June 2010
COMMERCIAL
LAW
NEW ROYAL
DECREE 749/2010 OF 7 JUNE, WHICH AMENDS THE REGULATION OF LAW 35/2003 OF
4 NOVEMBER ON COLLECTIVE INVESTMENT SCHEMES, APPROVED BY ROYAL DECREE
1309/2005 OF 4 NOVEMBER, AND SEVERAL TAX REGULATIONS
Royal Decree 749/2010 (“RD 749/2010”)
came into force on 9 June amending Regulation of Law 35/2003 of 4
November on collective investment schemes (“RCIS”) in order to
overcome the effects of the financial crisis and to relax the legal
regime, three tax regulations to include traded companies in the tax
regime applicable to ETFs and the asset securitization funds regime.
The most significant amendments
introduced by RD 749/2010 are the following:
1. Commissions and
expenses borne by the collective investment scheme (“CIS”) and investors
· The management company of the
collective investment scheme (“MCCIS”) may now enter into
agreements with investors for the return of commissions, which
understanding must be included in the full prospectus of the CIS. It was
previously unclear whether rebates could be returned to investors since
this could be considered a breach of the general principle of equal
treatment of investors.
· The minimum period of linkage to the
MCCIS of the maximum net asset value reached when the system used to
allocate commissions on results is to allocate the management commission
to the fund is changed to three years.
· Management commissions accrued and
borne indirectly by investors of an investment fund when it invests in
other CIS managed by the same MCCIS will be calculated on the amount
effectively charged in relation to the assets invested in these CIS.
· Funds may bear trading commissions,
including the provision of investment analysis services. The regulation
aims to resolve the issue regarding financial analysis services
(original opinions that give investment ideas to managers - “soft
commissions”) being provided by brokers together with trading services.
2. Application of
the delegation regime of the asset management and management of the CIS
to investment companies that are not managed or represented by a MCCIS
3. Amendment to CIS
documentation
From now on, the entry into force of
the change of control of the MCCIS will not be dependant on the date on
which the prospectus is updated. Moreover, investors may exercise their
right of separation in the event of significant changes to the legal
documentation of the fund on any day of the month following the changes
and the shares will be reimbursed at their net asset value on the
exercise date of the right.
4. Improvements to
the winding-up and liquidation regime for investment funds
· Reimbursements requested by investors
and pending payment, which applicable net asset value refers to a date
prior to the publication of the winding-up agreement, shall qualify as
creditor balances of the fund.
· Prior to drafting the financial
statements, the liquidator may distribute the cash obtained as a result
of the sale of the securities and assets of the fund to all investors so
that they do not have to wait until the end to receive the amounts
invested.
5. More assets
eligible for investment of financial CIS
· Eligible deposits are extended to
include deposits in credit institutions with a registered office located
in a Member State of the OECD subject to prudent supervision.
· Investment in foreign private equity
companies similar to those set out in Law 25/2005 on private equity
companies and their management companies is now allowed. Previously,
only investment in Spanish private equity companies was allowed.
6. Risk
diversification of financial CIS
· The limit to the investment in assets
or financial instruments issued or guaranteed by the same issuer is
increased to 35%, which must be included in the prospectus and in all
marketing material of the CIS.
· A new investment limit is introduced
for shares of a CIS that another CIS may acquire and is set at 25% of
the circulated volume of shares held by the CIS which shares are to be
acquired.
· Specific assets eligible for
investment are excluded from the calculation of the 35% limit
established in article 38.6 of the RCIS.
7. Requirements for
the investment in derivative financial instruments
· A CIS which management is aimed at
obtaining a specific performance objective will not be subject to the
limit on premiums paid in the acquisition of options of 10% of the
assets of the CIS.
· Specific derivative instruments (volatility
or any other asset determined by the CNMV) are excluded from the
calculation of the exposure to market risk of the underlying asset
associated with the use of financial instruments for the purposes of
complying with diversification limits. This will not apply to a CIS
which investment policy is based on the investment in a single fund.
8. Marketing of
Spanish CIS in the EU
Increase of the 20% limit on investment
in assets or financial instruments issued or guaranteed by the same
issuer to 35% for a CIS which reproduces or replicates a specific stock
market index or a fixed income index, provided that it is justified on
the basis of exceptional market grounds.
9. Special
provisions applicable to hedge funds
The EUR 50,000 minimum subscription
requirement will not apply to investors that qualify as professional
investors under article 78 bis. 3 of Law 24/1988 of 28 July on the
Securities Market.
10. Investment rules
for hedge funds
The obligation of these CIS to invest
60% of their assets in hedge funds with a registered office, or with an
MCCIS with a registered office, located in an OECD country, now includes
CIS with a registered office, or with an MCCIS with a registered office
located in an EU Member State.
11. Creation of
special purpose CIS and subfunds (side pockets)
· In specific cases, provided that the
depositary is informed, an MCCIS or an investment company may split-off
the original CIS, transferring certain liquid assets to a new CIS or
subfund, subject to prior notification to the CNMV and publication of
the relevant fact.
· The transfer regime set out in Law
35/2003 will be applicable, but the transformation, merger and split-off
regime will not.
12. ETFs and
exchange traded investment companies
· Exchange traded investment companies
are now permitted, and will be included in the ETF regime. For this
purpose, Income Tax for Non-Residents, Personal Income Tax and Corporate
Income Tax are amended to remove the obligation to withhold or
distribute income on account in relation to that realised on the
transfer or reimbursement of shares in traded companies.
· Amendment of the requirements for the
admission of ETFs to trading on the stock exchange.
13. Real estate CIS
regime
· From now on, the main investment aim
of real estate CIS can be: (i) REITs, provided that they do not hold
shares or units of other real estate CIS and (ii) other real estate CIS,
provided that such CIS have not invested over 10% of their assets in
other real estate CIS.
· The limit for real estate investment
of real estate CIS is reduced from 90% to 80% of the total assets in
order to bring it into line with the REITs regime.
14. Amendments to
the general conditions for the delegation of asset management and
management of the CIS set out in article 68 in order to bring it into
line with the regime established in Royal Decree 217/2008
15. MCCIS are not
required to form part of FOGAIN (Fondo de Garantia de Inversiones)
when providing investment advice services
16. Application of
the rules of conduct of Royal Decree 217/2008 to MCCIS that market
shares and units of their managed CIS and of other CIS
