1.1 Type of funds
1.3 Managers, trustees, and custodians
1.4 Investment restrictions
1.6 Accounts and prospectus
1.8 Fund ownership
1.9 Fund structure
1.10 Stock exchange
1.11 Anti-money laundering
1.12 Fund set-up
1.13 Foreign funds
1.14 Cross-border mergers
1.15 Master-feeder structures
1.16 Bearer shares
1.17 Use of internet
Spanish collective investment institutions (CIIs) may be organized as follows.
Financial CIIs which main purpose is the investment and management of financial assets by means of one of the following legal forms:
Non-financial CIIs which main purpose is the investment and management of real estate assets by means of one of the following legal forms:
To summarize, under Spanish Law, CIIs may be structured under one of the following legal forms:
|Spanish CIIS||Legal structure|
|Non-financial (real estate)||FII||SII|
This brochure, except as otherwise expressly indicated, will refer to financial CIIs, as they are the most common legal structures of collective investment in Spain.
The Spanish securities regulator is the Finance Ministry (Ministerio de Economía y Hacienda) which directly supervises the Spanish Securities Market Commission Comisión Nacional del Mercado de Valores (CNMV) as final responsible of the CIIs regulation.
Spanish CIIs are regulated, among others, by the following main provisions.
Management Companies: (Sociedades gestoras de instituciones de inversión colectiva (SGIIC/Management Company) are special corporations whose main corporate purpose is the administration, management and representation of CIIs. Likewise Management Companies may also be authorized to carry out the following activities:
In addition, when the Management Company is authorized to undertake the management of portfolios on a discretionally basis, it may also undertake the following complementary activities:
At this regard, Management Companies may, totally or partially, delegate to third parties the management of the CIIs’s assets.
Their corporate domicile and central administration must be located in Spain.
According to UCITS IV, a Management Company authorized in other EU Member State, may undertake in Spain, either by opening a branch or under the free provision of services regime, the activity for which it was authorized in its home country (Management Company Passport). The Management Company Passport covers all the activities for which the Management Company has been authorized in its Home Member State. Such authorization shall be valid in all Member States. Therefore, no additional authorization is required in the UE country where such activity is intended to be carried out.
The project for the incorporation of a new Management Company must be previously authorized by the Ministry of Economy through the prior proposal of the CNMV. Once the incorporation procedure is completed by means of its previous registration with the corresponding Mercantile Registry, the Management Company must also be registered with the CNMV.
The minimum amount of share capital required is EUR300,000, represented by registered shares, fully subscribed and paid-up. Notwithstanding the above, there are certain situations in which the Management Company is obliged to increase its share capital depending on the variation of the effective value of the assets of the CIIs managed according to the following chart:
|Percentage (%) of the assets managed||As of (EUR)||Up to (EUR)|
At least 60 percent of the Management Companies’ equity must be invested in listed securities on OECD countries’ stock exchanges. The remaining equity must be invested in any other assets suitable to the Management Company corporate purpose.
SGIICs must be managed by a Board of Directors, whose members must comply with certain requirements related to honesty and proved professional experience. These requirements are also applicable to members of the Board of Directors of Open-Ended Securities Investment Companies (SICAVs).
Management Companies may receive a maximum management fee that in general terms is calculated as follows:
When both, assets and profits of the fund, are taken into account in calculating the management fee, it cannot exceed 1.35 percent of the assets and 9 percent of the profits.
Additionally, neither the subscription and redemption fees nor the discounts to be applied in favor of the fund and nor the sum both, charged by the Management Company, should exceed 5 percent of the FI units’ net asset value.
According to Law 35/2003, Management Companies are obliged to meet and answer all queries and complaints of shareholders and/or unitholders. To this respect the figure of the ombudsman should be present within the organization of the CIIs. In the case of foreign Management Companies acting in Spain under the Managament Company Passport, they must answer all queries and complaints of shareholders and/or unitholders in Spanish.
The project of CIIs Regulation introduces a new set of rules concerning conflicts of interests between the Management Companies and the CIIs. According to these rules, Managemente Companies will be obligued to identify potential conflicts of interest, to adopt an effective policy in this regard and to communicate to investors those decisions taken to avoid specific situations of conflicts of interest.
Only commercial and savings banks (including the Confederación Española de Cajas de Ahorros and Caja Postal), Securities companies and Brokers (Sociedades y Agencias de Valores), credit co-operatives, and recently, Management Companies (see the comments in paragraph 1.3 above) can act as custodian entities of CIIs. Their corporate domicile and central administration must be located in Spain.
A prior authorization from the CNMV is required to be entitled to act as a custodian. Likewise, subsequent registration with the corresponding Registry of the CNMV is mandatory.
All custodians must be members, directly or indirectly, of the Clearing and Settlement System of the stock market in which they operate.
Each CIIs must have an unique custodian entity. No entity can simultaneously be a Management Company and a custodian of the same CIIs, except temporarily, under special situations. In principle, no entity can be a custodian of investment funds or companies managed by a Management Company belonging to the same group, unless the corresponding measures (that is, Chinese walls) have been implemented to guarantee independence and avoid conflict of interests.
The custodian entity’s commission cannot exceed 0.2 percent of the nominal value of the net equity in its custody.
As a general rule, CIIs cannot invest in securities issued or guaranteed by another entity, which exceed 5 percent of their own assets with the exception of investments in securities issued or guaranteed by entities belonging to the same group which percentage may be increased up to 15 percent. Besides, this 5 percent percentage could be increased in the following additional cases:
In this respect, the limit of the 5 percent would not be applied for the ETFs funds (please see paragraph 1.10) where the threshold may be increased to 20 percent of the CIIs’s assets.
The investment in shares/units issued by a sole EU Harmonized or non-Harmonized CIIs according to the Directive 85/611 shall not exceed the 45 percent of the CIIs’s assets (this limit would not apply for those CIIs whose respective investment policy consists on the investment of a unique fund).
Finally, it is important to emphasize that in order to comply with the liquidity ratio guidelines, CIIs should maintain a 3 percent of its assets’ liquidity ratio.
CIIs cannot borrow an amount of money exceeding 10 percent of the value of its assets. The term of such loans cannot be longer than one month and may only be granted to solve temporary cash deficits. This information must be submitted to the CNMV, who will handle its publication. Exceptionally, Non-financial CIIs may borrow this amount for a term no longer than 18 months in order to solve temporary treasury difficulties that they might have.
CIIs are obliged to publish the following documents:
All this documentation is registered at a special registry of the CNMV and is available to the general public.
The details of the supervisory authority for CIIs, Management Companies, trustees, custodians, and marketing entities are as follows:
Miguel Angel, 11
Tel: +34 91 585 15 00
There are no specific restrictions on the maximum percentage that an individual or a legal entity is allowed to hold in a CIIs.
Notwithstanding the above, Open-Ended Securities Investment Companies (SICAVs) or its managers,, and managers of FIs, as the case may be, must notify the CNMV the identification data of shareholders or unitholders which hold significant holdings in the relevant CIIs (20 percent, 40 percent, 60 percent, 80 percent, or 100 percent).
In principle, the number of shareholders in a CIIs may not be less than 100. The same minimum limit applies for the number of unitholders of funds.
This number must be achieved at the end of the first year of the incorporation of the CIIs.
In addition to the basic financial and non-financial types of CIIs detailed in paragraph 1.1 above, the following special CIIs types are permitted under the Spanish regulation.
Royal Decree 1309/2005 (and the current project for its amendment) governs exchange traded funds or ETFs (fondos cotizados) and are defined as those which units are listed in the stock exchange.
The first ETFs to be marketed in Spain did replicate the performance of the IBEX 35, the main index of the Spanish Stock Exchange, but there are also other ETFs which track the movements of other national or international stock market indexes.
In addition to the requirements for being quoted, similar to those applicable to public quoted companies, ETFs are also deemed to comply with the fulfillment of the conditions required to be registered as CIIs at the CNMV.
The operating of ETFs in relation to its liquidity, transparency, timing of sale and purchase, intermediation, management and deposit fees, tax regime, investment diversification, accessibility, dividends’ distribution, and trading hours are half way between investment funds and listed shares.
Spanish legislation on anti money laundering (Law 10/2010, dated 28 April 2008, on prevention of money-laundering and terrorism financing) is applicable, among others, to financial entities, securities companies and brokers, insurance entities, pension funds and pension funds managers as well as to CIIs, Management Companies, and custodians. All of them should comply with certain obligations in relation to their clients (client identification and KYC rules, among others) and operations in order to avoid money laundering.
Therefore, besides the aforementioned general legislation, there is no special regulation on anti money laundering measures which is exclusively applicable to CIIs.
The CNMV is the body entitled to authorize the incorporation of CIIs.
The set up and registration of a Spanish CIIs may take approximately three (3) months.
The administrative procedure of incorporation establishes that applications for setting up a CIIs must be authorized in a maximum period of two months (for CIIs that have the form either of funds or companies – SICAV – that have appointed a manager) or three months (in the case of SICAVs that have not appointed a manager) since the date of the reception by the CNMV of the relevant application. In case five months have elapsed since the date of the application and the CNMV has not notified either its authorization or the refusal, the authorization may be deemed as granted.
Minimum share capital/net equity requirements:
|Open-ended securities investment company (SICAV)||2,400,000|
A FI may be incorporated with a net equity of EUR300,000, provided that within a six-month period following its registration with the CNMV, the above-mentioned minimum net equity requirement is reached. Otherwise, the fund must be dissolved and wound up.
The legal requirements for marketing foreign CIIs in Spain will depend on whether they are recognized as EU-harmonized CIIs (fall under the scope of UCITS IV) or Non-EU-harmonized (not fall under the UCITS IV).
In the event of EU-harmonized CIIs, their marketing in Spain is permitted. UCITS IV simplifies the notification process, which now takes place directly between regulators of the relevant countries. In this sense, the Management Company will submit a request to its Member State regulator who, in the maximum term of ten business days will submit the request to the CNMV. Please note that the following issues must be taken into account.
If the foreign CIIs does not fall under the scope of UCITS IV (that is, Non-EU harmonized), its marketing in Spain is subject to express prior authorization by CNMV.
In this sense, the registration in Spain of this type of CIIs will be submitted to a restrictive regulation.
The CNMV is entitled to waive compliance with the obligation of notification/registration when certain exceptional conditions are given (such as, marketing in Spain targeted exclusively for professional/institutional investors or limited to no more than 100 investors in each Member State). However, the exemption to registration is not applicable for open-ended funds.
Among other documentation to be provided to CNMV, the foreign non-harmonized CIIs must prove that the legislation of its home country protects shareholders or unitholders at least as much as Spanish legislation does. Likewise, a favorable report from the supervisory authority of its home country will be required (full and simplified prospectuses and financial statements will be also required).
The CNMV charges EU CIIs a fee amounting to 0.014 percent of the volume of CIIs´ assets or units marketed in Spain with a minimum and a maximum that are fixed every year. A person responsible for payment of all applicable fees must be appointed.
The cross-border merger of CIIs has not been incorporated in Law 35/2003 after its modification but is foreseen in the project of its corresponding Regulation. Therefore, it will be necessary to wait until the modification process of the CIIs Regulation comes to an end to see the regime applicable to cross-border mergers.
However, according to the principle contained in UCITS IV, the project of CIIs Regulation that has been made public foresees that cross-border mergers shall be subject to prior authorization by the competent authorities of the merging CII Home Member State.
With the modification of the CIIs Regulation that will likely take place before the end of the first semester of 2012, it will be possible for a CII (a feeder CII) to invest at least 85 percent of its assets in units of a master CII. It will be also possible to transform an existing CII into a feeder CII.
According to the project of CIIs Regulation that has been made public, the feeder CII must provide its investors with the following information:
CNMV shall authorize the investment of a feeder CII in a master CII within fifteen business days since the submission of the complete application.
Shares of Spanish investment companies may be represented by registered titles or book entries; shares of different series may be issued. The shares of the same class shall have the same face value and grant the same rights.
Likewise, Spanish fund’s units may be represented by registered certificates or book entries. The same fund or sub-fund may have units of different classes, each with different commission fee structures.
Therefore, bearer shares or bearer units are not allowed for Spanish CIIs according to the applicable legislation.
internet as a marketing tool for the distribution of investment funds is nowadays widely used, either through fund supermarkets or exclusive channels, especially in the banking sector. The main general regulation regarding financial contracts and services provided via the internet is Law 22/2007, dated 11 July, on the Distance Marketing of Financial Services to Consumers. This Law completes the implementation of Directive 2002/65 in the Spanish legislation. Besides, it is also applicable the Royal Decree 1906/1999, dated 17 December, on Contracting General Conditions, as well as the Information Society Services and Electronic Commerce Law 34/2002. In particular for the financial sector, Rule 3/2001 of Bank of Spain modifies to these effects Rule 8/1990 on transparency and client protection.
1Please note that CIIs Regulation in now in the process of amendment in order to incorporate the changes in Law 35/2003 following the incorporation of UCITS IV in Spain. The most foreseeable scenario is that the modified CIIs Regulation is passed before the end of the first semester of 2012.
2Please note the main-subordinated structures currently foreseen in the CIIs Regulation will change after the modification of the CIIs Regulation to incorporate the master-feeder structures foreseen in UCITS IV (see 1.15).
© 2016 KPMG Abogados, S.L., a Spain legal liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.