I.- INTRODUCTION
On the 3rd of October 2014, the government approved the draft bill for the promotion of corporate finance. The purpose of this new draft bill is to improve financing channels for companies, especially small and medium companies (“SMEs”).
II.- CONTENTS
The following are the major new aspects introduced by this draft bill:
(1) Improvements in banking finance to SMEs
Advance notice:
The new regulation will set out the obligation of the credit entities to notify SMEs, in writing, at least 3 months in advance, of decisions to cancel or significantly reduce (by 35% or more) the financing flow which they had been allocated. The purpose of this notice is to facilitate SMEs with the necessary adjustment for rapidly redirecting their financial resources. Also SMEs will have the right to obtain information from banking entities concerning their financing position, payment history, bank statement, credit qualification, etc. and their credit qualification in accordance with the specified method for SMEs, which will be established by the Bank of Spain. This request should be attended to within 10 business days without any charge. In addition, SMEs may request such information whenever needed and without any restriction. Likewise, this request should be attended to within 15 business days, for a reduced fee.
(2) Legal framework for Credit Financial Institutions
Another aspect introduced by the draft bill is the regulation of Credit Financial Institutions (“EFC” according to the Spanish abbreviation), entities which have a role relevant to financing on consumption in Spain. EFCs ceased to be regarded as credit entities when European and domestic regulations on solvency entered into force, so it is necessary to set out a specific legal framework for them. The draft bill extends the scope of monitoring and solvency applied to the banks to the EFCs, which means these entities will be included within the perimeter of financial control and inspection.
(3) Legal framework for “securitization”
The draft bill reforms the legal framework for securitizations in order to simplify them and make them more transparent, providing them with the appropriate quality and reducing their dependence on the rating companies with respect to securities issued by securitization funds.
(4) Improvement in the access to and functions of the securities markets.
Alternative Stock Market:
In order to enhance the Alternative Stock Market (“MAB” according to the Spanish abbreviation), for companies whose growth and development requires them to be listed on the official market, the transition from MAB to the Stock market will be more flexible. During a 2 year transitional period, the interim management report is not required and companies will be allowed to not submit the second semi-annual report, which is not required by EU regulations. In addition, a capitalization threshold of 500 million euro will be set out, as a basis upon which those companies whose shares are listed on the MAB have to apply for admission to trading in a regulated market, so that they will be automatically bound to the corporate governance rules and other requirements for maintaining market transparency.
(5) Legal framework for participatory financing rules, “Crowdfunding”
The draft bill establishes a legal framework for internet platforms that promote participatory financing through loans or the issuance of stocks, debts or units of limited liability. The framework provides so-called “crowdfunding” in order to ensure the proper protection of investors and at the same time, to enhance this new tool for direct financing for business projects in their early stages.
(6) Reinforcement of the supervision capacity of the Spanish National Securities Market (“CNMV” according to the Spanish abbreviation).
The draft bill includes an amendment of the faculties of the CNMV in order to reinforce its functional independence and its competence as supervisor. CNMV will have more faculties for supervising, inspection and sanction, in the face of an increase in the activity in the financial markets. The CNMV may develop technical guidelines for applying regulations and will be a competent authority to authorize and revoke the entities which operate in securities markets, as well as for the application of sanctions.
III.- DATE OF ENFORCEMENT
The draft bill is in the process of parliamentary control. The new act will enter into force on the day following its publication in the official gazette.
Mika Otomo
Vilá Abogados
For more information, please contact:
10th of November 2014
