jurisdiction

1. Are members of the armed forces permitted to hold shareholdings in private companies, including startups, provided that they do not participate in management?

Yes. Members of the armed forces may hold passive shareholdings in private companies, including startups, provided that:

  • the investment remains purely passive;
  • they do not perform services or carry out economic activities for the company;
  • they do not serve as directors or hold any management position;
  • the company does not create a conflict with their official duties; and
  • their shareholding does not exceed 10%.

More restrictive rules apply to personnel involved in procurement, contracting, decision-making or advisory functions relating to the relevant sector.

Personnel in the reserve are subject to less restrictive rules than active service members.

2. Is notification or approval required before acquiring a shareholding or establishing a company?

A passive shareholding within the permitted limits does not generally require prior authorisation.

However, establishing a company or carrying out a business activity is considered an economic activity and requires prior administrative authorisation. The same applies where the military member intends to undertake an active role in the business.

3. Are there any notable limitations, thresholds or conflict-of-interest rules?

Yes. Spanish law imposes a 10% shareholding threshold in certain circumstances and includes specific incompatibility and conflict-of-interest rules applicable to military personnel.

In addition, significant shareholdings held by members of the armed forces may affect a company's ability to participate in defence-related public procurement procedures or be awarded defence contracts.

The restrictions are particularly relevant where the military member has duties connected with procurement, contracting, reporting or decision-making relating to the company's activities.