Changes to the corporate headquarters of large Catalan companies are continuing due to the ‘illegal’ declaration of unilateral independence. Hypothetical legal uncertainty has forced many of the large corporations and banks such as Sabadell and Caixa Bank, who have had their headquarters in Catalonia for decades, to move their legal headquarters to other parts of Spain.
These steps are having a large and diverse impact on public opinion, with the relocation of these top Catalan companies to the Spanish capital Madrid as well as other cities.
What is a business headquarters in legal terms?
The head office of a business can be likened to the home address of an individual. “It’s where you know you can find a legal entity” explains Pablo Garrido, an expert in business and corporate law at the UB. It allows, as necessary, for the business to be tracked down by the authorities, public institutions and regulators.
Can a business be located anywhere?
“The registered office must be either the administration centre or the place where the main business is located. It has to coincide with one of these two options as in Spanish law and there are no other options, says Garrido. Following this premise, in the case of a company that makes bricks, for example, the headquarters can be the main factory or their central administration offices.
For large companies, it is not acceptable to have “a 40 metre office, a telephone and an administrator”. It depends on the complexity of regulations, says Garrido. “There are no minimum requirements, but, in brief, it is based according to the size of the company”.
Why are there changes to headquarters now?
The possible declaration of unilateral independence in the Parliament can bring legal uncertainty. Companies must respond to their shareholders, so they must operate with the maximum possible security for the future. Caixa Bank put forward the argument for its relocation by stating “the priority of every financial institution to protect its customers, shareholders and employees, and to fully safeguard legal and regulatory security”.
Seeing the negative effect on the stock market, a message had to be sent to the markets. In the case of banking, the option was also activated after the first ‘panic’ withdrawals of deposits, with customers also alarmed by the uncertainty. That uncertainty was eliminated by moving outside of Catalonia and to have the address in other parts of Spain.
Does it affect facilities, buildings or employment?
There will be no physical moving of buildings or staff. The banks will remain in exactly the same place but will become more like the central offices. Regarding employment, companies that have moved their headquarters have made it clear that there will be no changes either. “This decision will not have any employment consequences”, explains Gas Natural, which has its registered office in Madrid.
But in the eyes of the law there are potential issues that could arise. “If these big companies do not want to be considered as fraudulent, by law they must be consistent with their decision and move their new centres of management and administration to the new venues” Garrido says.
How many times can a headquarters be changed?
It can be changed as many times as you want. The regulatory change that came into force at during this crisis makes it even easier, since it permits transfers without being approved by a shareholders’ meeting. This was the original main stumbling block Caixa Bank had when it wanted to act quickly.
Some of the Catalan companies that announced their changes of venue clarified their action by saying that it was a “temporary” decision in the face of uncertainty. It means they could still return to Catalonia, once the situation has stabilised.