Commercial law practice developments and trends in the Spanish market in 2024

We analyse the main developments and trends that we think will affect commercial law practice in the Spanish market in 2024.

This newsletter is a translation of the Spanish original that was published on 15 January 2024.

1. Emerging corporate issues affecting companies

During 2022 and 2023, various regulations were approved that developed corporate law that will affect companies in the coming months. These include the new regulations on structural modifications, the Create and Grow Law (which introduces various obligations, including ones relating to electronic invoicing), the Start-up Law and its implementing regulations on the accreditation of companies as “startups”, and the royal decree creating the Central Register of Beneficial Ownership and approving its regulation.

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2. Restructuring and special situations

The restructuring plans that Law 16/2022 of 5 September introduced began to be used in 2023. Several highly significant court rulings have also been handed down that will undoubtedly shed light on how this mechanism should be interpreted and used. The coming year looks set to be the year in which this tool becomes the ideal debt restructuring formula.

Likewise, the accounting moratorium will continue to apply in 2024. Under the transitional regime in force, this will allow losses from the 2020 and 2021 financial years not to be taken into consideration when determining whether grounds for dissolution exist under article 363.1.e) of the Corporate Enterprises Law, until the financial year that begins in 2024 closes.

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3. Transport and mobility

The past decade’s wave of technological and organisational innovations, among other factors, have evolved the transport and mobility sector. The legal framework has been adapting to this new reality in parallel with these changes. We expect this trend to continue in 2024, as we expect to see important legislative and case law developments that will particularly affect rail transport, vehicle rental with a driver (VTC) and urban air mobility (drones).

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4. Digital law, cybersecurity and AI

The regulatory developments concerning digital matters that the EU has been ushering in 2022 and 2023 will continue in 2024, when rules that will have a significant impact for companies operating in the digital sphere are expected to be approved, such as the Artificial Intelligence Act and the Regulation on electronic identification and trust services for electronic transactions in the internal market (known as the eIDAS 2.0 Regulation), which are both in the final stages of the legislative process.

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5. Securities market

In 2024, trilogues will continue within the EU on the final text of the regulations included in the Listing Act Package initiative, which the EU is expected to approve this year. Spain is also expected to approve the regulatory development of the Securities Market and Investment Services Law (SMISL), which will regulate the extension of the takeover bid framework to MTFs and the law transposing Directive 2022/2464 as regards corporate sustainability reporting (or “CSRD”, on which you will find more details in section 11). The volume of equity trading is expected to recover, while the level of fixed income trading is expected to remain the same or increase. We also expect new takeover bids for listed companies.

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6. Energy

We expect M&A transactions for greenfield projects and project financing to resume in 2024. They were at a standstill until the administrative processing milestones for electricity generation facilities provided for in Royal Decree-Law 23/2020 were extended, which happened at the end of 2023 under Royal Decree-Law 8/2023. This extension will boost project construction and will presumably generate greater activity in the power purchase agreement (PPA) market to the extent that financiers request their execution in order to finance construction under certain conditions.

In the coming year, self-consumption business will continue to grow and the design of the EU electricity market is expected to progress, as is the implementation of renewable hydrogen. Developments in the capacity markets and the new planning of the electricity transmission grid will also need to be closely monitored.

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7. Health

This year will be key in shaping the regulatory framework for medicines and medical devices for the coming decades. The reform package of the EU pharmaceutical legislation, the most relevant and ambitious in recent decades, is currently in the pipeline and is being debated in the European institutions. With the new Government in place, the major reform of Spanish legislation governing medicines and healthcare products, a basic pillar of Spanish legislation in areas such as pricing, financing and market access, will be taken up again. The pharmaceutical, health and social healthcare sector continues to be an area of great interest for both industrial operators and financial investors, both national and international. The sector’s dynamics will continue to be transformed by digitalisation and the incorporation of big data and AI solutions, which will also lead to investment and collaboration agreements. And, as in all other sectors, environmental, social and corporate governance (ESG) issues are becoming increasingly important in both management and investment decisions.

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8. Financial regulation

This year is set to be vital for the transition to the new financial sector regulatory framework expected in the coming years. Major regulatory advances in sustainability and digital finance were accompanied in 2023 by significant progress in the regulation of retail investors and payments. In this regard, we expect regulations in these areas to be approved in the final months of 2024 and there to be a major push on cybersecurity regulation ahead of the entry into force of DORA in January 2025. In addition, at the local level, the Financial Ombudsman Authority is expected to be finally created.

It seems that the Banking Package will be approved this year. It is based on the European Commission’s proposal (CRDVI and CRRIII), which, among other issues, includes adapting the latest Basel III rules to the European Union, with numerous technical development mandates for the European Banking Authority, new rules on corporate governance and risk management, and new content for the prudential treatment of climate- and ESG-related risks, including a requirement to develop transition plans for banks.

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9. Real estate

The final quarter of 2023 seemed to hint at a somewhat less uncertain 2024. Reduced inflation and stable interest rates are what the market called for to stimulate investment.

In this context, the hotel and residential sectors will continue to lead the way in terms of number of transactions, especially build to rent, co-living and senior living transactions.

We expect 2024 to be similar in terms of the high number of transactions involving the logistics needs of large operators (e-commerce, food and last mile, among others) and infrastructure and technological macro-projects (the Madrid Barajas Airport expansion or the Volkswagen gigafactory in Valencia).

Finally, the trend in the coming months will also be marked by the increasingly important role of ESG practices. Analysing these practices, also from a legal and contractual point of view, has become essential when deciding whether to invest in the real estate sector.

With regard to the regulatory landscape, the Government has expressed its intention to amend the Housing Rights Law, which we referred to in the previous edition and which was finally approved in May 2023. The Government has also announced a new state law to regulate the tourist housing market.

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10. Servicers

Directive (EU) 2021/2167 of the European Parliament and of the Council of 24 November 2021 on Credit Managers and Credit Purchasers and amending Directives 2008/48/EC and 2014/17/EU is expected to be fully transposed into Spanish law in 2024. The transposition deadline expired on 31 December 2023.

The Directive lays the foundation for the legal framework applicable to purchasers and servicers, two of the main players in the market for the sale of non-performing loans (NPLs), whose importance in Spain has been noteworthy in recent years. Transposing the Directive therefore seems key for this market’s consolidation and central to keep financial institutions’ balance sheets as sound as possible.

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11. ESG

This will be the first year in which large companies will have to report sustainability information in accordance with the Corporate Sustainability Reporting Directive (CSRD), which will therefore start to be implemented in 2024. On the other hand, the Sustainability and Human Rights Due Diligence Directive (CSDD) is also expected to be passed, which will focus more on analysing and auditing companies’ processes, especially in relation to their value or supply chains. We also expect to see developments in greenwashing, diversity, equity and inclusion, European green bonds and using technology in the field of sustainability, among other things.

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12. Foreign Investment Control (FDI)

The long-awaited Royal Decree implementing the FDI framework in Spain was approved in July 2023. The new Royal Decree reduces the legal deadlines for resolution from six to three months and establishes a novel system of exemptions. Further developments are likely in 2024: the Ministry’s interpretative guide (in the form of a Q&A) is expected to be published to clarify the most dubious cases and, from a legislative point of view, the EU FDI Regulation, which establishes the common framework for the EU and which could force further amendments to the Spanish framework, is expected to be revised and amended. The transitional control framework for EU and EFTA investors should also expire, unless it is extended.

In addition, the provisions of the EU Foreign Subsidies Regulation that did not enter into force in 2023, relating to inspection and investigation powers, will enter into force in 2024.

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1. Emerging corporate issues affecting companies

1.1. New law on structural modifications

The new regulations on structural modifications approved by Royal Decree-Law 5/2023 of 28 June came into force on 29 July 2023. Once the initial doubts surrounding the transitional framework are resolved, in 2024 we will start to see the registration outcomes of structural modification transactions and, consequently, the consolidation of criteria regarding the doubts raised by the regulation, as well as greater contributions from scholars that will help clarify how to interpret this central rule of Spanish company law.

Many issues regarding the new structural modification regulations will have to be clarified in 2024. The most important are probably the following:

(1) Certificates of being up to date with social security and tax obligations. This is the most  contentious new feature of the new regulations. It seems to be consolidating the interpretation that only the certificates from the Spanish Tax Agency (Agencia Estatal de Administración Tributaria) will need to be obtained, as provided for in articles 72 and following of Royal Decree 1065/2007 of 27 July, rather than from all tax authorities  (i.e. local, regional and national tax authorities). It does not seem, however, that we will be seeing the more flexible and desirable interpretation of allowing transactions to go ahead even when the certificate is negative, although this could happen for companies in insolvency proceedings that are subject to a restructuring plan.

(2) Criteria for determining fraud in cross-border transactions. As is well known, the commercial registrars have been given the task of monitoring the legality of these transactions, not only as regards their compliance with Spain’s structural modification procedure, but also in the event of suspected abuse or fraud. It would be desirable for the commercial registrars to, in the coming months, publish a document setting out the criteria they will follow when doing this, given that the regulation is quite vague in this regard and thus causes some legal uncertainty. We trust that these criteria will be formulated bearing in mind the principle in article 83.2 of Royal Decree-Law 5/2023 that “these rules should be interpreted taking into account that freedom of establishment constitutes a fundamental principle of European Union law”.

(3) Interpreting the measures for simplifying structural modifications. Another of the main sources of uncertainty is the new regulation’s various simplification measures. It is true that some of the doubts in the previous text have been clarified, but others have not – because of how the new law is put together, structured and worded. These uncertainties include how the structural modification procedure (and in particular the rules applicable to employees) is affected by transactions being unanimously approved at a shareholder meeting at which all shareholders are present or represented (junta universal) (article 9), by directors’ reports for simplified transactions having to include (or not) a section on employees, or by division balance sheets needing to be drawn up for divisions that form a new company (segregaciones por creación).

The following are some of our recent publications on the subject:

1.2. Start-ups: accreditation of status

Law 28/2022 to foster the startup ecosystem in Spain – also known as the Start-up Law – establishes a regulatory framework to support the creation and growth of startups.

In order to benefit from the measures in the Start-up Law, companies must be accredited and registered as a startup. Accreditation is granted by the Empresa Nacional de Innovación SME, S.A. (“ENISA”), who confirms that companies meet the requirements.

Order PCM/825/2023 of 20 July regulates the criteria and procedure for accrediting a company as a startup.

To accredit a company as a startup, ENISA assesses, among others, the following criteria: (i) how innovative the project is; (ii) how attractive it is for the market; (iii) the company’s life cycle stage; (iv) the business model used; and (v) competition in the company’s sector. The company’s annual turnover must not exceed EUR 10 million and 60% of its workforce must be employed in Spain.

If ENISA accredits a company as a startup, it will be registered as such with the Commercial Registry or the Registry of Cooperatives, at which point it will be eligible for the benefits listed in the Start-up Law.

Since this accreditation process was launched in July 2023, more than 500 companies have been registered as startups and are already benefitting from the tax and employment benefits granted by law, and more than 1,000 have applied to be accredited.

1.3. Electronic invoicing

Among other regulations, Law 18/2022 of 28 December on the creation and growth of companies (or the “Create and Grow Law”) imposes the obligation on companies and professionals to issue, send and receive electronic invoices in all their transactions with other companies and professionals.

The implementing regulations are expected to be approved at the beginning of the year, after which the deadlines for companies and professionals to start complying with this obligation will begin to run (which means that these obligations will probably not be enforceable until 2025).

1.4. Central Register of Beneficial Ownership

Royal Decree 609/2023 of 11 July, which created the Central Registry of Beneficial Ownership (“CRBO”) and approved its regulation, entered into force on 19 September 2023.

The CRBO is a single, centralised, electronic register – managed by the Ministry of Justice – that gathers information on beneficial ownership (i.e. the ultimate controlling person or entity) from the various public registers, as well as that obtained by the General Council of Notaries and the Commercial Registries regarding the following:

(1) Spanish legal persons and entities or structures without legal personality whose effective place of management or main activity is in Spain, or that are administered or managed by persons resident or established in Spain; and

(2) entities or structures without legal personality that are not administered or managed from Spain or another EU Member State, nor registered in another EU Member State, and that intend to establish business relations, carry out occasional transactions or acquire real estate in Spain.

The public and commercial registries must send the information or otherwise make it available to the CRBO by no later than 19 June 2024. After that, they must keep the information up to date on a daily basis.

As regards corporate enterprises (sociedades de capital), note that their directors must keep the CRBO updated. If they do not, their registration sheet will be closed per article 378 of the Commercial Registry Regulations.

To keep the CRBO updated, directors of commercial entities (sociedades mercantiles) are subject to the following obligations:

(1) If the information the CRBO is provided from registries or databases does not include everything the regulation requires, the relevant company’s management body must have submitted that missing information electronically by 19 November 2023 by means of a supplementary declaration.

(2)  They must make an annual declaration when filing the company’s annual accounts.

(3) Whenever any change in the beneficial ownership occurs, they must update the information within – at the latest – ten days of learning of the change.

Until such time as an ad hoc form is approved or another procedure is made available, most registries accept the use of the IURE application (Registrars Association Reporting Template) for making the appropriate declarations.

Associations, foundations and other entities and structures have similar obligations, although the formalities for compliance vary depending on the type of entity or structure.

Since 19 October 2023, the information in the CRBO can already be consulted by the authorities provided for in the regulations, by the parties subject to Law 10/2010 on the prevention of money laundering and terrorist financing, and by any person or organisation that proves to have a legitimate interest in knowing the information.

The following are some of our recent publications on the subject:

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2. Restructuring and special situations

The plans have proven to be effective and useful as a restructuring tool for takeover by creditors by capitalising their debt. In some cases, this has been non-consensual (Celsa) and, in others, consensual, as the debtor and the majority of the financial creditors have been able to reach an agreement (Pronovias and Food Delivery Brands/Telepizza).

In the past year we have seen examples of restructuring plans involving hive-downs (Ezentis), resolutions that addressed the problems of competing plans (Single Home), plans that only aimed at the capitalisation of shareholder credits (Aldesa) and some very significant resolutions that provided interpretative criteria regarding class issues (notably, Xeldist).

If 2023 was the year in which the restructuring plans were launched, 2024 – once their effectiveness has been sufficiently tested – should be the year in which they are more widely used to address the foreseeable need to restructure the financial debt of certain institutions as a result of rising interest rates.

Finally, in 2024, the transitional regime of the accounting moratorium declared during the pandemic, which was last amended by Royal Decree-Law 20/2022 of 27 December, will continue to have an important impact. Under this transitional regime, losses from the 2020 and 2021 financial years will not be taken into consideration when determining whether grounds for dissolution exist under article 363.1.e) of the Corporate Enterprises Law, until the financial year that begins in 2024 closes.

If, excluding the 2020 and 2021 losses, the company records losses in 2023 and fulfils the aforementioned grounds for dissolution, the directors must call a general meeting to dissolve the company within two months of the end of the financial year (i.e. by the end of February 2024, for financial years ending in December), unless the share capital is sufficiently increased or reduced. Any shareholder may also request that a general meeting be called within this period for this reason.

The following are some of our recent publications on the subject:

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3. Transport and mobility

The transport and mobility sector is constantly evolving. The last decade has been marked by the emergence of technological and organisational innovations, the development of last-mile delivery, the liberalisation of rail transport and the rise of new forms of urban mobility.

As these changes happen, the applicable regulations are being updated, which, together with case law, are adapting the rights and obligations of operators and users to this new economic and operational reality.

And 2024 is not expected to be any different. After numerous legislative proposals were halted in 2023 due to the various electoral processes, important legislative and case law developments are expected to affect the different methods of transport and their respective infrastructure.

1. Railway. The Luxembourg Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Railway Rolling Stock adopted on 23 February 2007 will enter into force on 8 March 2024.
   This Protocol brings railway rolling stock within the scope of application of the Cape Town Convention on International Interests in Mobile Equipment adopted on 16 November 2001 – thus following the precedent of the aeronautical protocol on aircraft and aircraft engines. Its objective is clear: to improve legal certainty (through a new institution) and to establish a legal framework for international interests and a new international registry based in Luxembourg. Ultimately, the aim is to facilitate access to financing and reduce financial costs for railway operators.
2. Vehicle rental with a driver (VTC). Royal Decree-Law 13/2018 introduced, subject to some provisional aspects, a limitation on the scope of VTC authorisations, restricting them to inter-urban journeys. Regarding urban areas, the autonomous regions and municipalities were given the option to approve specific regulations on the matter and thus require an additional authorisation for these journeys.
   Looking ahead, important legislative developments are expected in 2024 in two of the autonomous regions with the highest number of VTC licences:
   1. A regulation is expected to come into force in Madrid that will regulate essential aspects for operators, such as the requirements for obtaining and maintaining “autonomous” (urban) authorisations, as well as the conditions that drivers and vehicles need to meet.
   2. In Catalonia, Decree Law 9/2022 created a new “autonomous” authorisation for urban journeys, which is limited to two years and subject to an additional two-year extension if, at that point, a regulation that comprehensively regulates taxi and VTC services has not yet been approved. The Government of Catalonia is currently working on a regulation so we will have to keep an eye on how this initiative develops in 2024.
      On the other hand, on 8 June 2023, the Court of Justice of the European Union handed down its ruling in Prestige and Limousine (C-50/21). It found that the so-called “1/30 ratio” in force in the Metropolitan Area of Barcelona, whereby there must be a ratio of one VTC authorisation for every 30 taxi licences, is contrary to EU law. It is now up to the High Court of Justice of Catalonia to rule on the merits of the case and, therefore, on whether the “1/30 ratio” complies with the law.
3. UAS (drones) and U-Space. European regulations on unmanned aircraft systems (“UAS”) and their airspace (“U-Space”) are constantly being updated and developed, in response to each milestone in technological innovation and new operational safety challenges.
   Significant developments in the sector are expected in 2024, as the transitional period of Implementing Regulation 2019/947 ended on 1 January 2024. Consequently, UAS operating in the open (low-risk) and specific (medium-risk) categories, with certain very specific exceptions, will have to comply with the requirements laid down in Regulation 2019/947.

We will also need to follow closely whether the Ministry of Transport and Sustainable Mobility pushes on with the Draft Royal Decree on UAS, the processing of which began in 2020 and which aims to adapt the current national regulations (Royal Decree 1036/2017) to the aforementioned European provisions.

The following are some of our recent publications on the subject:

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4. Digital law, cybersecurity and AI

The AI Act will be a key element in Europe’s technological and digital strategy. It will apply to the European business community both when implementing AI tools in their businesses and when developing or marketing solutions using this technology. The AI Act establishes different requirements and obligations depending, essentially, on the risks the tool in question generates. After intense negotiations and much expectation from the public and private sectors, the trilogues on the AI Act concluded on 9 December 2023 with a political agreement between the Council of the European Union and the European Parliament, although the EU co-legislators still have to sign off on the final text . Once it is published in the Official Journal of the EU, the AI Act will apply two years after it enters into force (i.e. in 2026), except for some specific articles such as those on prohibitions (applicable after six months) and on general-purpose AI systems (applicable after 12 months).

The eiDAS 2.0 Regulation will be an essential legislative instrument in the creation of a European electronic identity and enhancing legal certainty in the digital environment. This regulation is also awaiting formal adoption by the Council of the European Union and the European Parliament following the political agreement reached on 8 November 2023.

In terms of data protection, five years after the General Data Protection Regulation (GDPR) entered into force, the GDPR’s first proposal for procedural reform saw the light of day in 2023. The proposal, which began its journey through the EU legislative process in July, aims to promote close cooperation between the various data protection authorities of the Member States and the European Data Protection Supervisor in cross-border cases.

Some other important regulations for the digital sector, such as the Data Actand the Regulation on markets in crypto-assets (MiCA) were also finally approved in 2023. The Data Law, approved on 13 December 2023, is a key measure for making more data available for use in the EU and will apply from December 2025, except for some provisions that will apply from September 2026. Similarly, MiCA, adopted in June 2023, will apply from 30 December 2024, except for some provisions that have been brought forward to June 2023 and June 2024. Section 5 provides further details on MiCA.

In addition, certain rules on digital matters approved in 2022 are yet to become fully applicable, such as the Digital Services Regulation (DSA). The DSA, which was approved on 19 October 2022, will be fully applicable as from 17 February 2024, although important obligations such as transparency of information, auditing and access to data already apply.

These are just some of the rules envisaged for the digital sphere. Note also that some even create specific supervisory authorities in each Member State, as is the case with the recently created Spanish Agency for the Supervision of Artificial Intelligence (AESIA).

In summary, in 2024 companies operating in the EU will have to continue and enhance their efforts to adapt and comply with the numerous (and sometimes complex) obligations imposed by, among others, the regulations described above, and will have to be particularly vigilant as to each of those regulations’ gradual implementation. The European regulatory framework governing digital matters is becoming more complex and sophisticated by the year, and companies will have to make additional efforts to remain in compliance.

The following are some of our recent publications on the subject:

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5. Securities market

As part of the regulatory development of the SMISL, Royal Decree 814/2023 on financial instruments, admission to trading, registration of negotiable securities and market infrastructures was enacted in 2023, bringing together all the previous regulations on the subject and simplifying the supervision of issues and admissions to trading on regulated securities markets that, in the case of fixed income, was completed by Circular 1/2023 for the admission and exclusion of securities on the AIAF fixed income market. Anticipating the entry into force of MiCA in 2024, the SMISL’s scope has been extended to any cryptoasset that is considered a financial instrument, including those represented by distributed registration technologies, and classifies breaches of MiCA as very serious or serious, emulating its system of sanctions and providing the CNMV with the necessary powers to ensure compliance.

In terms of sustainability, the European Green Bond Regulation, which came into force on 20 December 2023, is the standout in the European sphere. The regulation seeks to standardise, in line with the EU taxonomy, the framework applicable to instruments marketed under the European green bond label and a series of voluntary transparency requirements for other varieties of bonds marketed as environmentally sustainable and linked to sustainability. We are also waiting for Directive 2022/2464 (CSRD, which is also covered section 11) to be transposed, the Preliminary Draft Law of which has already been submitted for public consultation. In accordance with the Directive, the new sustainability reporting obligations will apply to listed companies that are considered “large companies” as from the financial years starting on or after 1 January 2024. These companies will have to publish their sustainability reports for that financial year in 2025 with a level of detail comparable to that of financial reporting.

In the area of corporate governance, in 2023 the Spanish government approved the Draft Basic Law on equal representation and balanced presence of women and men, which transposes Directive 2022/2381 and requires listed companies to ensure that, by the second half of 2026, the under-represented sex represents at least 40% of the members of their board of directors. The CNMV also launched in 2023 the CNMV Stewardship Code, applicable from February 2026, aimed at institutional investors, asset managers and proxy advisor providers, to encourage their long-term involvement based on the “apply and explain” criterion, under which whoever decides to adhere must apply all the principles of the Code and explain how they do so.

A royal decree is expected to be approved in 2024 to develop the rules for takeover bids applicable to MTFs such as BME Growth – a market in which five takeover bids were launched in 2023 – and the Portfolio Stock Exchange. The final texts of the rules included in the legislative initiative known as the EU Listing Act Package, which we briefly previewed in our Analysis of developments and trends for 2023 in commercial law practice in the Iberian market, are expected to be approved in 2024.

There were no new listings on the continuous market in 2023 and, in general, there were few equity transactions. However, these transactions are expected to grow significantly in 2024, given the large number of projects currently underway. At the same time, fixed income transactions are expected to increase once interest rates stabilise and the market begins to discount a possible easing of monetary policy.

In addition, the intra-group cross-border merger of Ferrovial, S.A. with its subsidiary Ferrovial International SE and the latter’s admission to trading simultaneously on the Spanish stock exchanges and Euronext Amsterdam has drawn attention to this type of transaction. These transactions are governed by a regulation that includes important new features as a result of the enactment of the new Law on Structural Modifications (LSM section 1.1 covers the new LSM in more detail) and the SMISL, such as easing control over the legality of intra-EU cross-border transactions in the state of destination, the reference price in the shareholders’ right of withdrawal, the framework governing the protection of creditor rights and the recognition of the CNMV’s power to exempt an issuer from the obligation to make a takeover bid as a result of its shares being delisted from the Spanish stock exchanges when they are listed on another EU trading venue. Moreover, the appetite for investment in listed companies by acquiring significant shareholdings (such as that of STC in Telefónica) and takeover bids – six were launched in 2023 for five companies (half of them being partial takeover bids launched by significant shareholders or the company itself, and the others being takeover bids launched by private equity funds, including a competing takeover bid) – is expected to continue, despite the control framework for foreign direct investment by EU investors being extended until December 2024 in 2022.

Other important developments include the CNMV authorising two new MTFs in 2023: BME Scaleup and the Portfolio Stock Exchange, which are already in operation. These two new markets focus on making their access requirements more flexible than those of other markets, in order to expose a greater number of companies to capital markets.

Finally, it is expected that the Supreme Court’s dismissal of the appeal against the National High Court’s ruling rejecting the appeal lodged by the minority shareholders against the CNMV’s authorisation of World Confectionery Group S.à r.l.’s takeover bid over Natra – ‍and, consequently, that ruling becoming final – will continue to set the trend in other possible appeals against CNMV authorisations for other subsequent takeover bids, such as those lodged against the takeover bids of Lorca Telecom Bidco, S.A., for Masmovil, which is expected in 2024, and Siemens Energy Global GmbH & Co KG regarding Siemens Gamesa Renewable Energy, S.A.

The following are some of our recent publications on the subject:

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6. Energy

These growing self-consumption businesses, especially larger capacity installations linked to industrial customers will – also under Royal Decree-Law 8/2023 – benefit from the 10% capacity reserve at all transmission grid nodes to discharge their surplus.

On the other hand, the Council and the European Parliament are expected to formally adopt early this year the provisional agreement they reached in December 2023 to reform the design of the EU electricity market.

This year will also be key in relation to implementing renewable hydrogen as a vector of the energy transition, in terms of both its regulation and developing its infrastructures, which have been promoted and backed with public subsidies at both the European and local level. Defining and consolidating this technology at the national level will require to closely monitor: (i) the development of Parliament-approved delegated acts, (ii) the application of the RED III Directive, and (iii) how the National Integrated Energy and Climate Plan (PNIEC) 2023–30 is reviewed and updated. We should keep an eye on any potential European Hydrogen Bank subsidies.

In addition, capacity market developments should also be  monitored closely this year. Spain has laid the foundations for a new capacity mechanism that will be crucial for the security of supply and flexibility of the Spanish electricity system, as well as to consolidate the energy transition outlined in the PNIEC.

Finally, we should also monitor how the process for the new planning of the electricity transmission grid advances in 2024. In this regard, the Ministry for Ecological Transition and the Demographic Challenge announced at the end of 2023 the start of the procedure to design the planning of Electricity Horizon 2025–30. Ministerial Order 1375/2023 initiated the procedure, and interested parties are invited to submit their proposals to Red Eléctrica, as operator of the national electricity system. As the Government has stated, future planning will take into account the update to the National Integrated Energy and Climate Plan 2023–30, which has very ambitious targets for renewables, as well as hydrogen production and storage, in order to increase the economy’s electrification.

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7. Health

In April 2023, after a long wait, the package of proposals to reform the EU’s pharmaceutical legislation was finally published. The most controversial aspect is the modification of data exclusivity periods, which is the main incentive this legislation offers for innovation. The Commission’s proposal reduces these periods across the board and extends them only if companies fulfil certain conditions, linked to the objectives of accessibility and availability of medicines. Some sections of the European Parliament and private stakeholders have been very critical of the reform for its likely negative impact on investment decisions and the development of new medicines.

The Spanish reform of the regulation on medicines and healthcare products will address key aspects from an economic point of view, such as the criteria for financing new medicines, the reference price system (which involves generalised price reductions once the exclusivity periods expire), the system of contributions by the pharmaceutical industry to the National Health System and the guaranteed medicine supply, in a context in which supply problems are causing significant friction in the market.

We expect there to be a great deal of M&A activity in the pharmaceutical and healthcare sector. Production assets and new products and technologies at all stages of development will continue to attract interest, as will private healthcare operators, in a market that, despite multiple transactions in recent years, is still fragmented and has great growth and optimisation potential.

We also expect the heavy investment in the social healthcare sector to continue, due to opportunities for public-private partnerships in nursing home development and service provision.

Digitalisation will continue to transform the healthcare sector. AI, non-face-to-face care technologies and the potential for data exploitation, in a new regulatory context, shape a new environment that will presumably lead to regulatory developments. It also means that operators are entering markets in search of technological capabilities and solutions that they are not developing in house.

Finally, as in all other sectors, ESG aspects are becoming increasingly important in both management and investment decisions. In the health sector, this will have a bearing on, among others, initiatives on environmental impact and equity and on the development of and access to new treatments.

In 2023 the Uría Menéndez Health Group launched a new space to share information, opinions and reflections on legal issues of interest to the sector. You can access the UM Salud Notes here.

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8. Financial regulation

In 2023, the SMISL was approved and developed through, among others, Royal Decree 813/2023 of 8 November on the legal regime of investment services firms and other entities providing investment services and Royal Decree 816/2023 of 8 November amending the Regulation implementing Law 35/2003 of 4 November on Collective Investment Undertakings, approved by Royal Decree 1082/2012 of 13 July. These rules have implemented European rules, i.e. the Investment firms Directive’s prudential and financial requirements for investment services companies, or the “Quick Fix” product-governance and information obligations for clients, as well as the Delegated Directives (EU) 2021/1269 and 1270 in relation to integrating sustainability factors in product governance and UCITS, respectively, in order to reinforce investor protection and continue modernising financial markets.

Regarding the MiFID II-MiFIR package, the European Parliament will vote on 16 January 2024 on whether to amend the MiFID II Directive and MiFIR Directive in relation to the consolidated reporting system for instruments traded on multiple trading venues to remove barriers to implementation and improve transparency. But we highlight the European Commission’s Retail Investment Strategypackage introduced in May 2023, which aims to amend all regulations applicable to retail investors (i.e. MiFiD II, AIFMD, the UCITS Directive, Solvency II or IDD) in a single text, as well as the PRIIPs Regulation, in order to further protect investors and ensure that they receive transparent information. The package will introduce very ambitious modifications, such as the prohibition to charge a commission for reception and transmission of orders (RTOs) and execution activities, although the text is not yet final and may still change.

With regard to payments, significant progress towards Open Finance is expected in line with the package of proposals for the revision of payment services rules that the European Commission put forward in June 2023. On the one hand, PSD2 will be amended by a new directive, PSD3, and a new Payment Services Regulation, PSR, which mainly aim to strengthen user protection and improve data accessibility. In line with this objective, the package includes a proposal for a regulation on access to financial data, the Financial Data Access Regulation (FIDA), which will regulate how financial sector participants exchange and use customer data. The legislative procedure is expected to be developed in 2024 and the final texts adopted in the course of 2025.

In the area of cybersecurity, in order for financial institutions to prepare for the DORA Regulation to enter into force, a first package issued by the European Financial Supervisory Authorities (ESAs), containing three regulatory technical standards on (i) the ICT risk management framework, (ii) classification criteria for ICT-related incidents and (iii) services provided by third-party ICT providers, and an implementing technical standard to establish the reporting registry templates, will be approved on 17 January 2024. A second package of ESAs is also under consultation and will be adopted by the middle of the year. It contains four regulatory technical standards on (i) outsourcing critical functions, (ii) threat-based penetration testing, (iii) monitoring ICT providers and (iv) ICT-related incident reporting, which is an implementing technical standard included in the latest regulatory technical standards (RTS) on the subject regarding incidents, and two guidelines on cooperation between supervisors and ICT incident costs and losses.

In Spain, the much-debated Financial Ombudsman Service will become a reality this year. The new draft bill that the Ministry of Economy, Trade and Enterprise published will be processed urgently and is expected to be approved early in 2024. This will entail a major change in customer services and the system of complaints to financial institutions, fintechs and crypto-asset providers.

On the other hand, the negotiation of the new reform of the Bank Recovery and Resolution Directive and Deposit Guarantee Funds (the CMDI package) is expected to progress in 2024. The European Commission’s reform proposal includes significant changes to give European resolution authorities more flexibility to apply resolution tools, including changes to how deposits are ranked for insolvency purposes, and to make it easier to use the resources of deposit guarantee funds in resolution. The Commission also proposes making the public interest assessment more flexible when banks fail in order to broaden the subjective scope of bank resolution in the European Union. The crises affecting US banks (Silicon Valley Bank, Signature Bank and First Republic Bank) and Credit Suisse in March 2023 have further exposed the need to speed up the process of improving bank resolution rules.

In relation to banking supervision, the Single Supervisory Mechanism’s priorities are (i) making supervised banks more resilient to macro-financial and geopolitical shocks, particularly in the areas of credit, liquidity and interest rate risks, (ii) promptly tackling weaknesses in how climate-related financial risks are managed, especially in banking governance and data quality, and (iii) moving ahead with banks’ digital transformation and creating robust business-continuity frameworks.

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9. Real estate

The Housing Rights Law reform aims, among other things, to avoid the excessive use of seasonal contracts which, according to statistics, has significantly reduced the number of units available to rent as permanent housing. To this end, the Government intends to tighten the requirements for homeowners to rent their homes on a temporary basis. In line with what the Urban Leases Law already establishes, the Government intends to restrict this type of rent to specific activities or functions (e.g. student housing or housing for temporarily displaced workers).

With a view to alleviating the rental market, the Housing Ministry has announced that it is still working on defining the reference price index, one of the most important measures in the Housing Rights Law, which, to date, has not yet been done. This new index is necessary for the autonomous regions to set limits on rent (even though only Catalonia has expressed an interest in setting these limits).

The Government has also announced a new state law to regulate the tourist housing market. Although the autonomous regions have authority over this matter, the State intends to come up with a standardised basic regulatory framework for this type of housing.

In particular, it intends to make advertising this type of accommodation subject to specific requirements and to establish minimum standards in terms of habitability, facilities and services in order to protect the health and safety of both tenants and other residents.

In the absence of a basic framework, it is the courts who, through their rulings, are setting relatively important rules that need to be followed. Two recent rulings (November 2023) of the Civil Chamber of the Supreme Court are worth noting. They both recognise that owner associations in residential buildings have the right to prohibit landowners from using their flats for tourist rentals, as this is considered an economic activity (rather than just a residential one).

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10. Servicers

The objectives of Directive (EU) 2021/2167 of the European Parliament and of the Council of 24 November 2021 on credit managers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU (“Directive”) are (i) to create a robust, stable and transparent framework for purchasers; and (ii) to consolidate and unify the regulatory landscape of servicersacross the European Union.

The Directive clearly intends to remove regulatory barriers to purchasers in Member States in order to allow the free movement of capital and to encourage investment in NPL portfolios from entities based in a jurisdiction other than the country in which the claims comprising that portfolio were originated.

It also aims to unify the regulation of servicers, which to date have only been subject to national regulation and, in some cases, such as Spain, do not even have a specific framework. Transposing the Directive should give servicers their own regulatory status, who will then presumably be supervised by the Bank of Spain. Furthermore, once the Directive has been implemented, servicers authorised in a Member State will be able to provide cross-border services in other Member States directly or through a permanent establishment, without having to apply for authorisation in the Member State of destination.

In short, when transposing the Directive in 2024, the legislator should aim to consolidate the Spanish market for the sale of NPLs and make it safe and flexible enough to attract all types of investors, in particular, capital from other Member States, making it easier for credit institutions to clean up the balance sheets.

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11. ESG

Sustainability reporting (CSRD)

As mentioned in section 5, one of the rules that is expected to have a particularly significant impact this year is the application of the Corporate Sustainability Reporting Directive 2022/2464 (CSRD), which significantly changes how companies report their ESG practices and performance. The CSRD aims to put sustainability information on an equal footing with financial information in decision-making and to ensure that there is adequate and publicly available information on how environmental and social factors affect a company’s viability and profitability, as well as how companies affect people and the environment (“dual materiality” approach). This holistic approach requires a thorough and nuanced analysis of the risks and opportunities associated with sustainability. Companies must not only ensure that they comply with disclosure requirements, but also review and, often, transform their internal processes to effectively collect, verify and report data.

Spain has not yet transposed CSRD, which must be done by 6 July 2024. The draft transposing regulation may still change.

Companies reporting under the CSRD will have to use the European Sustainability Reporting Standards (ESRS) to determine what information their sustainability reports must contain, these standards being applied for the first time in 2024 (for sustainability reports published in 2025).

Furthermore, the European Financial Reporting Advisory Group (EFRAG) is expected to approve ESRS standards for unlisted SMEs in 2024, the application of which will be voluntary.

On the other hand, in terms of reporting, clarifying documents on when the Taxonomy Regulation applies in practice will probably be issued, as since 1 January 2024 the new taxonomy selection criteria (TSC) applies progressively to determining when an economic activity is to be considered to contribute substantially to the non-climate objectives of the EU taxonomy (biodiversity, pollution prevention, water and marine resources, and the circular economy). Companies should also take into account the CNMV’s recommendations on the subject (such as the Report on disclosures by listed companies on the European sustainability taxonomy).

The Sustainable Financial Disclosure Regulation (SFDR) is also expected to be amended in 2024. This could involve new social principal adverse impacts (PAI), new disclosures in relation to greenhouse gas (GHG) reduction targets, updates to the concept of DNSH (do no significant harm) for the environment and society; simplifying pre-contractual and periodic disclosure templates for financial products and other technical adjustments.

Due diligence (CSDD)

Another highlight in the ESG area is the likely approval of the Corporate Sustainability Due Diligence Directive (CSDD), which establishes obligations to integrate due diligence into corporate policies and obligations to detect, assess, prevent, mitigate and remedy adverse effects on human rights and the environment. These obligations apply not only to the company itself and its subsidiaries, but also to the entities in its value chain with which it has an established business relationship (whether or not they are in the EU).

The Directive will apply to large companies (by number of employees and turnover) based in the European Union, as well as non-EU companies with a net turnover in the EU above certain thresholds. Financial services are temporarily excluded from the scope of the Directive, although financial sector companies must implement a plan to achieve the Paris Agreement 1.5°C warming target, although other measures may be required subject to a comprehensive impact assessment.

Failure to comply with the Directive’s obligations may result in the imposition penalties (up to 5% of the undertaking’s net turnover). It also establishes a civil liability framework under which injured parties may claim compensation for damages within five years; it gives civil society entities broad legal standing; and limits legal costs and specific rules of evidence and injunctive relief.

Member States have two years to transpose the CSDD once it enters into force.

Diversity and inclusion

Regulatory developments on diversity and inclusion are also expected in 2024.

Among others, in relation to the Directive on gender balance on company boards of directors, which was passed in December 2022 and which must be transposed this year, as noted in section 5 above, the Draft Basic Law on equal representation and balanced presence of women and men has been published, which amends, among others, the Companies Law and the Securities Markets and Investment Services Law, and introduces new obligations on gender balance on, among others, boards of directors and senior management of listed companies, and public interest entities that exceed certain thresholds, although the final text may change during the parliamentary process.

On the other hand, the LGTBI protocol regulations have not yet been approved. Article 15 of Law 4/2023 of 28 February for the real and effective equality of trans people and to protect the rights of the LGTBI community, stipulates that, as of 2 March 2024, all companies with more than 50 employees must have an action protocol to deal with harassment or violence against the LGTBI community.

Greenwashing

As part of the fight against greenwashing, a directive on consumer empowerment and a Green Claims Directiveare expected to be adopted in 2024, which will further protect consumers against misleading advertising in relation to environmental claims. These regulations not only set out clear guidelines and prohibitions, but also impose a framework of civil actions and penalties for breaching companies. Once the text is adopted after the European Parliament and Council have reached an agreement, Member States will have 24 months to transpose the new rules.

We also expect (i) the Commission to adopt in the first quarter of 2024 the Regulation on Ecodesign of Sustainable Products, which sets ecodesign requirements for European products in order to make them more environmentally sustainable, and (ii) a new “Digital Product Passport” to be designed to help consumers and businesses make informed choices when purchasing products.

European green bonds

In terms of sustainable finance, as mentioned in section 5 above, Regulation (EU) 2023/2631 of the European Parliament and of the Council of 22 November 2023 on European green bonds and optional disclosure for bonds marketed as environmentally sustainable bonds and for sustainability-linked bonds (“European Green Bond Regulation”) will start to apply in December 2024. This regulation establishes a common framework for bond issuers wishing to use the European Green Bond designation for their environmentally sustainable bonds. It also regulates the information issuers have to disclose about such bonds and the verification requirements for this information, the relationship between the allocation of proceeds from such bonds and taxonomy, and the supervisory and sanctioning powers granted to the competent authorities (in Spain, the CNMV).

Other initiatives

With regard to climate change, in 2024, the Commission plans to make its proposal for a 2040 emission reduction target and will start implementing the EU ETS in the maritime sector and the CBAM, the Carbon Border Adjustment Mechanism, which from 2026 will require EU importers to pay a carbon tariff based on their CO2 emissions and will create incentives for non-EU producers to reduce their emissions.

Spain is expected to update the National Integrated Energy and Climate Plan 2021–30 (to be submitted to the European Commission) to reduce GHG emissions by 23% compared to 1990, which has already been released for public consultation.

New regulatory developments are also expected (most of which were suspended in 2023 due to the general elections) in the areas of circular economy, waste (draft law on preventing food loss and waste), packaging (with novelties relating to the tax on non-reusable plastic packaging), energy efficiency, biodiversity and sustainable mobility (draft law on sustainable mobility, mentioned in section 3).

Moreover, the EU is likely to introduce transparency requirements for ESG-rating and -scoring companies to ensure that they mitigate any conflicts of interest in their business models.

In addition, the European Securities Markets Authority (ESMA) issued a public statement on the forthcoming guidelines on fund names, which will be published in the second quarter of 2024 in line with the modifications to sectoral fund legislation, such as the UCITS Directive and the AIFM Directive.

Finally, other potential trends in 2024 include

• the demand for sustainability specialists (for the so-called green jobs) increasing and positions such as ESG controllerin financial departments or chief sustainability officer (CSO) becoming consolidated, while other traditional positions such as marketing, finance and human resources being redefined with a focus on sustainability, which highlights the  all-round integration of ESG principles in different areas of the company; and
• AI becoming a tool to enhance sustainability, specifically to (i) capture data for reporting and measurement in the value chain of companies and optimise processes and forecast the impact of sustainability strategies; (ii) manage climate-change-related risk, predicting extreme weather conditions, assessing how they can affect operations and help organisations prepare for and adapt to these contingencies; and (iii) innovate in terms of sustainable products and services (e.g. automated systems to optimise energy efficiency in buildings and factories).

The following are some of our recent publications on the subject:

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12. Foreign Investment Control (FDI)

The FDI framework is particularly relevant in M&A transactions: direct and indirect sales and purchases of Spanish companies and assets, issuance of equity and debt instruments, and even financings. This framework needs to be taken into account when drafting transaction documents and it affects the schedule between signing and closing. This subject matter is becoming increasingly complex and 2024 will be no exception.

In particular, in 2024 the Subdirectorate General for Foreign Investment is expected to publish interpretative guides to the Spanish regulations in the form of a Q&A document. We will also learn the outcome of the review of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 on the control of foreign direct investment in the Union – a reference framework for Member States’ rules on FDI controls – which will presumably lead to its amendment. This modification could in turn require amendments to the Spanish rules, as well as to those of the Member States which, where appropriate, are not in line with the new framework. In any event, the modifications are not expected to make the rules much less restrictive, the controls will probably remain as they currently are.

However, 2024 should be the last year investors who reside in the EU or EFTA (but outside Spain) are subject to FDI controls, as the transitional application of article 7 bis of Law 19/2003 to these investors expires on 31 December 2024, but we should keep an eye on any possible extension as this framework has already been extended twice.

On the other hand, most of the provisions of Regulation (EU) 2022/2560 of the European Parliament and of the Council on foreign subsidies that distort the internal market entered into force in 2023. This regulation introduces a new level of scrutiny and potential conditions for M&A transaction closing, apart from the merger control and FDI controls, and involves potentially having to notify the European Commission of transactions whose participants have received financial contributions from non-EU Member States that exceed certain thresholds. In 2024, the remaining provisions of the Regulation, which essentially relate to inspection and investigation powers, will enter into force. This is also when the first rulings and cases applying the new framework will presumably arise, which will provide further practical guidance on this rule’s impact on M&A transactions.

The following are some of our recent publications on the subject:

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