Law 22/2014 of 12 November regulating venture capital entities, other closed-end collective investment entities and their management companies, and amending Law 35/2003 on Collective Investment Institutions

Law 22/2014, of 12 November, regulating venture capital entities, other closed-end collective investment entities and the management companies of closed-end collective investment entities, and amending Law 35/2003, of 4 November, on Collective Investment Institutions.

Head of State

"BOE" No. 275, of 13 November 2014
Reference: BOE-A-2014-11714

INDEX

Preamble ................................................................ 8
PRELIMINARY TITLE. General provisions........................................... 12
Article 1. Purpose. ....................................................... 12
Article 2. Closed-end collective investment....................................... 13
Article 3. Venture capital entities. .......................................... 13
Article 4. Closed-end collective investment entities. ............................. 13
Article 4 bis. Loan closed-end collective investment entities. ................. 13
Article 5. Scope of application. .............................................. 14
Article 6. Excluded entities. ............................................... 15
Article 7. Concept of financial entity and non-financial company....................... 16
TITLE I. Regime of venture capital entities and closed-end collective investment entities....... 16
CHAPTER I. Constitution of venture capital entities and closed-end collective investment entities ... 16
Article 8. Constitution of venture capital entities and closed-end collective investment entities. ............................................................ 16
CHAPTER II. Legal regime of venture capital entities .............................. 17
Section 1. Venture capital entities........................................... 17
Article 9. Main activity. ................................................ 17
CONSOLIDATED LEGISLATION

Article 10. Complementary activities. ........................................ 17
Article 11. Reservation of denomination. .......................................... 17
Article 12. Investment policy. ............................................ 18
Section 2. Investment regime of venture capital entities ......................... 18
Article 13. Mandatory investment coefficient of VCEs. ............................ 18
Article 14. Investment in VCEs................................................. 19
Article 15. Free disposal coefficient. ....................................... 20
Article 16. Group limitations and diversification of investments. ...................... 20
Article 17. Temporary non-compliance with investment limits. ................. 20
Article 18. Computable assets and other investment limits. .......................... 21
Article 19. Acquisition of shares in non-financial companies listed on regulated markets ............................................................ 21
Section 3. Investment regime of SME venture capital entities ..................... 22
Article 20. SME venture capital entities. ..................................... 22
Article 21. Mandatory investment coefficient of SME VCEs. ........................ 22
Article 22. Free disposal coefficient of SME VCEs. ........................... 22
Article 23. Group limitations and diversification of SME VCE investments. .......... 23
Article 24. Temporary non-compliance with investments. ............................. 23
Article 25. Other investment limits. ....................................... 23
CHAPTER III. Legal regime of venture capital companies ............................ 23
Article 26. Definition and legal regime.......................................... 23
Article 27. Valuation of assets and determination of net asset value. ................... 24
Article 28. Transformation, merger, demerger and other corporate operations. ................ 24
Article 29. Delegation of management. ........................................... 24
CHAPTER IV. Legal regime of venture capital funds ............................... 24
Article 30. Definition and legal regime.......................................... 24
Article 31. Assets. .................................................... 24
Article 32. Constitution of the fund.............................................. 25
Article 33. Content of the fund management regulations. ............................. 25
Article 34. Subscription and redemption regime for participations...................... 25
Article 35. Administration. ................................................. 26
Article 36. Merger........................................................ 26
OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

Article 37. Dissolution and liquidation. ............................................ 26
CHAPTER V. Legal regime of closed-end collective investment entities, European venture capital funds and European social entrepreneurship funds ............................ 27
Article 38. Legal regime of CICEs and FICEs.................................. 27
Article 39. Legal regime of European venture capital funds. ..................... 27
Article 40. Legal regime of European social entrepreneurship funds (FESE). .......... 27
Article 40 bis. Legal regime of European long-term investment funds (ELTIFs). ........ 27
TITLE II. Management companies of closed-end collective investment entities .................... 28
CHAPTER I. Access to the activity.................................................. 28
Article 41. Concept and corporate purpose. ........................................... 28
Article 42. Access requirements to the activity. .................................... 28
Article 43. Ancillary services............................................... 29
Article 44. Prohibited activities. ............................................ 29
Article 45. Authorization application. ........................................... 30
Article 46. Resolution of authorization. ........................................ 30
Article 47. Management companies of Collective Investment Institutions. .................... 31
Article 48. Authorization requirements. ........................................ 31
Article 49. Consultation with the supervisory authority of another European Union Member State. ...... 33
Article 50. Depositary..................................................... 33
Article 51. Specific powers of authorization of the National Securities Market Commission. .. 33
Article 52. Modifications of authorization conditions............................ 34
Article 53. Revocation. ................................................... 34
Article 54. Expiry of authorization. ........................................ 35
Article 55. Waiver of authorization. .......................................... 35
Article 56. Suspension. ................................................... 35
Article 57. Substitution of managers. ............................................ 35
Article 58. Register....................................................... 36
CHAPTER II. Conditions for the exercise of the activity ..................................... 36
Section 1. Operational and organizational requirements ..................................... 36
Article 59. General principles. .............................................. 36
Article 60. Policies and procedures related to the remuneration system and incentive setting............................................................ 37
OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

Article 61. Conflicts of interest. .............................................. 37
Article 62. Risk management. ............................................... 38
Article 63. Liquidity management. ............................................. 38
Article 64. Valuation. .................................................... 39
Section 2. Delegation of MC functions .................................... 40
Article 65. Delegation of functions. ........................................... 40
Article 66. Sub-delegation of functions.......................................... 41
Section 3. Transparency requirements............................................. 41
Article 67. Information, audit and accounting obligations. ........................ 41
Article 67 bis. Engagement policy. .......................................... 42
Article 67 ter. Information obligations of the MC when providing asset management services for insurance entities or pension plans and funds. .......................... 43
Article 68. Information obligations to investors on each investment entity prior to investment. .................................................... 43
Article 69. Periodic information obligations to investors......................... 45
Article 70. Periodic information obligations to the National Securities Market Commission. ... 45
Article 71. Information obligations arising from the acquisition of significant shareholdings and control of companies.................................................. 46
Article 71 bis. Notification of infringements. ....................................... 48
CHAPTER III. Access and exercise conditions for the activity of managing venture capital entities and closed-end collective investment entities under special circumstances ...................... 48
Article 72. Access and exercise conditions for MCs managing VCEs or CICEs below certain thresholds...................................... 48
Article 73. Access and exercise conditions for MCs managing European venture capital funds. ................................................ 49
Article 74. Access and exercise conditions for MCs managing European social entrepreneurship funds. .......................................... 49
Article 74 bis. Access and exercise conditions for MCs managing European long-term investment funds. ..................................... 49
TITLE III. Marketing of venture capital entities and closed-end collective investment entities 50
Article 75. Limits on the marketing of VCEs and CICEs. .............................. 50
Article 75 bis. Pre-marketing of VCEs and CICEs managed by management companies authorized in Spain, in Spain and in the rest of the European Union. ............................ 51
Article 75 ter. Services available for retail investors......................... 52
OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

Article 76. Marketing in Spain of VCEs or CICEs constituted in another European Union Member State managed by managers authorized in a Member State under Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011. ........... 53
Article 77. Marketing in Spain to professional investors of VCEs or CICEs constituted in a non-EU Member State managed by managers authorized in an EU Member State in accordance with Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011. ............................................. 54
Article 78. Marketing in Spain to professional investors of VCEs or CICEs managed by managers not domiciled in the European Union. ................................... 55
Article 79. Marketing in Spain to non-professional investors of VCEs referred to in Article 5.1.e). ........................................................ 56
Article 80. Marketing of VCEs and CICEs managed by management companies authorized in Spain under Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011, within the European Union. ........................................... 58
Article 80 bis. Notification of the cessation of marketing of VCEs and CICEs managed by management companies authorized in Spain under Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011, within the European Union. .................... 59
Article 81. Conditions for the cross-border management of VCEs and CICEs and for the provision of services in other Member States by management companies authorized in Spain in accordance with Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011. ............................................................ 60
Article 82. Conditions for the management of Spanish VCEs and CICEs and for the provision of services in Spain by management companies regulated by Directive 2011/61/EU, of the European Parliament and of the Council of 8 June 2011, authorized in another European Union Member State...... 61
Article 83. Conditions applicable to MCs managing VCEs or CICEs constituted in a non-EU Member State not marketed in the European Union Member States. 62
TITLE IV. Conduct rules, supervision, inspection and sanctioning .............................. 63
CHAPTER I. Conduct rules .................................................. 63
Article 84. Applicable regulations. .............................................. 63
CHAPTER II. Supervision and inspection............................................... 63
Article 85. Scope. ...................................................... 63
Article 86. Powers of supervision and inspection. ................................. 64
Article 87. Supervision of leverage limits, adequacy of credit assessment processes and liquidity risk...................................... 64
Article 88. Supervision of managers authorized in another European Union Member State managing or marketing VCEs or CICEs in Spain. ................................ 65
Article 89. Cross-border cooperation in supervision and cancellation of personal data. 66
Article 90. Exchange of information regarding the possible systemic consequences of the managers' activity. ................................................. 66
CHAPTER III. Sanctioning regime ................................................ 67
OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

Section 1. General provisions ............................................... 67
Article 91. Liability. ................................................ 67
Article 92. Procedure................................................... 67
Section 2. Infringements ....................................................... 67
Article 93. Very serious infringements. ........................................... 67
Article 94. Serious infringements. .............................................. 69
Article 95. Minor infringements. ............................................... 71
Section 3. Sanctions ........................................................ 71
Article 96. Sanctions for very serious infringements. ................................. 71
Article 97. Sanctions for serious infringements...................................... 71
Article 98. Sanctions for minor infringements....................................... 72
Article 99. Sanctions for very serious infringements committed by administrative or management positions. ........................................................... 72
Article 100. Sanctions for serious infringements committed by administrative or management positions. ........................................................... 72
Article 101. Criteria for determining sanctions. ........................... 72
Article 102. Intervention and substitution measures. .................................. 73
Section 4. Other provisions .................................................. 73
Article 103. Other provisions. ............................................. 73
Additional Provisions ...................................................... 73
First Additional Provision. Transformation of authorized VCE management companies into MCs.............................................................. 73
Second Additional Provision. Normative references. ............................... 73
Third Additional Provision. Time limit for adaptation to the new regulations for existing entities. .. 73
Repealing Provisions ..................................................... 74
Repealing Provision. ................................................... 74
Final Provisions ......................................................... 74
First Final Provision. Modification of Law 35/2003, of 4 November, on Collective Investment Institutions. ..................................................... 74
Second Final Provision. Modification of the consolidated text of the Law on the Regulation of Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, of 29 November. ..... 106
Third Final Provision. Modification of Law 18/2014, of 15 October, approving urgent measures for growth, competitiveness and efficiency. .......................... 107
OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

Fourth Final Provision. Modification of Annex II of Law 13/2014, of 14 July, on the transformation of the Fund for the Financing of Payments to Suppliers. .......................... 107
Fifth Final Provision. Competence titles. .................................... 108
Sixth Final Provision. Incorporation of European Union Law. ..................... 108
Seventh Final Provision. Regulatory empowerment..................................... 108
Eighth Final Provision. Entry into force. ........................................ 109
OFFICIAL STATE GAZETTE
CONSOLIDATED LEGISLATION

CONSOLIDATED TEXT
Last modification: 18 March 2023

FELIPE VI
KING OF SPAIN
To all who see and understand this.
Know: That the General Courts have approved and I come to sanction the following law.

PREAMBLE
I
The general objective of financial regulation is to channel savings efficiently towards productive investment, guaranteeing market stability and investor protection, thereby fostering balanced growth that allows for job creation. One of the traditional characteristics of the Spanish economy is the high dependence of companies on bank credit, which in the current context has been subject to strong restrictions. Therefore, it is fundamental to favor other sources of direct financing, among which collective investment is configured as an alternative of growing relevance. Within this scope, it is possible to distinguish between collective investment institutions whose regulation is harmonized at the European Union level directed preferably to retail investors, and those considered alternative investment. The latter include entities such as hedge funds, real estate funds and venture capital funds, with the regulation of the latter being the main object of this Law. Despite the notable development of venture capital in recent years, it is necessary to review its regime to, on the one hand, foster greater fund raising and the consequent financing of a greater number of companies; and on the other, attempt to reorient it towards the financing of small and medium-sized enterprises in their early stages of development and expansion, as these are the ones that see, to a greater extent, the obtaining of financing limited. Venture capital is defined as those investment strategies that channel financing directly or indirectly to companies, maximize the value of the company by generating professional management and advice, and divest from it with the aim of providing high capital gains for investors. Venture capital is a source of financing of special relevance for all stages of company development: from the development of an idea where seed capital is crucial, the first phases of starting productive activity, the expansion and growth stages where financing can allow the qualitative leap to a greater dimension and maturity and competitiveness, up to the moments when the company is already consolidated where financing may be necessary for various reasons such as going public or restructuring or selling the company. Venture capital includes both what has been called venture capital, intended for the early development phases of companies, and private equity, this latter term including investment in mature companies with a consolidated track record of profitability and therefore involving larger-scale corporate restructuring operations requiring recourse to loans by venture capital entities to finance them. The involvement of venture capital entities implies not only the advantage of the financing obtained by companies, but also, through the participation of qualified professionals in the management of these entities who bring their knowledge and experience, contributes to significant improvements in the efficiency of the management of financed companies and the
dissemination of knowledge. OFFICIAL STATE GAZETTE CONSOLIDATED LEGISLATION

II
The legislative antecedents of venture capital in Spain date back to 1976, the year in which Royal Decree-Law 18/1976, of 8 October, on economic measures, was approved, which was the promoter of industrial development societies, as predecessors of venture capital companies. The current legal regime of venture capital has its origins in articles 12 to 16 of Royal Decree-Law 1/1986, of 14 March, on urgent administrative, financial, fiscal and labor measures. This regime was profoundly modified by Law 1/1999, of 5 January, regulating Venture Capital Entities and their management companies. This Law introduced the two modalities of entities, companies and funds (administered by management companies), and subjected them to an authorization, supervision, inspection and sanctioning regime by the National Securities Market Commission, homologable to the rest of subjects acting in financial markets. A regime of investments was also established distinguishing the mandatory investment coefficient in non-listed non-financial companies that constitute their objective, as well as the free disposal coefficient. Finally, group and diversification limits on investments were established. Although the 1999 regulation proved to be a notable advance in the legal regime of venture capital in our country, it did not entirely succeed in providing the industry with the instruments