Key aspects before incorporating a company

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I. Choosing the company structure

Selecting the legal form is one of the first and most decisive steps. It determines legal responsibilities, tax obligations, and management structure.

Common forms include limited liability companies, joint-stock companies and partnerships, each with different implications in terms of risk, fundraising capacity and flexibility.
The choice should align with the partners’ objectives and the applicable jurisdiction.

➤ For a detailed overview of the legal process, requirements and timelines, you can read Setting up a company in Andorra: steps, requirements and benefits.

II. Shareholders’ agreements and bylaws

Before incorporation, it is essential to draft a shareholders’ agreement or partners’ pact.
This complements the bylaws and regulates internal relations to prevent disputes.

Key clauses include:

• Voting rights and decision-making mechanisms to avoid deadlocks.
• Transfer and sale rights (drag along, tag along, pre-emption rights).
• Dividend policy, defining timing and criteria for profit distribution.

Clear agreements enhance transparency and long-term stability.

III. Funding and initial capital

The capital structure defines both balance and growth potential.
Partners should determine:

• Form of contributions (cash, assets or services).
• Ownership percentages and alignment with involvement.
• Future financing plans (investment rounds or capital increases).

A solid capital base ensures flexibility and financial health.

IV. Management and operations

The company’s governance structure should be defined from the outset:

• Executive roles such as administrator, director or board.
• Decision-making processes, distinguishing strategic from operational.
• Internal controls and reporting channels among partners.

Good governance reduces risk and promotes professional management.

V. Legal protection and intellectual property

Legal protection and safeguarding intellectual property are fundamental:

• Trademark, domain and patent registration.
• Contracts with employees, suppliers and clients, including NDAs.
• Regulatory compliance in labour, data protection and corporate law.

Preventive legal protection saves time and costs in the future.

VI. Tax planning

Proper tax planning optimises profitability and ensures compliance:

• Choosing the right jurisdiction and corporate structure.
• Compliance with international tax agreements.
• Dividend and reinvestment strategies within legal boundaries.

Tax strategy should evolve with business goals and market expansion.

➤ For a complete view of Andorra’s tax system and the advantages available to companies and shareholders, see Taxation in Andorra: advantages and obligations.

VII. Exit strategies

Partners should agree on clear exit mechanisms:

• Sale of shares or the company, with valuation and priority rules.
• Orderly liquidation, if dissolution is required.
• Transfer mechanisms to prevent deadlock situations.

Planning exits in advance provides security and continuity.

VIII. Dispute resolution

Disagreements are inevitable; they must be anticipated:

• Mediation or arbitration as primary dispute resolution methods.
• Forced exit clauses in case of serious breaches.

Predefined processes help maintain internal harmony.

Conclusion

Incorporating a company is not merely a legal formality, but a strategic decision.
Clarity in agreements, structure and tax planning determines the project’s strength.
Working with experienced legal and financial advisors ensures foresight, efficiency and long-term success.

📚 Related articles

• Tax residency in Andorra: requirements and real benefits — Explains the conditions for obtaining tax residency and its connection to business activity.
• Double taxation treaties and their practical application — How to avoid double taxation internationally and optimise the overall tax burden.
• Types of residence in Andorra: active, passive and fiscal — Key differences between the options and which profile best fits each case.

Last review date: October 2025.