Editor’s note: This article was first published in October 2010. The Spanish rules it describes, including the CNMV’s 50-member limit, registration with the stock exchange governing company, tax office filings and IRPF taxation, reflect that time and may have changed.
With this business idea we finally bring together our entrepreneurial spirit and finance and investing. I’ve heard some people say that an investment club isn’t set up to make money but to learn how to invest. It’s crazy to think that, because a club is a way of generating money. Learning how to invest? Of course: as in any business, you learn new things every day and face new challenges.
Right, to set up an investment club or stock market club in Spain, we need to form a comunidad de bienes (a form of joint ownership between individuals), since it is an association of natural persons. Spain’s securities regulator, the Comisión Nacional del Mercado de Valores (CNMV), stipulates that an investment club must not have more than 50 members.
Steps to create your investment club
The steps are no different from those for creating any other kind of company, because we really are creating a company.
1. Form the comunidad de bienes. The advantages of the comunidad de bienes legal structure are several, the main one being that no initial capital is required. You’ll need to state the club’s purpose.
2. Register as such with the relevant stock exchange governing company (Sociedad Rectora de la Bolsa).
3. Choose a brokerage firm or securities agency to carry out your trades.
4. Draw up the articles of association, setting out the registered tax address, the management committee and the list of founding members and their stake in the club.
5. Submit the articles of association and the founding deed to a branch of the tax office (Hacienda), together with various forms they’ll ask you for.
As you can see, it’s just a matter of setting up a company, nothing more complicated than that.
See also: Probably the mother of all stock market investing mistakes
As for the taxation of an investment club, since it is a comunidad de bienes and an association of natural persons, its members are taxed individually through IRPF (Spain’s personal income tax).
The club must necessarily have:
- A general assembly
- A president
- A treasurer
- A secretary
Once the club is up and running (and it’s not a charity), look for ways to generate income, since among its advantages you’ll have information on the stock markets and the courses and seminars that will constantly be offered to all club members.
Further reading
- Profitable business idea: advertising sales representative
- Open your own financial education school
- You can be a successful businessperson
Featured image: cabezadeturco, CC BY-SA 2.0, via Flickr.
