How to modify the corporate purpose of a company

• In the business world, the ability to adapt is essential for business survival and growth.
• We tell you the steps to carry out the modification of the corporate purpose

On many occasions, companies find themselves at the crossroads of adjusting their strategic direction to respond to changes in the market or to explore new opportunities. One of the fundamental tools to carry out this type of adjustments is the modification of the company's corporate purpose.

But how is this process carried out? We tell you the essential steps to carry out the modification.

The importance of the corporate purpose

Before diving into the specific steps, it is important to understand the importance of the corporate purpose in a company's bylaws. It defines the economic activities in which the company is dedicated, both in the present and in the future.

It is often advisable to establish a corporate purpose broad enough to cover possible future lines of activity, thus avoiding costly modification procedures, since, in changing or emerging situations, adaptability becomes a necessity, and modifying the corporate purpose is becomes an imperative.

Steps to modify the corporate purpose

Meeting call

The first step is to call a meeting of partners or shareholders. At this meeting, the modification of the corporate purpose will be discussed and voted on. It is important and mandatory to follow the call, quorum and majority requirements established in the bylaws or in the Royal Legislative Decree 1/2010, of July 2, which approves the consolidated text of the Capital Companies Law.

Minute writing

Subsequently, a minute is drawn up that includes the agreement adopted by the general meeting. These minutes will include the new wording of the corporate purpose and will contain the signatures of the attendees.

Elevation to public deed

To grant legal validity to the agreement, it must be made into a public deed before a notary. The notary verifies that the agreement complies with the legal and regulatory requirements, drafting the deed with the new corporate purpose.

Commercial Registry

Once the public deed is obtained, the changes are formalized in the Commercial Registry. This step involves the publication of the modification of the corporate purpose in the Official Gazette of the Commercial Registry (BORME), ensuring its validity against third parties.

Communication to tax and labor entities

As a last step, it is essential to communicate the modification to the Tax Agency (model 036) and to Social Security (model TA7). To do this, the corresponding models are presented along with a copy of the public deed, ensuring the updating of tax and labor data.

Additional considerations to take into account

The modification of the corporate purpose is not without implications. Partners who voted against can exercise their right not to continue as partners, and the company is obliged to pay them the price of their shares. In addition, new associated costs are incurred, such as notarial, registration, taxes and, possibly, insurance and local conditions.

What if I am a startup?

Emerging companies or startup They are usually in a constant search for their optimal business model and must be prepared to pivot based on market demands.

The modification of the corporate purpose thus becomes an essential tool to quickly adapt to new opportunities or challenges. Although, as we mentioned previously, a broad corporate purpose is initially recommended to anticipate possible strategic changes, the reality of the startup It often involves the need to adjust and refine that initial approach.