February 2015

Capital Markets


On 14 February 2015, Spain’s Official Gazette ("BOE") published an amendment to the Regulations of Law 35/2003 of 4 November on Collective Investment Schemes, approved by Royal Decree 1082/2012 of 13 July.

This amendment completed the transposition of Directive 2011/61/EU of the European Parliament and of the Council of 8 June on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010, harmonising regulation on managers of alternative investment funds in the European Union ("AIFMD"). The transposition process began with Law 22/2014 of 12 November on venture capital entities and other closed-ended collective investment schemes, which modifies Law 35/2003 of 4 November on Collective Investment Schemes.

The Directive affects management companies of non-harmonised collective investment schemes ("CIS"), that is, those not falling under the regime established by Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities ("UCITS"). In addition, new requirements are introduced for approving management companies and for marketing the CIS they manage. The new rules also establish with greater detail the standards of conduct to which they are subject, as well as the operational, organisational and transparency requirements they must meet, with a particular focus on risk management, liquidity management and management of conflicts of interest.

The transposition of the Directive also refers to other matters, such as: the additional information to be included in the prospectus of the non-harmonised CIS; the regular reporting that CIS management companies must provide to the National Securities Market Commission ("CNMV" for its Spanish initialism) on the markets and instruments in which they trade on behalf of alternative CIS managed by them and the limits to the investments in securitisations. The amendment also sets out the requirements to delegate the functions of management companies, the mandatory adjustment of management companies’ own resources to the minimum established by European regulations, and the requirements to incorporate appropriate and consistent procedures to accurately and independently evaluate the assets of the CIS.

Particularly worth noting are the regulations on remuneration policies and on the depositary that will apply to any type of management company and depositary, in line with the regulations in Directive AIFMD and Directive 2014/91/EU of the European Parliament and of the Council of 23 July amending Directive 2009/65/EC of the European Parliament and of the Council of 13 July ("UCITS V").

The Regulations contain a new title V which describes the substantial elements to define and regulate their functions and responsibilities.

Other novelties resulting from the evolution and development of the Spanish market have also been introduced, of which the following are particularly are of note:

Firstly, marketing of Spanish hedge funds ("IICIL") to qualified Spanish retail investors is allowed, provided that they subscribe a minimum of EUR 100,000 and acknowledge the corresponding risks inherent to such investment in writing.

Secondly, in line with recent regulatory reforms to promoting alternative business financing channels, various types of Spanish hedge funds are regulated to include the possibility of investing in bills, loans, commercial paper commonly used within the scope of business transactions and other similar assets, in financial assets linked to investment strategies with a timeframe exceeding one year and in derivatives, regardless of the nature of the underlying instrument. The active marketing of this type of hedge fund is exclusively limited to professionals.

Finally, specific provisions of the Regulations are adjusted modified to allow the possibility of using omnibus accounts, to modify the regime of assets in which UCITS can invest to include those accepted by the European Securities and Markets Authority, and the financial instruments and derivatives in which non-harmonised CIS (funds and investment companies) can invest are extended.

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The information contained in this Newsletter is of a general nature and does not constitute legal advice