In order to comply with European regulations, the Spanish Government’s Ministry of E-Economic Affairs and Digital Transformation recently initiated a reform of the Securities Market and Investment Services Act. A legislative package has been put out for discussion, so that citizens and operators can comment and contribute to the proposal, which aims to adapt four EU directives into Spanish law and regenerate the functions of capital markets.
The proposal also includes three real development decrees relating to investment firms, financial instruments, the marketable securities registration regime, market infrastructures, and the supervisory powers of the National Securities Market Commission (CNMV).
The measures are aimed at improving the functioning of investment firms, incorporating solvency obligations specific to such companies, and establishing a prudential supervisory regime adapted to the investment business model, bearing in mind the principle of proportionality.
Current Spanish legislation is adapted to the European Market and Financial Instruments Directive (known as MIFID II). It is proposed to reform the Spanish Law on Capital Companies by adjusting the requirements and administrative obligations for investment services to promote the investment and recapitalisation of companies, which would ease financing demands and also ensure protection of investors’ interests.
Investor safeguards are also included in the reform of the Corporations Act for SPACs (Listed Companies with Purpose for Acquisition), whose IPO will be favoured with the new regulation. The objective of SPACs, which do not usually have a specific business plan, is to participate in mergers or acquisitions of other companies and go public to raise the capital. Thus, the sources of financing in SPACs which are growing (or in their early years of activity) also diversify their IBRO and reduce dependence on financing sourced from financial institutions. In order to protect investors, this new regulation will give security to the reimbursement of investments in such companies.
It is anticipated that the proposal will contribute to the promotion of investment in the real economy and the recapitalisation of companies, particularly as SPACs figure heavily on international stock exchanges.
In addition, following this adaptation of EU regulations and to regulations of countries around Spain, the process of issuing fixed income securities is also proposed to be simplified, and certain reporting obligations to market participants clearing and liquidating securities are eliminated.
It is estimated that these regulatory developments will improve competitiveness in Spanish capital markets and investment financing.
Auxadi will keep you updated with the progress of this legislation.
Local Knowledge – International Coverage
Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.