1. Are there any governmental or regulatory approvals, reviews or filings required specifically by foreign buyers and, if so, please give brief details (such as relevant body/authority and timing requirements)?

Foreign investment in Spain is unrestricted except for investments in certain specific sectors, such as air transportation, radio and gambling where foreign investment is restricted (the most notable restriction being a 25% limit on foreign ownership of the share capital of the company concerned). Furthermore, the manufacture, marketing and distribution of weapons and explosives for civil use and activities related to national security require prior governmental authorisation, except in the case of companies engaged in any activity related to Spanish national defence that are listed. In such cases investment authorisation is required when foreign ownership exceeds 5% of the share capital of the company.

2. Are there any industry sector controls on investment?

Yes, there are industry sector controls applicable to foreign and national investors alike, that are applicable to certain type of businesses, including:

  • the acquisition of a stake equal to, or in excess of 10% of financial entities (including credit entities, insurance companies, brokers and broker dealers) require approval from the relevant financial regulator;
  • no individual or entity is entitled to hold, directly or indirectly, shares in more than one concessionaire of private television or representing more than 49% of the company’s share capital; and
  • any public entities or individuals, or any entities controlled by public entities or administrations which, directly or indirectly, acquire a significant shareholding (i.e., 3% of the share capital or of the voting rights of the target company) in entities carrying out activities at a national level in the energy markets (e.g., electricity generation and the hydrocarbon industry) shall not be entitled to exercise the voting rights corresponding to their shareholding, unless specially authorized to do so by a resolution of the relevant authorities.

 3. Are there merger control regulations and, if so, please give brief details (such as relevant body/authority and timing requirements)?

Takeovers in Spain may be subject to competition legislation at both a Spanish and European level.

European merger control is discussed in [**] of this Guide. If European merger control does not apply, Spanish merger control may apply if the transaction meets any of the two alternative legal thresholds set out in the Spanish Antitrust Law:

  • Market share threshold: The transaction entails the acquisition of a market share equal to, or higher than 30%. In relation to this market share threshold, there is a de minimis rule: the threshold would not be met if the joint market share of the parties resulting from the transaction is below 50%, and the target’s aggregate turnover in Spain is below EUR 10 million.
  • Turnover threshold: The global turnover in Spain for all the undertakings concerned in the previous accounting year exceeded EUR 240 million, provided that at least two of them achieved an individual turnover in Spain higher than EUR 60 million.

Under this regime, any transaction meeting any of the legal thresholds must be notified and authorized by the National Competition Commission (“NCC”) prior to its implementation. The merger control procedure formally begins by providing notification of the transaction to the NCC. Before the formal opening of the procedures, the parties are encouraged to initiate pre-notification discussions of the draft notification with NCC officials. This stage is not subject to any legal deadline. The submission of the notification opens the first phase of the procedure. From this date, the NCC has one month in which to decide whether the transaction should be cleared or if a more detailed assessment is required. If the transaction raises competition concerns, the NCC will open a second phase of the procedure in which to conduct further assessment. If a transaction proceeds to the second phase the NCC must reach a final decision within the two months following the decision to conduct a second phase analysis.

4. Are there any exchange control restrictions?

There are currently no exchange control restrictions in Spain.



What are the most common types of corporate legal entities established under the laws of your jurisdiction?

The most common form of business vehicles used by foreign companies are limited liability companies (sociedad de responsabilidad limitada or S.L.) or corporations (sociedad anónima or S.A.).

Corporations are often used for larger investments, when the possibility of becoming listed on the stock market is anticipated, or to comply with the investment requirements for certain regulated activities.



What are the principal sources of law and regulation applicable to M&A transactions in your jurisdiction? What are the principal issues dealt with in such laws and regulations in relation to M&A?

Companies Act (Ley de Sociedades de Capital)

The Companies Act applies to all companies domiciled in Spain. In relation to M&A transactions, the Companies Act is relevant in connection to a number of issues, including:

  • prohibitions against a company giving financial assistance for the purchase of its own shares (note that this prohibition extends to the shares of the parent (for corporations) and to the shares of any other entity of the group (for limited liability companies));
  • share capital increase and reduction and other amendments of the by-laws; and
  • requirements and restrictions applicable to the payment of dividends.

Business Companies Structural Amendments Act (Ley sobre Modificaciones Estructurales de las Sociedades Mercantiles)

The Business Companies Structural Amendments Act applies to all mercantile companies domiciled in Spain, whether listed or unlisted. This Act is relevant to M&A transactions in connection with a number of issues, including:

  • transformation;
  • mergers and spin-offs;
  • transfer of on going concerns;
  • transfer of the corporate domicile to another country; and
  • appraisal right (“derecho de separación”) granted to minority shareholders in certain cases (i.e., the right to sell their shares to the company at a certain price determined in accordance with the law).

Securities Market Act (Ley del Mercado de Valores)

The Securities Market Act sets out the rules of conduct that apply generally to participants in the Spanish securities market, regulating issues including:

  • disclosure obligations in respect of certain transactions concerning shares of listed companies in excess of certain thresholds (including acquisitions, transfer of voting rights, and equity swaps);
  • market abuse, such as insider dealing; and
  • disclosure of shareholders agreements.

It also sets out the regulation principles on takeover bids.

Royal Decree on takeovers (Real Decreto 1066/2007, de 27 de julio, sobre el régimen de las ofertas públicas de adquisición de valores)

The Royal Decree on takeovers (the “Royal Decree”) contains more detailed rules developing the principles set out in the Securities Market Act.

The Securities Market Act and the Royal Decree together prescribe certain requirements which are applicable when making mandatory offers. This legislation also contains procedural rules relating to both voluntary and compulsory tender offers. The rules are intended to protect minority shareholders, and also to ensure that offers are conducted fairly and transparently, with the minimum possible disruption to the securities market.

Spanish takeover regulation will govern all aspects of an offer if the target has its registered office in Spain and is admitted to trading on a regulated market in Spain. Specific rules apply to companies which meet only one of these two requirements.



1. What are the principal methods of acquisition?

The most common methods of acquiring a listed company are:

  • a takeover offer to purchase the shares of the target company; or
  • a merger under the Business Companies Structural Amendments Act.

This section focuses on the takeovers regime.

2. Are hostile bids permitted?


3. In what circumstances (if any) is a mandatory bid obligation incurred?

The person or entity that (acting individually or with other parties) obtains control of a listed company has the obligation to make a takeover bid for all the securities of the target at an “equitable price”.

The relevant control thresholds for purposes of takeover bids are the following:

  • direct or indirect acquisition of a percentage of voting rights in the listed company equal to, or in excess of 30%; or
  • holding any interest carrying less than 30% of voting rights but appointing, within 24 months following the acquisition, a number of directors which, together with those already appointed by the bidder, if any, represents more than one-half of the members of the board of directors.

Control of a listed company may be obtained in any of the following manners:

  • by means of the acquisition of shares or other securities that directly or indirectly carry voting rights in such company;
  • through shareholders’ agreements; or
  • as a result of indirect or unexpected takeovers.

Concert or concerted action is deemed to exist when two or more persons cooperate pursuant to an agreement (express, implicit, oral, or written) in order to obtain control of a listed company.

4. Is there a minimum price at which the offer must be made?

As a general rule, an offeror making a voluntary bid is free to offer whatever price it wishes.

Mandatory takeovers must be made at an “equitable price”, which may not be less than the highest price that the offeror or persons acting in concert with it have paid or agreed to pay for the same securities over the 12 months prior to the announcement of the bid.In the event that the offeror did not carry out any acquisitions in the 12 months prior to the announcement of the takeover bid, the equitable price may not be less than the price calculated pursuant to the valuation rules set out in the Royal Decree for de-listing offers. There are cases where the CNMV can modify the price calculated in accordance with the foregoing.

5. What are the key documents in a takeover bid?

Key documents in a takeover bid include:

  • Takeover notice: This is a notice given by the offeror, which starts the takeover process. It must be sent to the CNMV at the same time that it is disseminated by any other means and as soon as the event becomes known or the decision is adopted.
  • Request for authorisation of the takeover: This request must be submitted by the offeror to the CNMV and contain the main terms of the transaction. It must be accompanied by: (i) documents evidencing the adoption of the decision to make the takeover bid by the competent person or body; and (ii) the offer document.
  • Offer document: The offer document, which must be disseminated by the offeror, contains in summary:
    • information regarding the offeror and its group; a description of agreements regarding the bid between the offeror and the shareholders or directors of the target; information on securities of the target which are held by the offeror; information regarding transactions on securities of the target made by the offeror and persons acting in concert therewith over the 12 months preceding the announcement of the bid;
    • information regarding the securities which are subject to the bid, the consideration offered, the conditions to which the bid is subject, and the guarantees for and financing of the bid;
    • procedure for acceptance and settlement of the bid;
    • information regarding the purpose of the transaction, including strategic plans; and
    • information on authorisations required.
  • Target’s board report: This report must contain, among other matters: (i) the opinion of the members of the board of directors of the target regarding the bid, and the intention to accept or reject the bid by those that are direct or indirect holders of the affected securities; (ii) information on agreements between the target and the offeror, its management or shareholders, or between any of these and the members of the board of the target; and (iii) conflicts of interest affecting board members.

The report must be made public by the target itself, and must also be submitted to the CNMV and to the representatives of the employees of the target.

6. Do takeover documents require pre-approval by any regulatory body prior to publication?

Yes, the offer document and related documentation must be filed with and be authorised by the CNMV prior to their distribution to the public.

7. How long does a takeover take?

The timetable will depend on a number of factors, including whether the bid is mandatory or voluntary, whether the consideration is in cash or whether competing offers are made.

In a voluntary cash takeover bid without considering competing offers, key dates include:

  • D - 1 month: Announcement by the offeror of a firm intention to make an offer;
  • D: Submission of the request for authorisation of the bid;
  • D + 20: Authorisation of the bid by the CNMV;
  • D + 21: Public dissemination of the bid;
  • D + 22: Commencement of the acceptance period;
  • D + 32: Publication of the target’s board report;
  • D + 36 / 91[1]: Expiration of the period for acceptance of the bid;
  • D + 43 / 98: Disclosure of the result of the bid; and
  • D + 46 / 101: Settlement of the bid.



1. Is it common for the parties on private M&A transactions to enter into an “agreement” such as a Memorandum of Understanding (MOU), Letter of Intent (LOI), Termsheet, Framework Agreement or other? If so, to what extent (if any) do the parties generally endeavour to create legally binding obligations?

Yes, MOU or LOI are common in Spanish transactions.

MOU and LOI are generally deemed and intended to be non-binding documents. However, it is usual for MOU and LOI to include legally binding provisions typically dealing with confidentiality, exclusivity and break-up fees.

2. Does the execution of a non-binding LOI/MOU result in a duty for the parties to negotiate in good faith and, if so, what does this duty involve?

Yes; negotiating in good faith is a general principle of Spanish law to which the parties of a LOI/MOU are typically bound.

This duty will be breached by a party that unreasonably refuses to cooperate with the other to assess the transaction (for example by unreasonably withholding information) or that refuses to negotiate unless under conditions that may be deemed abusive or illegal.

3. Are lock-out / exclusivity agreements (meaning agreements by the seller not to (for example) negotiate or enter into an agreement with third parties) common on private M&A transactions?

Yes, time limited binding exclusivity agreements are common in private M&A transactions.

4. In connection with proposed acquisition of listed company, is it common for the bidder and target to enter into any preliminary agreement and, if so, what kind of issues are commonly dealt with?

Preliminary agreements between the target company and a potential bidder are possible and not unusual in the context of friendly acquisitions. These agreements may cover matters such as exclusivity undertakings from the target (that is, the agreement not to negotiate with any other potential offeror, nor to recommend a competing offer to its shareholders), standstill provisions (a clause preventing the offeror from acquiring shares of the target without the target’s consent for a specified period). A confidentiality obligation is a legal requirement where the target company grants access to information on the business to a potential offeror. In this situation, Spanish law provides that the recipient of the information must agree to keep the information confidential and use the information for the sole purposes of launching the tender offer. It should be noted that Spanish law requires that the target company should make the information available to any other offerors.

Agreements in preparation for a bid between the controlling shareholder of the target (and not the target itself) and the potential offeror are relatively common: irrevocable commitments under which the latter undertakes to make a takeover bid and the former to participate with its controlling interest.

5. Are there any regulatory constraints specifically aimed at payment of break fees (meaning payments from the buyer or seller to the other (or payments payable by the target company) if the deal does not proceed) on M&A transactions?

There are no regulatory constraints in relation to the payment of break-up fees in private company M&A transactions.

With regard to M&A for listed companies, the Royal Decree expressly allows for the possibility of the target and the first offeror agreeing on a break-up fee. The Royal Decree, which considers the break-up fee as a fee payable to the first offeror as compensation for the expenses incurred in preparing the bid in the event that its bid is not successful because competing offers having been made, subjects such agreements to four conditions: (i) that the fee does not exceed 1% of the total amount of the bid; (ii) that it is approved by the board of directors of the target; (iii) that a favourable report is obtained from the financial advisors of the target; and (iv) that it is described in the offer document.



What are the principal rights given by law to a person acquiring a non-controlling interest in a company?

The Companies Act contains a number of provisions designed to ensure that the principle of “majority rule” is not abused. For example, with regard to S.A.s:

  • Holders of 5% of the issued shares may request that the management body: (i) include items on the agenda of the general shareholders’ meeting; or (ii) call the shareholders’ meeting.
  • Regardless of whether or not it is included on the agenda of the relevant meeting, a shareholder may request that the general shareholders’ meeting decides upon whether a liability claim should be brought against a company director. Such a resolution is adopted by simple majority.

Holders of 5% of the issued shares may request that the directors call a general shareholders’ meeting to decide on whether to bring a liability claim against a company director. Furthermore, holders of 5% of the issued shares may jointly bring a liability claim against a corporate director to protect the corporate interest where: (i) the directors have not called the general shareholders’ meeting; (ii) the company has not filed the claim against the director within one month following the date on which the resolution to file a claim is adopted; or (iii) the general shareholders’ meeting decides not to file a claim against the company director.

Where a liability claim is brought by the company against a company director, the general shareholders’ meeting may at any time decide to reach a settlement or waive the claim, unless holders of 5% of the issued shares oppose such a measure.

  • Holders of 5% of the issued shares may challenge resolutions by the management body which are null or voidable.
  • Holders of 5% of the issued shares may make a request for an auditor to be appointed to audit the accounts of the company, when such measures are not compulsory.
  • Those amendments of the by-laws which impose new obligations on the shareholders require their consent. Further, those amendments of the by-laws which directly or indirectly affect the rights of certain classes or series of shares, or of part of the shares, must be passed not only by the general shareholders’ meeting, but also by the majority of the shareholders whose share are affected.
  • In certain cases (e.g., substitution of the corporate purpose), shareholders’ who have not voted in favour of the relevant resolution have an appraisal right.


1. Does a share acquisition trigger any statutory obligations for the buyer?

From a strictly legal perspective, the acquisition of a Spanish company’s shares does not trigger any statutory obligations, either for the buyer or for the seller, and will not affect the employer/employee relationship. However, in order to encourage a healthy working environment, it could be advisable for the employer to provide the employees with information regarding the change of ownership of the company.

2. What employee issues arise in connection with the transfer of an undertaking, business or part thereof?

Given that by law the transferee is subrogated to or “takes on” all the labour rights and obligations of the former employer (transferor) with respect to the affected employees, no employee issues arise in connection with the transfer of an undertaking, business or a part thereof. Hence, the main effect is the maintenance of all rights acquired by the employees, including pension rights. The mere occurrence of the transfer does not entitle the transferor or the affected employees to terminate their employment contracts.

Unless otherwise agreed in the collective bargaining agreement applicable to the transferred business, undertaking or part of a business or undertaking at the time of the transfer, such agreement will continue to be applied until the date of its expiry or until a new collective bargaining agreement enters into force.

Finally, the transferor and the transferee must provide the representatives of their employees involved in the transfer with certain information relating to the transfer (i.e., the expected date, the grounds for the transfer, and the measures to be adopted). If labour measures are to be adopted as a consequence of the transfer, a consultation period with the employee representatives must commence in relation to the proposed measures and the consequences for the affected employees.



Is there any legislation in your jurisdiction, the effect of which may result in liability of a purchaser of a business for the debts or obligations of the seller of the business?

Spain does not have a law specifically dealing with the transfer of on-going concerns. Whereas with regard to share transfers the purchaser is not liable for the obligations of the seller that are not specifically transferred, with regard to transfers of businesses, assets and liabilities there are specific cases where the purchaser will be liable for certain pre-transfer obligations of the seller, for instance in relation to labour, tax and environmental liabilities.

Further, with regard to spin-offs and transfers of on going concerns, pursuant to the Business Companies Structural Amendments Act a beneficiary or assignee may be liable in relation to liabilities transferred in the relevant transaction to other beneficiaries or assignees.



Please give examples of recent PRC M&A activity in your jurisdiction.

Most Chinese investments in Spain are green field and amount to relatively small representative offices or permanent establishments. Examples of Chinese companies currently established in Spain include COSCO, ZTE, Air China, Haier, Chint Group, ICBC and Huawei. Large projects have been announced, particularly involving the automotive sector (the regional Government of Catalunya signed an agreement with Brillance Auto to establish a potential manufacturing plant, while the Government of Navarra entered into another agreement with Foton to manufacture electric buses) but little has been finalised so far. An area that may have potential (public procurement) remains out of reach of Chinese companies as a result of the impending accession by China to the Global Procurement Agreement (a WTO agreement) -- until then Chinese bidders will need to show that Spanish companies have free access to Chinese public procurement (something that may be hard to prove in some sectors).

However, there is an increased Chinese interest in Spanish assets which is evident in sectors where Spain is a world player or has particular expertise, such as tourism (for example, in October 2011, HNA agreed to acquire 20% of the Spanish hotel group NH), telecommunications (China Unicom and the Telefónica group agreed an exchange of shares that will increase Telefonica’s stake in China Unicom to 9.7% and China Unicom’s holding in the Spanish group to 1.37%) and financial services (BBVA agreed to partner with China Development Bank in various areas of business outside China, particularly in Latin American countries). Other sectors also seem promising and are attracting the interest of Chinese investors, such as renewable energies (one of the top priorities of the latest China five year plan) and key infrastructure operations that need to be privatized (airports and water treatment, for example) or disposed of by big Spanish private operators in order to increase their liquidity. The acquisition of stakes in interesting industrial conglomerates that are disposed of by cash-strapped savings banks also appear to have appealed to Chinese investors.

Chinese investors have also been dealing with Spanish investors regarding their mature investment portfolio in Latin America. For example, in May 2010, State Gird acquired seven concessionaries of electricity transmission lines in Brazil from Spanish owners for USD 1.72 billion and, shortly afterwards, in October 2010, the oil company Sinopec acquired a 40% stake in its Brazilian subsidiary from Spanish oil company Repsol. We believe that this trend is set to continue in financial sector, as well as the energy and public infrastructure sectors.

[1]  For purposes of this timetable, the acceptance periods considered are of 15 and 70 calendar days, respectively.

Uría Menéndez is 600-lawyer international law firm with 16 offices around the world acknowledged as the leading firm in Spain, Portugal and Latin America.

Uría Menéndez Beijing Office, the first and only Iberian law firm in this city, is run by international lawyers with extensive experience in European and Latin American investments, finance, mergers and acquisitions. The focus of the Beijing office is to assist investors in the region with their outbound investments into Spain, Portugal and, particularly, Latin America, where the firm has five offices, an unparalleled transaction record and execution capabilities that have earned us a reputation for having the world’s best network in the region.

For further information, please contact:

In Beijing: Juan Martín Perrotto (, tel. +86 5965 0701

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In Portugal: Ana Sa Couto (, tel. + 35 1213583005

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