New framework law for securities markets

On 7 April 2023 Law 6/2023 of 17 March on Securities Markets and Investment Services came into force, published in the Official State Gazette on 18 March. It replaces the 2015 consolidated text as the framework law on the subject, transposes several European directives and reorders the rules so that the law contains only the essential features of markets, their participants and supervision, with the rest moved to regulations. It also amends other laws, including those on capital companies, venture-capital entities and the promotion of business financing.

It is a lengthy, technical law, but it affects any person or company that issues securities, is listed or uses investment services. Its scope can be summed up in three lines: modernise the Spanish market to make it more competitive, adapt it to European law and strengthen protection for investors, in particular against fraud. This note explains the framework and is not a recommendation on any product.

What it modernises

The law removes redundant requirements for admitting fixed-income securities to trading, abolishes the information system used to supervise trading and settlement, with two years of transition, and extends to multilateral trading facilities the rules on takeover bids and voluntary delisting that previously applied only to regulated markets. The aim is to make the Spanish market more attractive to issuers and investors by reducing burdens that European law already covers.

It also simplifies the CNMV’s penalty regime, which had grown in order to comply with European regulations, and regulates investment firms in line with the new European prudential supervision. For national financial advisory firms, adaptation periods to the new regime are provided, along with membership of the Investment Guarantee Fund.

SPACs and financing

A striking novelty is the regime for listed special-purpose acquisition companies, known as SPACs. These are companies that raise investment to identify and acquire, within a set period, a company that is usually unlisted. The reform of the Companies Act gives them 36 months to put forward the acquisition proposal, extendable by 18 more if the general meeting approves.

Investors will have a right of redemption of the capital contributed, through a statutory exit right or redeemable shares, for the proportional amount held in a transitional account. The legislator presents it as an alternative route to a traditional stock-market listing and to bank financing. It is worth knowing it exists as a business financing route provided for by law, without that amounting to a recommendation. The CNMV may also require a prospectus on the merger with the target company where the transaction would otherwise be exempt from publishing one.

Fraud and distributed ledgers

The law strengthens the CNMV’s powers over advertising by those offering investment services without authorisation, a problem that the spread of social media has worsened, and designates the CNMV as the competent authority to supervise the issue and offer of certain crypto-assets that are not financial instruments, once the corresponding European regulation is approved.

It also adds rules for representing negotiable securities through distributed-ledger systems, in line with the European pilot regime for market infrastructure. Anyone receiving investment offers through social networks or messaging should always check in the CNMV register that the firm is authorised. Companies considering issuing securities or seeking market funding should analyse the new disclosure and corporate-governance obligations with their adviser. This information is general; your adviser can help you assess each case.

A new framework law brings order to the market; the prudent investor keeps checking who is offering what.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.