SPAIN Law and Practice Contributed by: Ignacio Sanjurjo, Ignacio Echenagusia, Alejandro Espín and Román Cantín, Deloitte Abogados y Asesores Tributarios, S.L.U.
Merger Control Regulations Spanish competition regulations establish the require - ment to obtain prior authorisation from the National Markets and Competition Commission (CNMC) in cases where the completion of a transaction exceeds certain market share and turnover thresholds. In such instances, it is standard practice for share pur - chase agreements (SPAs) or investment agreements to include, as a condition precedent (CP) to closing, prior authorisation by the CNMC. A frequent condition in SPAs and investment agreements is that, should such authorisation be denied, or if it is subject to the execution of certain conditions that cannot be met, the SPA or investment agreement would be automati - cally terminated (except in cases where an additional requirement to be fulfilled by the parties is necessary and can be implemented). This form of regulatory control is more commonly encountered in PE investments or other M&A trans - actions versus VC investments, which typically involve Royal Decree 571/2023 primarily aims to provide a legal framework for Spanish investments abroad, as well as for foreign investments in Spain. For these purposes, foreign investments in Spain can be under - stood as involving, among other things: • a shareholding in the capital of companies incor - porated in Spain equal to or greater than 10% in a Spanish company; • the acquisition of interests in collective invest - ment institutions when the management company (ManCo) is resident in Spain and, such that a stake equal to or greater than 10% of the target’s assets or share capital is acquired; • any contributions made by shareholders (holding more than 10% of the share capital of a company) to the net equity of Spanish companies without an increase in share capital; • financing Spanish companies for an amount equal or greater to EUR1 million; or • the acquisition of real estate assets in Spain for an amount greater than EUR500,000. acquisitions of start-up companies. Foreign Investment Regulations
Additionally, there is an obligation to report foreign investments in Spain to the Investment Registry of the Ministry of Industry, Trade and Tourism, with the aim of maintaining oversight over the investments made. Royal Decree 571/2023 (as well as Law 19/2003 of 4 July) also regulates the suspension of the liberalisation of foreign direct investments (FDIs) in Spain, which requires prior administrative authorisations in specific cases. In this regard, any investment carried out by any non-EU or non-European Free Trade Association (EFTA) residents (or by EU/EFTA residents whose ulti - mate beneficial owner is based outside these areas) must obtain prior authorisation from the Spanish gov - ernment when any of the following conditions are met. • The foreign investor obtains 10% or more of the share capital of a Spanish company or acquires effective control over it. • The investment is directed towards a sector des - ignated as strategic. In this regard, critical sectors include energy, healthcare, transport, data pro - cessing and finance. • The total value of the investment exceeds EUR1 million. Any foreign investment transactions carried out with - out the required prior authorisation shall be null and void and have no legal effect until such authorisation is granted. The authors had access to a report published by the Ministry of Industry, Consumption and Tourism stating that, during FY 2024, 167 transactions were submitted for prior authorisation, which represents a 29% increase over 2023, and 85 transactions were expressly authorised without any additional require - ments from the Spanish Ministry of Industry. EU Foreign Subsidies Regulation The EU approved, on 23 December 2022, Regulation (EU) 2022/2560 of the European Parliament and of the Council concerning foreign subsidies that distort the internal market (the “Foreign Subsidies Regulation”; FSR). Entering into force on 12 July 2023, its purpose is to enhance control over subsidies granted and to empower the European Commission to investigate subsidies granted by non-EU countries to companies
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