BANKING & FINANCIAL LAW
AMENDMENTS
TO THE REGULATIONS ON ISSUANCES AND PUBLIC OFFERINGS OF SECURITIES AND ON
ADMISSIONS TO LISTING OF SECURITIES IN SPANISH OFFICIAL SECONDARY MARKETS SET
FORTH IN ROYAL DECREE LAW 5/2005
1. MAIN
AMENDMENTS
2. ADMISSION TO
TRADING OF SECURITIES IN A SPANISH SECONDARY MARKET
2.1 Eligibility
requirements for the admission to trading
2.2 Registration
requirements for the admission to trading
2.3 Equity and
non-equity securities
2.4 Exceptions to
the duty to file documentation
2.5 Authority to
regulate
3. PUBLIC
OFFERINGS OF SECURITIES
3.1 Definition of
public offering
3.2 General
principles
3.3 Document filing
requirements for public offerings
3.4 Exemptions from
the obligation to publish a prospectus
4. THE PROSPECTUS
4.1 Competent
filing authority
4.2 Content of the
prospectus
4.3 Liability for
the content of the prospectus
4.4 Cross-border
validity of the prospectus
4.5 Precautionary
measures
5. FLEXIBILITY OF
THE ISSUANCE REGIME OF DEBT SECURITIES
6. AMENDMENT OF
THE REGIME ON SECURITIES REPRESENTATION BY BOOK ENTRIES
BANKING
& FINANCIAL LAW
AMENDMENTS
TO THE REGULATIONS ON ISSUANCES AND PUBLIC OFFERINGS OF SECURITIES AND ON
ADMISSIONS TO LISTING OF SECURITIES IN SPANISH OFFICIAL SECONDARY MARKETS SET
FORTH IN ROYAL DECREE LAW 5/2005
On 15 March 2005, Royal Decree Law
5/2005 of 11 March, on urgent reforms to encourage productivity and improve
public procurement (“RDL 5/2005”) came into force.
This note analyses the amendments to
the legal regime applicable to the issuances and offerings of securities and
to the admission to listing of
securities in Spanish official secondary markets, as provided in Chapter
I of Title I (“Reforms in the financial markets”) of RDL 5/2005.
RDL 5/2005 implements Directive
2003/71/EC of the European Parliament and of the Council, of 4 November 2003,
on the prospectus which must be published when securities are offered to the
public or admitted to trading, and which amends Directive 2001/34/EC (the
“Prospectus Directive”), redrafting Title III (“Securities Primary Market”)
of Law no. 24/1988, dated 28 July, on the Securities Market (the “SMA”).
Nevertheless, the implementation of the Prospectus Directive should be
completed with additional secondary implementing regulations. This should
take place in the upcoming months, bearing in mind that the term for
implementation expires on 30 June 2005.
In addition, in view of the fact that
the Prospectus Directive grants issuers of non-equity securities with a
nominal value equal to or higher than one thousand euros the possibility of
electing the competent authority, certain requirements contained in the
legislation currently in force have been removed for certain issuances of
debt securities. These requirements were justified neither from an investor
protection point of view nor from the point of view of the correct
functioning of the market, and have been eliminated to maintain the
competitive position of the Spanish Market and avoid the issuances being made
in other foreign markets.
1. MAIN
AMENDMENTS
The main amendments can be
outlined as follows:
• The requirement to
file a prior notification regarding public offerings of securities and admissions to
listing of securities in Spanish official secondary markets is removed.
• The number of cases
and the scope of the exemptions to the duty to register a prospectus in
relation to certain public offerings or sale of securities are widened.
• The requirements for
securities to be admitted to trading in Spanish official secondary markets
are systematically regulated.
• This is the first
time civil liability arising from mistakes or omissions in public offering or
admission to trading prospectuses is regulated.
• The formalities for
the granting a public deed, making official publications and recording with
the Commercial Registry of certain issuances of debt securities when the
transaction requires the publication of a prospectus, have now been removed.
2. ADMISSION TO
TRADING OF SECURITIES IN A SPANISH SECONDARY MARKET
2.1 Eligibility
requirements for the admission to trading
The new Article 25 of the SMA sets
forth the general eligibility requirements for admissions to trading in an
official secondary market:
• The issuer must be
validly incorporated under the laws of the country in which it has its
registered office and must be operating in accordance with its memorandum of
incorporation and its articles of association or equivalent documentation.
• The securities must
conform to the legal system to which they are subject.
• The securities must
be freely transferable.
2.2 Registration
requirements for the admission to trading
According to Article 26 of the SMA,
the admission to trading of securities in an official secondary market is
subject to the fulfilment of the following requirements:
• To submit and file
with the Spanish Securities Exchange Commission (the “CNMV”) the documents
evidencing that the issuer and the securities comply with their applicable
governing laws.
• To submit and file
with the CNMV the financial statements of the issuer prepared and audited in
accordance with the law which applies to the issuer.
2.3 Equity and
non-equity securities
The law introduces a new concept in
the Spanish legal system which is known as “equity securities” and derives
from the Prospectus Directive. Equity securities refers to shares and other
transferable securities which are equivalent to shares, as well as to any
other type of transferable securities which entitle its holders to acquire
any of the these securities through conversion or by exercising the rights
conferred by the relevant securities, with the condition that the securities
are issued by the issuer of the underlying shares or by an entity belonging
to the group of the said issuer. In turn, non-equity securities refer to all
securities other than the mentioned securities.
The regulations do not clarify whether
hybrid securities such as, for example, preferred capital securities
(“participaciones preferentes”) regulated by the Second Additional Provision
of Law 13/1985 of 25 May, or share quotas (“cuotas participativas”) in saving
banks, should be classified as equity or non-equity securities. This question
will need to be clarified by the regulatory authorities when applying the
law. In this regard, preliminary feedback indicates that the CNMV considers
that preferred capital securities should be classified as non-equity
securities.
2.4 Exceptions to the duty to file
documentation
The requirements set out above do not
apply to non-equity securities issued by the Spanish State, the Autonomous
Regions and local authorities.
Moreover, the Government is authorised
to allow for total or partial exemptions with regard to the fulfilment of the
requirements mentioned in section 2.1 and 2.2 above for the admission to trading of
certain securities according to (i) the nature of the issuer or the
securities, (ii) the amount of the admission or (iii) the nature or the
number of investors to which the referred securities are addressed. When the
exemptions are based on the nature of the investor, additional requirements
may be demanded to guarantee its correct identification.
In this regard, further
exemptions provided in the Prospectus Directive to the obligation to publish
a prospectus prior to admission to listing of securities will need to be
provided through the implementing regulations of the SMA. The exemptions
apply to shares (i) issued free of charge to existing
shareholders, (ii) issued as a result of stock splits or
reverse splits without changing the issuer’s share capital, (iii)
resulting from the conversion or exercise of the rights conferred by other
securities, such as convertible bonds or warrants, (iv) issued for existing
or former directors and employees of the issuer and its group, (v) issued in
connection with a merger or a takeover by means of an exchange offer, when a
document with equivalent information is available; and (vi) which together with the
shares issued by the issuer in the previous 12 months, do not represent more
than 10 per cent of the issuer’s share capital;
The lack of implementation in the
Spanish legal system of the exceptions to the obligation to draft a
prospectus prior to the admission to listing of the shares referred to above
will give rise to certain inefficiencies. This will be so until the
implementation through secondary regulations takes place in issuances of new
shares which, pursuant to the Prospectus Directive, would be totally exempt
from publication of an offer or listing prospectus. For example, an offer of
newly issued shares by a listed company on a non-preemptive basis to
qualified investors or to less than one hundred non-qualified investors
which, considering the transaction and any other capital increases conducted
by the issuer in the last twelve months, do not exceed ten percent of the
company’s share capital. However, as these exceptions have not been
implemented yet, in order for the shares to be admitted to trading, the
prospectus will have to registered.
2.5 Authority to regulate
The SMA provides authority to enact
secondary implementing regulations governing: (i) the procedure for admission
to listing of securities, which must facilitate the correct, organized and
efficient trading of securities; (ii) the conditions that must be fulfilled
for approval and publication of the prospectus by the CNMV; and (iii) the
period covered by the financial statements required to be filed to be
admitted to trading. If the CNMV does not issue a resolution regarding the
prospectus during the stipulated term, it will be understood that the
prospectus has been rejected.
3. PUBLIC
OFFERINGS OF SECURITIES
3.1 Definition of public offering
The new Article 30 bis defines a
public offering of securities as any communication made to persons by any
means which provides sufficient information about the terms and conditions of
the offer and the securities offered that allow an investor to decide on the
acquisition or subscription of these securities.
This is the first time that
Spanish law provides a definition of the term “public offering of
securities”. In the past, the implementing regulations of the SMA merely
established the objective scope of application of the rules on issuances and
public offerings of securities but failed to define the meaning. Moreover,
the new definition focuses only on communication and solicitation, therefore,
the fact that securities issued or offered are similar to other securities of
the same issuer listed in an organised market located in Spain is no longer
relevant for an offer to constitute a public offering of securities. We
believe that this is a positive improvement.
3.2 General principles
The new Article 25 of the SMA
establishes, as in the repealed wording, that issuances of securities shall
not require prior administrative authorisation, but goes further by removing
the previously existing exceptions to this principle.
In addition, as a general rule, it
shall not be possible to make a public offering of securities in the Spanish
territory without the prior publication of a prospectus duly approved by the
CNMV or, if applicable, by the competent authority of the Member State of the
issuer.
The SMA also establishes that the
issuer may choose any appropriate method in order to place the securities
being offered. In the event that the issuer has a duty to publish a
prospectus, the placement must comply with the conditions set forth in the
prospectus.
3.3 Document filing requirements
for public offerings
As a general rule, a public offering
of securities in Spain cannot be carried out without the prior publication of
a prospectus approved by the CNMV (or by the competent authority of the
Member State of the issuer, if applicable, which shall be recognized in Spain
-please see paragraph 4.4 below-) and without
the fulfilment of the remaining requirements referred to in sections 2.1 and 2.2 above, with any
adaptations and exemptions that may be set forth in the implementing
regulations. In particular, public offerings of securities may be exempt from
the requirement regarding the free transferability of securities.
The elimination of the prior
notification is an important development, as it used to be the initial
document of the approval process of every offer of securities subject to
registration with the CNMV. Whilst the new regime does not clarify the terms
in which publicity and pre-marketing activities can be conducted in relation
to registered offers prior to the approval of the prospectus, which in the
past were protected by the prior notification requirement, it seems
reasonable to interpret that the marketing activities may continue to be
performed, as long as they are carried out in a manner that they do not
appear to constitute an offering of securities.
3.4 Exemptions from the obligation
to publish a prospectus
The obligation to publish a prospectus
will not apply to the following types of offers, which will therefore not be
considered as public offers for the purposes of the law:
• offers of securities
addressed solely to qualified investors.
• offers of securities
addressed to less than one hundred natural or legal persons, other than
qualified investors, per Member State.
• offers of securities
addressed to investors who acquire securities for a total consideration of at
least EUR 50,000 per investor, for each separate offer.
• offers of securities
which denomination per unit is at least EUR 50,000.
• offers of securities
with a total consideration of less than EUR 2,500,000, which limit shall be
calculated over a period of 12 months.
The SMA does not define the concept of
qualified investor, which will therefore need to be regulated further through
secondary provisions, in accordance with the terms of the Prospectus
Directive. This Directive includes institutional investors, national and
regional governments, central banks, international and supranational
institutions, large enterprises and, at the choice of the Member States,
small and medium sized enterprises which meet certain criteria and which
expressly request to be considered as qualified investors.
In addition, the SMA provides that
further exemptions from the obligation to publish a prospectus will be set
forth in secondary implementing regulations, depending on (i) the nature of
the issuer or the securities, (ii) the amount of the offering or (iii) the
nature or the number of investors to which the referred securities are
addressed.
In connection with the preceding
paragraph, although it is not expressly indicated, from the wording of
section third of Article 30 bis it must be understood that public offerings
of securities exempted from the obligation to publish a prospectus are also
exempt from any other obligation to notify or file documentation with the
CNMV.
The new list of exceptions to the
obligations to register documentation with the CNMV provide a great deal more
of flexibility than the former regime as it will allow the conclusion of many
transactions, which used to be subject to filing with the CNMV, without
complying with any requirement. Some examples include issuances and offers of
securities addressed exclusively to qualified investors, including block
trades and accelerated book-built offers of shares, regardless of the
percentage of the share capital of the issuer which they represent.
The transitory regime of RDL 5/2005
does not clarify whether the full or partial exemptions from the obligation
to publish a prospectus and to file further documentation with the CNMV,
according to Royal Decree 291/1992, dated March 27, on issuances and public
offerings of securities (“RD 291/1992”) and which are not in contradiction
with the new exemptions (e.g., offers of securities to current and former
directors and employees of the issuer and its group) are still in force. This
will be clarified when the secondary implementing regulations of the SMA are
approved. In the absence of specific regulations in this regard, it seems
that the referred exemptions will continue being applicable in their terms
and with their current scope until the secondary implementing provisions of
the SMA are enacted. Therefore, employee offers which cannot rely on an
exception to the duty to register documentation according to the new set of
exceptions (because they target more than one hundred persons, have a nominal
amount of less than EUR 50,000 or are for a total consideration of more than
EUR 2,500,000) will only be subject to the obligation to file the supporting
documentation regarding the issuer and the securities offered with the CNMV.
4. THE PROSPECTUS
The SMA devotes several articles to
regulate the prospectus to be published in public offers and admissions to
trading of securities. The main features of the provisions on the prospectus
are the following:
4.1 Competent filing authority
As stated in section 2.3
above, the concept of equity and non-equity securities (set forth in the
Prospectus Directive) has been included in the SMA. However, the regulations
of the Prospectus Directive regarding the determination of the competent EU
authority to file the prospectus of the public offer or the admission to
trading, on the basis of the registered office of the issuer and the nature
of the securities offered or for which admission to trading is requested,
have not been implemented and should be regulated in secondary regulations
implementing the SMA. Meanwhile, we understand that the Spanish issuers of
securities will be able to choose the competent authority for the filing of
their prospectus between the different member states in which they wish to
make the offering or the admission to trading of each issuance of securities,
to the extent that the legislation of these member states so permits, and
regardless of the type of security issued.
4.2 Content of the prospectus
The new Article 27 of the SMA
regulates the content of the prospectus to be published in the event of a
public offer or a request for admission to trading of securities.
In this regard, Article 27 provides
that the prospectus will be executed by a person with sufficient authority to
bind the issuer of the securities and obtain all the information which,
according to the specific nature of the issuer and the securities offered, is
necessary for the investors to make an informed assessment of the assets and
liabilities, financial position, profit and loss, prospects of the issuer and
any guarantor, and of the rights inherent to these securities. This information will be presented in an easily
comprehensible manner.
The obligation to include a summary of
the prospectus, which will be introductory in nature, is a novelty. Until
now, this was only required in cases where the issuance and offers used
advertising materials (a document known as a legal triptych). The summary
must convey the essential characteristics and risks associated with the
issuer, any guarantor and the securities. It will also contain a caution that
(i) it is an introduction to the prospectus only, (ii) any decision to invest
in the securities should be based on an analysis of the prospectus by the
investor as a whole and (iii) there is no personal civil liability with
regard to the summary, except in the event that the summary is misleading,
inaccurate or inconsistent when read together with the other parts of the
prospectus.
In relation to the prospectus model to
be used, the Ministry of Economy and Treasury is entitled, through a
ministerial order, to set out the forms and regulate the content of the
different types of prospectuses, specify the exemptions of the obligation to
include certain information, determine which documents must be submitted with
the prospectus and establish the cases in which the information contained in
the prospectus can be incorporated by reference. However, as the prospectus
forms are already regulated under Regulation (EC) 809/2004 of the Commission,
of 29 April 2004, it is expected that the ministerial order will simply refer
to the mentioned Regulation in this regard. In addition, the working group
formed by the General Directorate of Treasury and Financial Policy, the CNMV
and the AIAF Market have recently published a document containing specimen
securities notes for bonds and mortgage-backed bonds (“cédulas
hipotecarias”), while it continues developing further specimen securities
notes for commercial paper and preferred capital securities.
Until the mentioned Ministerial Order
is approved, the Single Transitory Provision of RDL 5/2005 states that the
CNMV is entitled to approve and register those prospectuses which contents
conform to RD 291/1992 and its secondary implementing regulations, or to
Regulation (CE) 809/2004 of the Commission, of 29 April 2004. Although the
provision does not provide more details in this regard, the CNMV has stated
that the prospectuses which are registered during the provisional period in
accordance with the models contained in the current implementing regulations
of RD 291/1992, must be completed with an updated supplement adapted to the
forms contained in Regulation (CE) 809/2004, to maintain their effectiveness
after the entry into force of the new Ministerial Order.
As regards the language of
the prospectus, it is worth highlighting that the CNMV has recently announced
publicly its availability to commence registration of prospectuses drafted in
English. This will facilitate considerably the recognition of the prospectus
registered with the CNMV, without any need to translate it into the local
language, by the competent authorities of other European Union States where
the issuer plans to offer the securities or seek admission to listing thereof.
Finally, the CNMV has
likewise expressed its wish that in the future, the consolidated financial
statements of issuers of securities admitted for trading on Spanish official
secondary markets prepared under international financial reporting standards,
be eligible for use as an issuer registration document provided certain
additional information, which is being prepared by the Commission, is
included in the notes to financial statements such that they cover a content
similar to that of a registration document.
4.3 Liability for the content of
the prospectus
According to RDL 5/2005, liability for
the information contained in the prospectus lies with: (i) the issuer, (ii)
the offeror, (iii) the person requesting admission to trading in an official
secondary market, (iv) the directors of all the aforementioned parties, (v)
the guarantor, with respect to the information that this person prepares,
(vi) the lead manager, with respect to any verifications it may carry out,
and (vii) any other persons who assume liability for the content of the
prospectus, as long as this acceptance is contained in the prospectus, and
those persons who have authorised the content of the prospectus, all of which
shall be carried out in accordance with the secondary implementing
regulations. It should be noted that there is no mention of the joint global
coordinators of public offers of securities, which were given the same
treatment as lead managers for the purposes of prospectus liability by means
of the amendment made in 1998 to the RD 291/1992.
The prospectus must identify the
persons who are liable for the information contained therein with their name
and post, or, in the case of legal persons, their corporate names and
registered offices. These persons must declare that, to the best of their
knowledge, the information contained in the prospectus is in accordance with
the facts and that the prospectus makes no omission which could affect its
import.
Due to its importance, special mention
must be made to the fact that, in accordance with the Prospectus Directive,
civil liability for the content of the prospectus has been established for
the first time in Spain, which, up to now, did not have a specific regulation
and, in the opinion of scholars, stemmed from the general principles of tort.
In this regard, the persons liable for the information of the prospectus will
be liable for any damages caused to the holders of the securities acquired as
a result of any misleading information or omissions in the prospectus, in
accordance with the secondary implementing regulations. In connection with
the summary, no civil liability can be attributed to any person solely on the
basis of the summary, including any translation thereof, unless it is
misleading, inaccurate or inconsistent when read together with the other
parts of the prospectus.
Claims for this type of liability
expire within three years from the time the claimant could have been aware of
the misleading information or omission in the prospectus. This provision
deserves some criticism as it subjects issuers and offerors of securities to
considerable uncertainty. Firstly, because the reference date to calculate
the statute of limitation is uncertain, therefore to establish when the
claimant could have known the inaccuracies or omissions in the prospectus it
will be necessary to analyse this on a case by case basis. Since the statute
of limitation is linked to a period after the claimant could have become
aware of the errors in the prospectus, issuers and offerors of securities run
the risk of being sued for damages many years after the offer was made or
admission to listing was sought, which does not seem to be reasonable. A more
objective system where the statute of limitation is linked to a certain date,
such as the date of registration of the prospectus by the CNMV, would have
been more desirable. In this regard, a longer period (e.g., five years) could
have been established if it was deemed necessary to protect investors.
The new provision does not clarify
certain aspects which have been discussed at length by legal academics such
as, (i) the possibility for the investor to rescind the securities
subscription or purchase agreement, (ii) the issues that give rise to civil
liability (omissions or inaccuracies in the prospectus, damage, causal link
between the prospectus and the damage and negligence or wilful misconduct)
and any relevant assumptions and the distribution of the burden of proof
between the claimant and the person liable for the prospectus, or (iii) the
capacity of successive purchasers of the securities in the secondary markets
to seek compensation against the parties responsible for the issuance or
offering prospectus. Notwithstanding this, the regulatory implementation
which is pending offers a new opportunity to tackle this and other matters
that remain unresolved.
4.4 Cross-border
validity of the prospectus
The new regulation contains the
principle of mutual recognition of EU prospectuses enshrine by its reciprocal
nature. Thus, it is stated that the prospectus approved by the CNMV and any
supplements thereto will be valid in any host Member State, as long as the
CNMV notifies the competent authority of each host Member State in accordance
with the secondary implementing regulations. In turn, the prospectus approved
by the competent authority of the host Member State and any supplements
thereto, will be valid in Spain, provided that this competent authority
notifies the CNMV. In such a case, the CNMV will refrain from approving or
conducting any administrative procedures relating to the prospectus.
4.5 Precautionary
measures
The new Article 30 of the SMA states
that when Spain is a host Member State, the CNMV must inform the competent
authorities of the home Member State if it notices that the issuer or the
financial institutions in charge of the public offer has committed
irregularities or if it observes breaches of the issuer’s obligations
deriving from the admission to trading in a regulated market. In the event
that the issuer or the financial institution in charge of the public offer
continues to breach the relevant legal or regulatory provisions, despite the
measures taken by the competent authority of the home Member State or because
such measures prove inadequate, the CNMV, after informing the competent
authority of the home Member State, will take all the appropriate measures in
order to protect investors, immediately informing the European Commission of
these measures.
5. FLEXIBILITY
OF THE ISSUANCE REGIME OF DEBT SECURITIES
As indicated above, one of the most
significant novelties of the amendment of the SMA introduced by RDL 5/2005 is
the flexibility of the formal regime of the issuance of debt securities in
certain circumstances. Its aim is to considerably facilitate and speed up the
issuance of these types of securities and reduce the costs related to their
issuance, for the purpose of avoiding the migration of the issuers of these
types of securities to more favourable European jurisdictions.
For this reason, Article 30 ter of the
SMA establishes that its provisions will be applicable to the issuance of
debt securities (i.e., other than equity securities) which will be the
subject matter of a public offering or a trading in an official secondary
market and for which the preparation of a prospectus will be required in the
terms indicated above. The wording does not clarify if it refers to
prospectuses approved by the CNMV only or if it applies also to prospectuses
approved by the competent authorities of other European Union Member States.
Moreover, it establishes that its provisions will apply to the issuance of
bonds provided under Chapter X of the Spanish Public Limited Companies Law,
when the issuer is a listed company, and to the issuance of bonds provided
under Law no. 211/1964, dated December 24.
Pursuant to Article 30 ter SMA,
issuances regulated under this article do not require: (i) the execution of a
public deed; (ii) its recording with the Commercial Registry together with
any other acts related to such issuance; or (iii) its publication in the
“Official Commercial Registry Gazette” (“OCRG”). The reason to withdraw these
requirements is that the aim of disclosure of the issuance is satisfied by
the publicity regime provided under the law for issuances of securities which
require the filing of a prospectus. Moreover, the article provides that the
conditions of each issuance and the capacity of the issuer to formalize them,
when the conditions have not been regulated by law, will be subject to the
clauses contained in the issuer’s articles of association and will be
regulated by the contents of the issuance resolution and the prospectus.
Although the purpose of the regulation
is commendable, it can be criticised in that its wording is unclear. It seems
that it could be construed that the conditions listed in its first two
paragraphs are cumulative, so that the scope of application of the
regulation, in the case of public limited companies, would be limited to
listed companies. However, there is no reason to negatively discriminate
issuances of debt securities by non listed companies when they are equally
compelled to register a prospectus. In order to be entitled to the benefits
provided in the Second Additional Provision of Law 13/1985, on Equity of
Credit Institutions, listed companies which are not credit entities must
necessarily issue debt securities by means of a non listed public limited
subsidiary, which sole purpose is the issuance of these securities with the
guarantee of the parent company.
In that regard, the regulatory
authorities have recently expressed in public that this provision must be
interpreted in the sense that it permits the issue of debt securities by
public limited companies, whether listed or not, without regard to the
requirement to grant a public deed and other formal requirements associated
therewith, as long as the issue is subject to a prospectus approved by the
CNMV (and not by the authorities of other Member States), and that the
regulation will be amended soon to clarify the doubts raised by the current
drafting.
The foregoing facilitates the
incorporation in Spain of debt issuers, for example under Euro Medium Term
Notes programmes which, provided they register the base
prospectus with the CNMV, will be able to issue notes easily and quickly, without
having to grant a public deed or to comply with other requirements, in terms
analogous to those of other jurisdictions.
6. AMENDMENT OF
THE REGIME ON SECURITIES REPRESENTATION BY BOOK ENTRIES
The regime on securities
representation by book entries has also been modified. The representation of
securities by book entries will require the drafting of a document by the
issuer, which includes the necessary information to identify the securities
in the issuance. The incorporation of this document into a public deed will
be voluntary. Although it must be taken into account that for certain types
of securities (e.g., shares), the execution of the corresponding public deed
is still required as it is a company law requirement in order to be
registered with the Commercial Registry.
This document will be substituted by
(i) the prospectus, whenever the issuer is required to submit it for its
approval and filing by the CNMV, in accordance with the provisions of this
Law, or (ii) the publication of the characteristics of the issuance in the
corresponding official gazette, in the event of debt issuances made by the
State or the Autonomous Regions.
The issuer will file a copy of the
document with the entity in charge of the book entries registry and with the
CNMV. In the case of securities admitted to trading in an official secondary
market, a copy of the document will be filed with their managing bodies.
Finally, the preparation of this
document will not be necessary for the representation, by means of book
entries, of the financial instruments negotiated in the official secondary
markets of futures and options and in the remainder of cases, and with the
conditions set out in any secondary implementing regulations enacted.
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