The transitional rules suspending deregulation of direct foreign investments have been extended until December 31, 2021, meaning certain investments of EU/EFTA residents in Spanish listed companies will also require authorization until then.
Transitional rules suspending deregulation of foreign investments in Spain, applicable to direct foreign investments in listed companies by residents of other EU countries and Member States of the European Free Trade Association, were established in November 2020. These rules essentially mean that investments within their scope require prior administrative authorization under Act 19/2003.
Direct foreign investments under these rules refer to investments that lead an investor to hold 10% or more of the listed company’s stock or to corporate and legal transactions taking over control of that company in accordance with the criteria of the Defense of Competition Act (Ley 15/2007, de 3 de julio, de Defensa de la Competencia).
Finally, these rules apply if the investments are made by residents of EU countries and Member States of the European Free Trade Association other than Spain and also if they are made by residents in Spain in which residents of other EU and EFTA countries hold significant control (when they hold or ultimately control, directly or indirectly, a stake exceeding 25% of the share capital or voting rights of the investor, or when they otherwise directly or indirectly control it).
Although these rules were to be exceptional and expire on June 30, they have been extended until December 31, 2021 under Royal Decree Law 12/2021, of June 24. Its preamble states that the circumstances under which they were adopted in the first place, i.e., ensuring protection of health, safety and public order, are still present, and the economy is still recovering from the COVID crisis, whose ongoing nature has made it necessary to adopt measures such as this.