SPAIN Law and Practice Contributed by: Miguel Cases, Toni Barios, Joaquín Fabré and David Navarro, Cases & Lacambra
obligation of publishing the minimum purchase and maximum sale rates or, if applicable, the single rates that they shall apply in spot transactions ( operaciones de contado ). 3.4 Restrictions on the Borrower’s Use of Proceeds There are no legal restrictions under Spanish law on the borrower’s use of proceeds, however, restrictions can be specified in the loan documentation. Restrictions that a specific lender requires in the loan documentation would also depend on the rules apply- ing to it and the obligations it has to fulfil in accordance with the relevant law applicable to it. For instance, Spanish financial entities usually include restrictions regarding anti-money laundering, anti-corruption, ter- rorism financing or sanctions. 3.5 Agent and Trust Concepts Spanish law does not recognise the concepts of agent and trust. Parallel debt structures are not recognised under Spanish law, as security interests are consid- ered as accessory to a main obligation. Spanish law does not recognise the difference between legal and beneficial ownership. Therefore, the beneficiaries of such security interests shall be the lenders to a financ- ing transaction. Nonetheless, the concept of agent is commonly used in Spain, but it should be taken into account that for such concept to be fully valid under Spanish law (for instance, for the purposes of enforcing security inter- ests) it would be necessary that all lenders grant pow- ers of attorney in favour of such agent. In any case, common practice in Spain is that security interests are granted to all lenders to avoid future risks on recogni- tion of the concept of agent. 3.6 Loan Transfer Mechanisms Under Spanish law, loans are usually transferred through the assignment of a contractual position or through the assignment of the credit rights derived from the loan documentation. Assignment of a con- tractual position entails the assignment of both rights and obligations under the agreement, but the assign- ment of the credit rights derived from the agreement
entails the transfer of the credit rights owned by the assignee. Assignment of a contractual position requires consent of the rest of the parties to an agreement, but it is usual that the loan documentation already contains a pre-consent from the rest of the parties. Assign- ment of credit rights does not require consent from the debtor, but it is usual in Spain that the debtor is notified of the assignment as otherwise the debtor could pay the assignor and be released from fulfilment of the relevant obligations. Assignment by a lender under the loan documents is usually documented in a public document (either via public deed ( escritura pública ) or notarial policy ( póliza notarial )) granted before a Spanish notary. This is not legally required for its validity, but loan docu- ments granted as public documents benefit from a much simpler and faster enforcement procedure. That is why it is market standard in Spain to grant all loan documents as public documents. Under Spanish law, assignment of credit rights is only effective against third parties from the date on which the assignment is documented in a public document. With respect to the security package associated to the loan documentation, under Spanish law, guarantees and security interests are accessory to the main obli- gation, therefore, security interests subject to Spanish law would be assigned to the new beneficiary with the assignment of the main obligation. Nonetheless, some formalities may be necessary depending on the security interest granted in order for the assignee to maintain an enforceable right over them, such as to document the change of beneficiary in a public docu- ment and register the same with the relevant Spanish Public Registry. In any case, when assigning a lender’s contractual position, it is common in Spain to grant a document in which the relevant security interests and guarantees are ratified by the guarantors. If the original security interests were granted in a public document, it is also common that this ratification is granted as a public document, and it is advisable in any case to document such ratification in a public document in order to ben- efit from the much simpler enforcement procedure.
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