): 81112 ; Martínez-Rodríguez, Susana, “¿Sin ley y dentro de la legalidad? Inicios de la sociedad de responsabilidad limitada en España (1869–1953),” Biblio 3W: Revista Bibliográfica de Geografía y Ciencias Sociales 18, no. 1021 (2013); available at http://www.ub.es/geocrit/b3w-1021.htm.

7 Chandler highlights the key role of the corporation in the development and modernization of American industry and notes that modern entrepreneurial forms appeared only when advances in technology and the expansion of markets increased the volume of economic activity. Alfred D. Chandler Jr., The Visible Hand: The Managerial Revolution in American Business (Boston, 1977).

8 On numerus clausus, see Hansmann, Henry and Kraakman, Reinier, “Property, Contract, and Verification: The Numerus Clausus Problem and the Divisibility of Rights,” Journal of Legal Studies 31, no. 2 (2002): 373420 .

9 In this article the term notary refers only to the civil-law type of notary, called Latin's notary. Arruñada, Benito, “The Economics of Notaries,” European Journal of Law and Economics 3, no. 1 (1996): 537 .

10 Navarro, Fausto, “La configuración de la sociedad limitada a través de la práctica notarial,” Revista de Derecho Privado, no. 299 (1942): 2443 .

11 Arruñada, Benito, “Institutional Support for the Firm: A Theory of Business Registries,” Journal of Legal Analysis 2, no. 2 (2010): 524–76.

12 These data come from Dirección General de los Registros y del Notariado, Estadística del Registro Mercantil (Madrid, 1886–1898; 1911) and Dirección General de los Registros y del Notariado, Anuario de la Dirección General de los Registros y del Notariado (Madrid, 1909–1936).

13 Lamoreaux, Naomi, “Scylla or Charybdis? Historical Reflections on Two Basic Problems of Corporate Governance,” Business History Review 83, no. 1 (2009): 934 ; Timothy Guinnane and Jean-Laurent Rosenthal, “Adapting the Law to Fit the Facts: The GmbH, the SARL, and the Organization of Small Firms in Germany and France, 1892–1930” (paper presented at the annual meeting of the Economic History Association, Vancouver, 2012), available at http://eh.net/eha/wp-content/uploads/2013/11/Guinnaneetal.pdf.

14 Belgium (1811), Haiti (1826), Spain (1829), Portugal (1833), Greece (1835), Holland (1838), Turkey (1839), and other countries adopted the French code directly. In Latin America several countries adopted the Spanish code, such as Costa Rica (1853). Julio Olavarría, Manual de Derecho Comercial (Santiago de Chile, 1950), 67–78.

15 Naomi Lamoreaux, “Partnerships, Corporations, and the Limits on Contractual Freedom in U.S. History: An Essay in Economics, Law, and Culture,” in Constructing Corporate America: History, Politics, and Culture, ed. Kenneth Lipartito and David B. Sicilia (New York, 2004), 29–65; Djelic, Marie Laure, “When Limited Liability Was (Still) an Issue: Mobilization and Politics of Signification in Nineteenth-Century England,” Organization Studies 34, no. 4 (2013): 595621 ; Butler, Henry, “Nineteenth-Century Jurisdictional Competition in the Granting of Corporate Privileges,” Journal of Legal Studies 14, no. 1 (1985): 129–66. Free incorporation in Spain dates back to 1829; it lasted for several years. Tortella, Gabriel, “El principio de Responsabilidad Limitada y el desarrollo industrial en España,” Moneda y Crédito 104 (1968): 6984 .

16 Incorporation in the United States dates back to 1811, in a New York statute. Beginning in 1844, England permitted the formation of joint-stock companies without specific authorization, but it deprived them of limited liability. Lamoreaux and Harris, “Contractual Flexibility.”

17 Harris, Ron, “The Private Origins of the Private Company: Britain, 1862–1907,” Oxford Journal of Legal Studies 33, no. 2 (2013): 339–78.

18 Kessler, Amalia, “Limited Liability in Context: Lessons from the French Origins of the American Limited Partnership,” Journal of Legal Studies 32, no. 2 (2003): 511–48; M. Romiguiere, Commentaire de la Loi sur les Sociétés à Responsabilité Limitée (Paris, 1863), 48; Paul Pic and F. Baratin, Des sociétés à responsabilité limitée (Paris, 1927).

19 Pargendler, Mariana, “Politics in the Origins: The Making of Corporate Law in Nineteenth-Century Brazil,” American Journal of Comparative Law 60, no. 3 (2012): 805–50; Requiao, Rubens, “Reforma da Lei de Sociedades por Quotas de Responsabilidade Limitada,” Revista da Facultade de Direito da UFPR 13, no. 0 (1970): 233–45.

20 Susana Martínez-Rodríguez, “Quien calla otorga: La larga sombra de la SRL en España (1869–1953)” (Fundación de las Cajas de Ahorros [FUNCAS] working paper 716, Madrid, 2013).

21 Arturo Salinas, “Las sociedades mercantiles en el código de comercio de 1889,” in Centenario de código de comercio (Mexico City, 1991), 563–82.

22 Codice di Commercio del regno d'Italia, 1882 (Rome, 1888), sec. 76.

23 Guinnane et al., “Putting the Corporation in Its Place.”

24 Sesión del 24 de Enero,” Diario de las Sesiones de las Cortes, no. 29 (1883): 608 .

25 Jose Luis Cardoso, “The International Diffusion of Economic Thought,” in A Companion to the History of Economic Thought, ed. Warren J. Samuels and Jeff E. Biddle (Malden, Mass., 2007), 622–33.

26 Guinnane et al., “Putting the Corporation in Its Place,” 697–98.

27 Rodrigo Uría, “Apertura del Centenario de Código de Comercio,” in Centenario del Código de Comercio (Madrid, 1986), 24–32.

28 Amanda Gregg, “Factory Productivity and the Concession System of Incorporation in Late Imperial Russia, 1894–1908” (job market paper, Department of Economics, Yale University, 2014), accessed 12 Mar. 2015, https://dl.dropboxusercontent.com/u/14512460/AG_RussCorpJMPJan2015.pdf.

29 Lamoreaux and Rosenthal, “Legal Regime,” 37.

30 Numerus clausus appears in the French business code (1807), sec. 19, and the Italian commercial code (1882), sec. 76. The debate about flexibility for company law continues among Spanish legal scholars. Luis Fernández de Gándara, La atipicidad en Derecho de Sociedades (Zaragoza, Spain, 1977); Burbano, Pablo Casado, “El principio de tipicidad en el nuevo régimen de nuestro Registro Mercantil,” Revista Crítica de Derecho Inmobiliario 76, no. 657 (2000): 1047–66.

31 Sesión del Miércoles 24 de Enero,” Diario de las Sesiones de las Cortes, no. 29 (1883): 593617 ; Sesión del Viernes 24 de Febrero,” Diario de las Sesiones de las Cortes, no. 50 (1883): 1037–48.

32 Castellar, Enrique, “Sociedades Mercantiles a Responsabilidad Limitada,” Revista Jurídica de Cataluña 1 (1895): 436–41; Martínez, Manuel, “Reformas del Código de Comercio,” Revista de los Tribunales y de Legislación Universal 41 (1907): 312–13; Pedro Estasén, Tratado de las Sociedades Comerciales (Madrid, 1906), 555–60; Lanfranco, Enrique, “Las Sociedades de Responsabilidad Limitada y nuestro Código de Comercio,” Revista Jurídica de Cataluña 10 (1904): 110–13.

33 Barcelona enrolled two SRLs in 1916. Pelegrí, Joan, “Les Societats mercantils de Responsabilitat Limitada segons el Codi de Comerç de 1885,” Revista jurídica catalana 24 (1918): 323–44.

34 Instituto Nacional de Estadística, Censo de Sociedades y Empresas (Madrid, 1951).

35 Araya, Tomás Jiménez, “Formación de capital y fluctuaciones económicas: Creación de sociedades mercantiles en España entre 1886 y 1970,” Hacienda Pública Española 27 (1974): 137–85; Xavier Tafunell, “Empresa y Bolsa,” in Estadísticas Históricas de España, siglo 19 y 20, ed. Albert Carreras and Xavier Tafunell (Bilbao, 2005), 707–835.

36 Estasén, Tratado de las Sociedades Comerciales.

37 José Ponsa Gil, Sociedades civiles, mercantiles, cooperativas y seguros (Barcelona, 1906); Mario Ruiz, Las Compañías Mercantiles y nuestro Código de Comercio (Barcelona, 1919).

38 Guinnane and Martínez-Rodríguez, “Choice of Enterprise Form.”

39 Colli, Andrea, Pérez, Paloma Fernández, and Rose, Mary B., “National Determinants of Family Firm Development: Family Firms in Britain, Spain, and Italy in the Nineteenth and Twentieth Centuries,” Enterprise & Society 4, no. 1 (2003): 2864 .

40 Guinnane and Rosenthal, “Adapting the Law.”

41 The following are cases from companies' books in the business register of Barcelona. J. Roca y Cía. (license no. 1049, 1884) was a limited partnership transformed into a corporation (no. 1051, 1888) and named Cía Marítima, SA. Maratona Dibi y Cía. (no. 1707, 1890) was first a limited partnership and later became a corporation (1905) and was named Aguas Potables de Vilafranca. Azucarera de Vich was a corporation, but previously it had been a limited partnership, first named Torres y AYM Planas (no. 1724, 1890) and, a few months later, Miret y AYM Planas SCM (no. 1728, 1890). Data collected by Guinanne and Martínez-Rodríguez, “Choice of Enterprise Form.”

42 Lorenzo Benito, Manual de Derecho Mercantil, vol. 1, 3rd ed. (Madrid, 1924); Gary W. McDonough, Las buenas familias de Barcelona: Historia social de poder en la era industrial (Barcelona, 1988).

43 An example was Compañía Telefónica Montañesa, as seen in the company's books in the business register of Madrid (no. 4056, 1920). The founders were all relatives: Leopoldo Gálvez, María José Gálvez Rubio de Villejas, and Roberto Gálvez Rubio de Villejas. Data collected by Guinanne and Martínez-Rodríguez, “Choice of Enterprise Form.” After 1916, information regarding corporations was published in yearbooks; see Anuario Financiero y de Sociedades Anónimas (Madrid, 1916–).

44 José María González de Echávarri y Vivanco, Comentarios al Código de Comercio y Jurisprudencia española (Valladolid, Spain, 1941); José Antonio Viera González, Las sociedades de capital cerradas (Pamplona, 2002).

45 José Del Cueto, De la Sociedad Civil con formas mercantiles (Havana, 1891).

46 Data from Guinanne and Martínez-Rodríguez, “Choice of Enterprise Form.” In 1920, the exchange rate was 23.30 pesetas per British pound and 6.37 pesetas per U.S. dollar. Pablo Martín and María de los Angeles Pons, “Sistema financiero y monetario,” in Estadísticas Históricas de España, siglo 19 y 20, ed. Albert Carreras and Xavier Tafunell (Bilbao, 2005), 705.

47 The total number of SRLs enrolled in Madrid (1920–1936) was 754. The number of civil societies with limited liability was 22. Guinnane and Martínez-Rodríguez, “Making Up the Rules.”

48 Del Cueto, De la Sociedad Civil, 39.

49 Martínez-Rodríguez, “Sin ley.”

50 Sesión 18.1.1905. A la Academia de Jurisprudencia y Legislación de Barcelona ,” Revista Jurídica de Cataluña 11 (1905): 190–92.

51 Paloma Fernández Pérez, “De hereu a profesionales: La transición de un modelo tradicional a un modelo moderno de gestión en la empresa familiar catalana,” in La profesionalización de las empresas familiares (Madrid, 2013), 35–71; Francesc Cabana, ed., Cien empresarios catalanes (Madrid, 2006).

52 José Francisco Arribas, “La inscripción, la función primera del Registro Mercantil,” in El Registro Mercantil en España (Madrid, 2009), 214–58.

53 José Roig was connected with the Catalonian business network, but a government crisis started by the Catalonian political party provoked Roig's resignation and those of the whole government group. The 1914–1923 period was highly unstable for successive governments; there were six general elections and seventeen prime ministers. Albert Balcells, El projecte d'autonomia de la Mancomunidad de Catalunya del 1919 i el seu context historic (Barcelona, 2010).

54 Villaverde, Rafael García, “La Inscripción de las sociedades civiles en el registro mercantil español,” Revista de Derecho de Sociedades, no. 14 (2000): 4784 .

55 Guinnane, Timothy W., Harris, Ron, Lamoreaux, Naomi R., and Rosenthal, Jean-Laurent, “Pouvoir et propriété dans l'entreprise: Pour une histoire internationale des sociétiés á responsabilité limitée,” Annales: Histoires, Sciences Sociales 63, no. 1 (2008): 73110 .

56 Loi sur le registre du commerce: Textos officiels, loi du 18 mars 1919, décret du 15 mars 1920, loi du 26 juin 1920, décret du 27 juin 1920 II (Paris, 1920).

57 Conclusión del Reglamento para la organización y régimen del Registro Mercantil,” Gaceta de Madrid 271 (1919): 1059–70.

58 Betrán, Concha, “La contribución de utilidades y la modernización del sistema fiscal español,” Hacienda Pública Española, special issue (1999): 119–35.

59 Data from Guinanne and Martínez-Rodríguez, “Choice of Enterprise Form.” Martín and Pons, “Sistema financiero y monetario,” 705.

60 Juan Francisco Lasso, Crónica de la codificación española: Código de Comercio (Madrid, 1999), 555–56.

61 Wenceslao Roces, “Prólogo,” in La Sociedad de Responsabilidad Limitada, ed. E. Feine (Madrid, 1933), accessed 12 Mar. 2015, http://www.wenceslaoroces.org/arc/roces/pro/soc.htm.

62 Arruñada, “Institutional Support,” 4.

63 General Directorate of Registers and Notaries resolutions consulted are published in Repertorio de Legislación Aranzadi (Madrid, 1930– ). Supreme Court decisions are published in Jurisprudencia Civil: Colección Completa de las Sentencias Dictadas por el Tribunal Supremo (Madrid, 1861– ).

64 Cándido Paz-Ares, “¿Cómo entendemos y cómo hacemos derecho de sociedades?” in Tratado de la sociedad limitada (Madrid, 1997), 159–206.

65 Commercial courts worked until 1868 in Spain and only at the local level.

66 Rubin, “Why Is the Common Law Efficient?” 51–63.

67 Benito, Manual de Derecho Mercantil, 256–57; Peter W. Rea, Resoluciones de la Dirección General del Registro y el Notariado sobre la reforma mercantil (Madrid, 1992), 17–30.

68 Arruñada, Benito, “Organización del registro de la propiedad en países en desarrollo,” Revista de Doctrina y Jurisprudencia Registral 1, no. 1 (2003): 4977 .

69 “(276) Resolución de la Dirección General del Registro y el Notariado, 14-7-1933,” Repertorio de Jurisprudencia Aranzadi (Pamplona, 1934).

70 “(1157) Resolución de la Dirección General del Registro y el Notariado, 3-6-1948,” Repertorio de Legislación (Pamplona, 1948).

71 “(580) Resolución de la Dirección General del Registro y el Notariado, 16-4-1942,” Repertorio de Legislación (Pamplona, 1942).

72 “(112) Resolución de la Dirección General del Registro y el Notariado, 15-1-1945,” Repertorio de Legislación (Pamplona, 1946).

73 “(238) Resolución de la Dirección General del Registro y el Notariado, 12-12-1945,” Repertorio de Legislación (Pamplona, 1946).

74 “(342) Resolución de la Dirección General del Registro y el Notariado, 9-3-1943,” Repertorio de Legislación (Pamplona, 1944).

75 “(276) Resolución de la Dirección General del Registro y el Notariado, 14-7-1933,” Repertorio de Legislación (Pamplona, 1934).

76 “(966) Resolución de la Dirección General del Registro y el Notariado, 11-8-1943,” Repertorio de Legislación (Pamplona, 1944).

77 “Sentencia del Tribunal Supremo, 17-11-1928,” Repertorio de Legislación (Pamplona, 1929).

78 Enrique Taulet, Sociedades de Responsabilidad Limitada, Conferencia en el Colegio Notarial de Barcelona (Barcelona, 1947), 18; Roces, “Prólogo.”

79 “(94) Sentencia del Tribunal Supremo, 4-2-1929,” Jurisprudencia Civil: Colección Completa de las Sentencias Dictadas por el Tribunal Supremo (Madrid, 1930).

80 “Resolución de la Dirección General del Registro y el Notariado, 11-8-1943,” Repertorio de Legislación (Pamplona, 1944).

81 Taulet, Sociedades, 18; Felipe Solá, Tratado de Sociedades de Responsabilidad Limitada (Barcelona, 1951), 99; José Roig, Sociedades de Responsabilidad Limitada (Barcelona, 1923).

82 Decreto-Ley de 7 de noviembre de 1947 sobre la convocatoria de Juntas Generales de las Sociedades Anónimas,” Boletín Oficial del Estado 315 (1947): 6062 .

83 “(94) Sentencia del Tribunal Supremo, 4-2-1929,” Jurisprudencia (Madrid, 1930).

84 Taulet, Sociedades, 18.

85 “(78) Sentencia del Tribunal Supremo, 5-7-1940,” Jurisprudencia Civil (Madrid, 1941).

86 “(58) Sentencia del Tribunal Supremo, 18-2-1948,” Jurisprudencia Civil (Madrid, 1949); “(233) Sentencia del Tribunal Supremo, 19-6-1952,” Jurisprudencia Civil (Madrid, 1953).

87 Joaquín Garrigues, the head of the team that drafted the two laws, belonged to the group of intellectuals that supported the totalitarian and antiliberal doctrines prior to the Civil War. Martínez-Rodríguez, “Sin ley.”

The author thanks Timothy Guinnane for his invaluable cooperation. She is grateful for the helpful comments received from Salvador Almenar, Benito Arruñada, Luís Bertola, Ron Harris, Fernando Gómez-Pomar, Yadira González de Lara, Amanda Gregg, Naomi Lamoreaux, Angel Pascual Martínez, Javier Moreno, Craig Palsson, Jean-Laurent Rosenthal, Marivel Sáez, Mercedes Sánchez-Ruiz, three anonymous referees, and for the excellent advice of the journal editors. Previous versions of this work have been presented at the Annual Meeting of the Spanish Association of Law and Economics (Granada, 2013); the History of Law and Business Organizations, Harvard Business School (Boston, 2014); the Workshop on History, Law, and Business Organizations, University of Murcia (Murcia, 2015); the Seminar of Economic History and Master's Degree in Development, Institutions and Economic Integration, University of Valencia (Valencia, 2015). This research received financial support from the MacMillan Center at Yale University, the Programa de Movilidad Castillejo 2011 (Ministry of Education, Spain), the Fundación Séneca (Project 15147/PHCS/10), the Spanish Ministry of Economy and Finance (Project HAR2013-42013-R), and the Economic History Program at Yale University. Portions of this article draw on research conducted in collaboration with Timothy Guinnane. All errors are the author's.

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