Circular 1/2024 of the Bank of Spain on information regarding capital structure

I. GENERAL PROVISIONS
BANK OF SPAIN
1867 Circular 1/2024, of January 26, of the Bank of Spain, addressed to banks, credit cooperatives, and other supervised entities, regarding information on capital structure and amending Circular 1/2009, of December 18, of the Bank of Spain, to credit institutions and other supervised entities, in relation to information on the capital structure and participating shares of credit institutions, and on their offices.

Index
Chapter I. General provisions.
First Rule. Object.
Second Rule. Scope of application.
Chapter II. Information on shareholdings and information on capital structure.
Third Rule. Information on shareholdings.
Fourth Rule. Information on capital structure.
Chapter III. Rules for the presentation of statements and information to the Bank of Spain.
Fifth Rule. Rules for the presentation of statements and information to the Bank of Spain.
Transitional Provision. Transitional regime.
Repealing Provision. Partial repeal of Circular 1/2009, of December 18, of the Bank of Spain.
Final Provision First. Amendment of Rule Six of Circular 1/2009, of December 18, of the Bank of Spain.
Final Provision Second. Entry into force of this circular.
Appendix I. Shareholdings in the capital or voting rights of banks, credit cooperatives, credit institutions, payment entities, and e-money entities.
Appendix II. Information on capital structure.

I
In recent years, modifications have been introduced in Spanish regulation that advise updating the Bank of Spain's current regulations in this matter, which were contained in Circular 1/2009, of December 18, of the Bank of Spain, to credit institutions and other supervised entities, regarding information on the capital structure and participating shares of credit institutions, and on their offices, as well as on the senior management of supervised entities. Specifically, this circular updates and harmonizes the regulation regarding the information that banks and credit cooperatives must communicate to the Bank of Spain in accordance with Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions, and with Royal Decree 84/2015, of February 13, which develops Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions; credit institutions, in accordance with Law 5/2015, of April 27, on the promotion of business financing, and with Royal Decree 309/2020, of February 11, on the legal regime of credit institutions and amending the Commercial Register Regulations, approved by Royal Decree 1784/1996, of July 19, and Royal Decree 84/2015, of February 13, which develops Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions; payment entities, according to Royal Decree-Law 19/2018, of November 23, on payment services and other urgent measures in financial matters, and Royal Decree 736/2019, of December 20, on the legal regime of payment services and payment entities, amending Royal Decree 778/2012, of May 4, on the legal regime of e-money entities, and Royal Decree 84/2015, of February 13, which develops Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions; and e-money entities, in accordance with Law 21/2011, of July 26, on e-money, and Royal Decree 778/2012, of May 4, on the legal regime of e-money entities, regarding holders of shares, participating shares, or contributions to their share capital, given the functions corresponding to the Bank of Spain in supervising compliance with the organization and discipline rules of said entities. In this sense, this circular includes payment entities within its scope of application (except those expressly excluded in Rule Two of this circular), which were not subject to Circular 1/2009, of December 18, of the Bank of Spain, so that it becomes applicable to all supervised entities subject to the capital structure information regime.

The knowledge of acquisitions, increases, and reductions of shareholdings in the aforementioned entities and of their capital structure is essential for the Bank of Spain to carry out the competencies attributed to it within the framework of the organization and discipline regulation. Consequently, it is necessary to have a specific framework of confidential information in this matter that is adequate and sufficient for the proper development of the aforementioned supervisory function, which replaces the content of Rule One, as well as Appendices I and II of Circular 1/2009, of December 18, of the Bank of Spain.

Similarly, the regulatory changes produced since the publication of Circular 1/2009, of December 18, of the Bank of Spain make it necessary to repeal Rule Two and Appendix III of said circular. Specifically, the Thirteenth Additional Provision of Law 26/2013, of December 27, on savings banks and banking foundations, established the amortization of participating shares issued by savings banks, meaning that the information obligations regarding the structure of participating shares imposed in the Third Transitional Provision of Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions, became obsolete.

On the other hand, regarding registration in the Register of Senior Management and the submission of information on the positions held by these individuals in other companies, Circular 1/2009, of December 18, of the Bank of Spain sought to harmonize in a single rule and form the communications that different types of supervised entities must send to the Bank of Spain regarding their administration and management positions, for supervisory reasons or due to the imposition of respective senior management registers created by regulation. However, since then, in addition to the regulatory modifications that have followed in sectoral Spanish regulation, mentioned above, the manner in which interested parties must interact with the Administration has changed radically to favor greater agility and the necessary modernization of administrative procedures. Specifically, the Virtual Office has been created on the Bank of Spain's website; here, the various forms that must be submitted in each procedure entities wish to initiate are made available to them (among others, the register inscription of their senior management, which includes the necessary instructions for completion). This initiative aims to gain effectiveness and efficiency in the processing and management of various administrative procedures, promoting the use of Electronic Administration, in line with the guidelines set by Law 40/2015, of October 1, on the Legal Regime of the Public Sector.

As a result of the combination of both factors, Rules Four and Five of Circular 1/2009, of December 18, of the Bank of Spain, included in Chapter III, have become obsolete, being superseded by subsequent regulation of equal or higher rank, and are therefore repealed in this circular along with Appendix V. Nevertheless, entities will maintain the information obligations in this matter derived from the regulation applicable to them.

Regarding the elaboration procedure of this circular, the public consultation provided for in Article 133.1 of Law 39/2015, of October 1, was carried out. Likewise, the draft circular was submitted to the public hearing procedure provided for in Article 26.6 of Law 50/1997, of November 27, and in Article 133.2 of Law 39/2015, of October 1, thus enabling the active participation of potential recipients. Furthermore, the final legality report was requested from the Legal Department of the General Secretariat of the Bank of Spain, in which no legal objections were raised and in which it was deemed appropriate to submit the draft to the opinion of the Council of State before its approval by the Governing Council of the Bank of Spain, following a favorable opinion from the Council of State. These procedures were followed to complete the elaboration of the circular.

II
This circular consists of five rules, one transitional provision, one repealing provision, and two final provisions. Additionally, it includes two appendices.

Chapter I collects the general provisions, which are materialized in two rules regulating the object and scope of application of this circular. The object of this circular is to establish information requirements regarding the acquisitions, increases, and reductions of shareholdings in the entities and their capital structure. The scope of application comprises banks, credit cooperatives, credit institutions, payment entities, and e-money entities.

Chapter II, containing two rules, regulates the information that the aforementioned entities must send regarding the acquisitions, increases, and reductions of shareholdings in them, and the information they must submit regarding their capital structure. Through these rules, the indicated entities are obliged to report to the Bank of Spain certain acquisitions, increases, and reductions of shareholdings in them as soon as they become aware of them; likewise, they must periodically send information to the Bank of Spain regarding holders of shares, participating shares, or contributions to their share capital.

Chapter III, composed of a single rule, collects the rules applicable to the presentation of information that must be sent to the Bank of Spain based on this circular.

For its part, the sole transitional provision indicates the transitional regime to be followed until the definitive application of what is stated in this circular.

In the sole repealing provision, those norms that are repealed by this circular are mentioned; namely: Chapters I and III, as well as Appendices I, II, III, and V, of Circular 1/2009, of December 18, of the Bank of Spain.

The First Final Provision amends Rule Six of Circular 1/2009, of December 18, of the Bank of Spain.

The Second Final Provision indicates the entry into force date of this circular.

Finally, the appendices collect the statement models that entities must send to the Bank of Spain to comply with their obligations in this matter. Specifically, Appendix I collects the information that entities subject to this circular must send when certain shareholdings in them are acquired, increased, or reduced. Appendix II indicates the information that the aforementioned entities must report periodically to the Bank of Spain regarding capital structure.

III
This circular is issued in the exercise of the regulatory authorizations attributed to the Bank of Spain, which are listed below:
– Regarding banks and credit cooperatives, the authorizations are found in Article 22 of Law 10/2014, of June 26, and in Article 27 and letter f) of the Sixth Final Provision of Royal Decree 84/2015, of February 13, which develops Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions.
– Regarding credit institutions, the authorizations are found in Article 7 of Law 5/2015, of April 27, on the promotion of business financing, and in Article 26 and the Fourth Final Provision of Royal Decree 309/2020, of February 11, on the legal regime of credit institutions and amending the Commercial Register Regulations, approved by Royal Decree 1784/1996, of July 19, and in Royal Decree 84/2015, of February 13, which develops Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions. – Regarding payment entities, the authorizations are in paragraphs 2 and 5 of Article 17 and in the Twelfth Final Provision of Royal Decree-Law 19/2018, of November 23, on payment services and other urgent measures in financial matters, and in Article 29 and letter f) of paragraph 2 of the Fifth Final Provision of Royal Decree 736/2019, of December 20, on the legal regime of payment services and payment entities and amending Royal Decree 778/2012, of May 4, on the legal regime of e-money entities, and Royal Decree 84/2015, of February 13, which develops Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions. – Regarding e-money entities, the authorizations are found in Article 25 and letter c) of paragraph 1 of the Third Final Provision of Royal Decree 778/2012, of May 4, on the legal regime of e-money entities; in Article 20.1 of Law 21/2011, of July 26, on e-money, and in the Third Additional Provision and the Twelfth Final Provision of Royal Decree-Law 19/2018, of November 23, since these last two provisions refer to payment service providers, thus being applicable to e-money entities to the extent that they provide payment services.

IV
This circular attends to the principles of good regulation required by Article 129 of Law 39/2015, of October 1, on the common administrative procedure of Public Administrations.

Regarding the principle of necessity required by Law 39/2015, of October 1, the establishment of a specific framework of confidential information regarding the acquisitions, increases, and reductions of shareholdings in the entities and their capital structure, which provides adequate and sufficient information, is necessary for the proper development of the supervisory function entrusted to the Bank of Spain.

In relation to the principle of efficacy stipulated in the aforementioned law, this circular updates the information that the Bank of Spain must request from supervised entities regarding certain shareholdings in them and their capital structure. In this way, the circular also complies with the principles of legal certainty and administrative efficiency, by prescribing a stable, predictable, complete, and clear regulation for all the aforementioned entities.

Taking into account the differences in nature, scale, and complexity of the activities of the different entities subject to the circular, a simplified regime has been established for some of them. This regime applies both regarding the volume of data to be reported and the periodicity with which the affected entities must send information to the Bank of Spain. The principle of proportionality is thus fulfilled.

The principle of transparency is achieved through the prior public consultation with potential affected parties, fixed by Article 133 of Law 39/2015, of October 1, and the public hearing with interested parties. Both procedures form part of the processing of this circular.

Consequently, in the exercise of the powers conferred upon it, the Governing Council of the Bank of Spain, upon proposal of the Executive Commission, and in accordance with the Council of State, has approved this circular, which contains the following rules:

CHAPTER I
General Provisions

Rule One. Object.

1. This circular aims to establish the confidential information to be sent to the Bank of Spain, regarding the acquisitions, increases, and reductions in shareholdings in the capital of the entities cited in Rule Two, as well as that of their capital structure.

Rule Two. Scope of application.

1. This circular shall apply, with the scope provided in the following rules, to the types of entities indicated below:
   a) Banks and credit cooperatives, as defined in Article 1 of Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions. b) Credit institutions, as defined in Article 6 of Law 5/2015, of April 27, on the promotion of business financing. Hybrid credit institutions are therefore included. c) Payment entities defined in Article 3.15 of Royal Decree-Law 19/2018, of November 23, on payment services and other urgent measures in financial matters. Hybrid payment entities are included, in accordance with Article 23 of Royal Decree 736/2019, of December 20, on the legal regime of payment services and payment entities and amending Royal Decree 778/2012, of May 4, on the legal regime of e-money entities, and Royal Decree 84/2015, of February 13, which develops Law 10/2014, of June 26, on the organization, supervision, and solvency of credit institutions. Natural or legal persons providing payment services under the exemption regime provided for in Article 14 of Royal Decree-Law 19/2018, of November 23, and entities providing account information services defined in Article 3.30 of Royal Decree-Law 19/2018, of November 23, are excluded from the scope of application of this circular. d) E-money entities defined in Article 3 of Law 21/2011, of July 26, on e-money. Hybrid e-money entities are included, in accordance with Article 21 of Royal Decree 778/2012, of May 4, on the legal regime of e-money entities.

2. Any reference in the circular to the "entity" or "entities" shall be understood to refer to all the aforementioned entities, except in those paragraphs where it is specifically indicated that it is only applicable to one or several types of these entities.

CHAPTER II
Information on shareholdings and information on capital structure

Rule Three. Information on shareholdings.
The entities indicated in Rule Two, paragraph 1, shall communicate to the Bank of Spain, as soon as they become aware, and at the latest within ten business days from the annotation of the direct shareholding in the register of registered shares or in the register of contributions to share capital or the register of partners:
a) The acquisitions of significant shareholdings in the entity as defined in Article 16 of Law 10/2014, of June 26, in Article 17 of Royal Decree-Law 19/2018, of November 23, and in Article 4 of Law 21/2011, of July 26. b) The acquisitions of shareholdings in the entity that, although not significant, result in the percentage of voting rights or capital held being equal to or greater than 5%. c) The increases in shareholdings in the entity that result in the percentage of voting rights or capital held being equal to or greater than 20%, 30%, or 50%, or that would allow controlling the entity. It shall be presumed that a relationship of control exists when any of the circumstances provided for in Article 42 of the Commercial Code occur. d) The losses or reductions in significant shareholdings in the entity or those that imply that the percentage of voting rights or capital held falls below the thresholds indicated in letters b) or c) above, or imply the loss of control of the entity.

In the case that the entity is a listed public limited company and its bylaws have modified the proportion between the nominal value of the share and the voting right, granting a double vote to each share based on Article 527 ter of the consolidated text of the Capital Companies Law, approved by Royal Legislative Decree 1/2010, of July 2, the communication to the Bank of Spain shall be made, at the latest, within ten business days from the attribution, modification, or cancellation of the double voting right to the shareholder, as stated in Subsection 4 of Section 3 of Chapter VI of Title XIV of Royal Legislative Decree 1/2010, of July 2.

The communications of the entities shall refer to the acquisitions, increases, reductions, and losses of shareholdings, both direct and indirect, carried out by natural or legal persons, acting alone or in concert. For this purpose, the model included in Appendix I shall be used.

Rule Four. Information on capital structure.

1. The entities indicated in Rule Two, paragraph 1, shall communicate to the Bank of Spain, with the periodicity indicated in paragraph 4 of this rule, the composition of their share capital, relating:
   a) All direct holders of shares, participating shares, or contributions to share capital who, at the end of the period indicated in paragraph 4, have the status of "financial entities." Those with Spanish nationality and those other foreigners whom the reporting entity is aware have a similar nature to said entities shall be included in any case. b) The rest of the direct holders who, at the end of the period indicated in paragraph 4, have registered in their name shares, participating shares, or contributions to share capital representing a percentage of the share capital in the entity equal to or greater than 0.25% in the case of banks, 1% in the case of credit cooperatives and credit institutions, and 2.5% in the case of payment entities and e-money entities. c) The sum of the rest of the direct holders who, at the end of the period indicated in paragraph 4, have registered...