I INTRODUCTION

For the past two decades, until March 2020, Spain's investment policy measures were geared towards investment liberalisation, promotion and facilitation. As a result, according to the latest available FDI Regulatory Restrictiveness Index prepared by the Organisation for Economic Co-operation and Development (2018), Spain was considered the 11th economy most open to foreign direct investment (FDI).2

In March 2020, Spain aligned its FDI policies with the European Union's (EU) less liberalised standards (i.e., those established under Regulation (EU) 2019/452 of 19 March 2019 establishing a framework for the screening of foreign direct investments into the EU (the EU Screening Regulation)). A new screening mechanism for certain FDIs made by residents outside the EU and the European Free Trade Association (EFTA), based on public order, public health and public security considerations, came into force on 18 March 2020, and was subsequently amended on 2 April 2020.

The new screening mechanism implements the guidance issued by the European Commission in March 2020 in Spain, in the context of the covid-19 crisis. The European Commission called upon EU Member States to 'make full use already now of its foreign direct investment screening mechanisms to take fully into account the risks to critical health infrastructures, supply of critical inputs, and other critical sectors as envisaged in the EU legal framework'. The preamble to Royal Decree-Law 8/2020, which introduced the new screening mechanism, referred to the impact of the global covid-19 crisis on stock markets, and to the fact that Spanish listed and non-listed companies suffered a huge drop in equity value; this constituted a threat to strategic sectors of the Spanish economy – in particular, from possible potentially hostile takeovers by opportunistic foreign investors.

Notwithstanding the above, the establishment of new FDI screening measures in Spain should not be interpreted as a radical shift towards protectionism, or as a prohibition on foreign persons investing in any critical sector for the Spanish economy. On the contrary, the new screening mechanism means that certain documents and information will have to be filed with the Spanish authorities prior to the closing of certain transactions, and that the closing will be postponed until the required authorisation is granted. The foreign investor should generally expect either to have its prospective investment authorised or, if the target is a critical participant in the Spanish market, to be requested to provide certain guarantees that the Spanish market will not be negatively affected.

Although foreign investment in Spain increased significantly from 2015 to 2018 (gross and net foreign investment increased from €25.3 billion to €52.8 billion and from €19.3 billion to €43.7 billion respectively), there was a significant drop in 2019, mostly because of the lack of large merger and acquisition deals during that year – gross foreign investment experienced a 54.8 per cent drop compared to 2018 figures, down to €22.4 billion; and net foreign investment fell by 60.3 per cent to €16.5 billion.3 As regards the main countries of origin for foreign investments into Spain in 2019, the United Kingdom was the leader (gross €4.9 billion); while France (gross €3.8 billion), the United States (gross €3.7 billion), Italy (gross €0.97 billion) and Germany (gross €0.96 billion) completed the top five. The main sectors towards which this investment is directed are industrial manufacturing, financial and insurance services, professional services, real estate, and information technology and telecommunications.4

II FOREIGN INVESTMENT REGIME

The general rule under Spanish law, as set out under Law 19/2003 of 4 July, on the legal regime of capital exchanges, economic transactions with foreign countries and certain anti-money laundering provisions, as amended (Law 19/2003), is that FDIs, as well as transactions, deals and business between Spanish residents and non-residents are liberalised.

However, the liberalisation principle has been suspended and prior administrative authorisation is required for (1) non-Spanish residents (including non-Spanish EU residents), in relation to activities directly related to Spanish national defence, and (2) non-EU and non-EFTA residents for FDIs above certain thresholds, either in relation to specific sectors or made by certain types of investor.

In addition, air transportation and audiovisual service regulations set out restrictions for certain investments made by non-European Economic Area (EEA) nationals. Laws relating to other business sectors restrict the acquisition of significant holdings, but these restrictions apply regardless of the nationality or residence of the prospective acquirer.

i General regime for foreign investments

Law 19/2003 and Royal Decree 664/1999 of 23 April on external investments (RD 664/1999) established a liberalised system for foreign investments in Spain that provides two declaration regimes for informing the Investments Registry of the Ministry of Economy, Industry and Competitiveness:

  1. an ex ante declaration regime, which applies only to:
    • investments made from a country or territory identified as a tax haven in Royal Decree 1080/1991 of 5 July. No ex ante declaration is required if the investment is made in listed shares or investment funds registered with the Spanish Securities Market Commission (CNMV) or involves less than 50 per cent of the Spanish company's share capital; or
    • investments made in Spain by non-EU Member States acquiring property to be used as diplomatic or consular offices, except in cases where there is an agreement providing for deregulation under reciprocity rules in compliance with Additional Provision No. 3 of RD 664/1999. The ex ante declaration is not equivalent to a verification, non-objection or clearance requirement and, once the investment has been declared, the investor may carry out the investment; and
  2. an ex post declaration regime, which applies to all foreign investors, including those subject to an ex ante declaration, for administrative, statistical and economic purposes only.

ii National defence-related activities

RD 664/1999 suspended the general liberalisation regime relating to foreign investments made in activities directly related to national defence, such as the manufacture or trade of weapons, ammunition, explosives and military equipment.

Any investment in any of these activities will require an authorisation from the Council of Ministers,5 unless the investment is (1) made in listed companies that carry out activities in this sector, (2) equal to or below 3 per cent of the share capital, and (3) does not allow the foreign investor to become, directly or indirectly, part of the managing bodies.

iii Screening Mechanism for FDIs whose liberalisation is suspended

A new screening mechanism for certain FDIs made by non-EU and non-EFTA residents, based on public order, public health and public security considerations was introduced by the government in March 2020 as an amendment to Law 19/2003 (the Screening Mechanism). The Screening Mechanism aligns part of the Spanish foreign investment legal framework with the EU Screening Regulation.

Not all FDIs will be subject to the Screening Mechanism, only those made (1) in certain sectors, or (2) by certain investors, regardless of the sector of the target company.

The following sectors are subject to the Screening Mechanism:

  1. Critical infrastructures, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, sensitive facilities, and land and real estate crucial for the use of such infrastructures.
  2. Critical technologies, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, and nanotechnologies and biotechnologies.
  3. Supply of critical inputs, including energy, raw materials and food security.
  4. Sectors with access to or control of sensitive information, including special categories of personal data, or the ability to control such information.
  5. Media.
  6. Other sectors designated by the Spanish government from time to time (currently there are none).

The following investors' FDIs will be subject to the Screening Mechanism regardless of the sector in which they invest:

  1. Investors directly or indirectly controlled by the government, including state bodies, armed forces or sovereign wealth funds, of a non-EU or non-EFTA country, pursuant to the control criteria set out in Article 42 of the Spanish Commercial Code.6
  2. Investors that have already made an investment affecting national security, public order or public health in another EU Member State.
  3. Investors subject to ongoing judicial or administrative proceedings in any state for engaging in illegal or criminal activities.

iv Audiovisual services

Investors who are citizens or residents in a country that is not a member of the EEA can only hold stakes and voting rights in a Spanish audiovisual communication services company that uses spectrum in accordance with the principle of reciprocity.

Additionally, the shareholding held, directly or indirectly, by a non-EEA person in these operators may not exceed 25 per cent of the share capital of the Spanish audiovisual communication services licence holder, and the total shareholding in a Spanish audiovisual communication licence holder by non-EEA persons must not exceed 50 per cent on aggregate.

v Air transportation

Law 48/1960 of 21 July on air navigation and Regulation (EC) No. 1008/2008 of the European Parliament and of the Council of 24 September on common rules for the operation of air services in the Community together provide that holders of operating licences for air transportation of passengers, cargo or mail, or both, for remuneration must be majority-owned and effectively controlled by EU nationals, except as provided for in an agreement with a third country to which the EU is a party. The airline in question must at all times be able, on request from the competent licensing authority, to provide evidence that it meets these requirements.7

In this context, EU airlines must also notify the competent licensing authority in advance of any intended mergers or acquisitions and within 14 days of any change in the ownership of any single shareholding that represents 10 per cent or more of the total shareholding of the airline or of its parent or ultimate holding company.

vi Other sectors

The acquisition of significant holdings in Spanish companies in certain sectors, regardless of the nationality or residence of the prospective purchaser, is subject to prior authorisation or, with regard to ownership of certain types of key energy assets, ex post communication with the potential for conditions to be imposed. These sectors include:

  1. Regulated energy activities (regulated gas activities include regasification, primary storage, transportation and distribution of natural gas), certain types of key energy assets,8 market operators (i.e., Operador del Mercado Ibérico de Energía, Polo Español, Red Eléctrica de España, Enagás GTS and Compañía Logística de Hidrocarburos CLH).9
  2. Certain financial entities, such as credit entities, insurance or reinsurance companies and investment services entities,10 as well as Bolsas y Mercados Españoles (the operator of the Spanish stock exchanges, which was the target of a successful takeover bid by the Swiss financial infrastructure operator SIX Group AG in 2020).
  3. Gambling operators.
  4. Professional sports public limited companies (currently limited to football and basketball).

III TYPICAL TRANSACTIONAL STRUCTURES

i Setting up a business in Spain

Investments in Spain may be carried out directly. There are two main structures available for conducting business operations in Spain: incorporating a subsidiary company (or acquiring an existing subsidiary company) or establishing a branch.

In practice, there are no operational differences between the two structures, and there are no business restrictions deriving from the type of structure. The creation of branches and subsidiaries requires the execution of a public deed with a Spanish notary public, and registration at the Commercial Registry. Both types of entities must comply with certain tax and accounting registrations and current obligations.

Subsidiary

A subsidiary is a company (i.e., an independent legal entity) that may conform to any of the corporate structures provided for under Spanish law. A subsidiary enjoys full legal standing and decision-making autonomy. It has its own share capital, articles of association, management bodies and governing policies.

The investment corporate vehicles most frequently used in Spain are the public limited company and the private limited company. Both exclude shareholders' liability for the company's obligations or liabilities. Spanish law also regulates other types of entities, in some of which shareholders have liability for the company's obligations if they are not settled.

Branch

A branch has no legal personality separate from the company to which it pertains. The head office and all its branches share the same legal personality (that is, they are all the same legal entity).

The establishment of a branch does not require compliance with all the requirements set out in Spanish law for the incorporation of a new company, but it is still necessary for a resolution to be passed by the head office of the company, a notarial deed to be executed in Spain and for at least two managers to be appointed and authorised to act in Spain on behalf of the branch. The branch must also comply with certain reporting obligations.

As regards the liability of the branch, because a branch has no separate legal personality, the foreign head company operating in Spain through a branch will be liable for the obligations of the branch.

ii Corporate law residency requirements

Under Spanish law, non-Spanish entities or individuals that carry out any activity with potential tax implications in Spain must obtain a tax identification number (tax ID) in Spain. A tax ID identifies individuals, legal entities and entities without legal personality pursuant to Law 58/2003 of 17 December for general tax purposes. Similarly, foreign individuals must request a foreign identification number.

iii Takeover bids by foreign companies

Under Royal Decree 1066/2007 of 27 July on takeover bids, the obligation to make a mandatory takeover bid would be triggered, irrespective of the nationality or residence of the bidders, if:

  1. a percentage of voting rights in the listed company equal to or more than 30 per cent of its voting rights is acquired, direct or indirectly; or
  2. upon an acquisition, the relevant company holds an interest carrying less than 30 per cent of the voting rights of the listed company, but within 24 months of the acquisition appoints a number of directors who, with those already appointed, represent at least one half plus one of the members of the board of directors of the listed company.

However, there are certain rules whose application varies depending on the nationality of the bidder, such as the possibility of releasing the directors of the affected company from their duty of passivity if the applicable law of the country of origin of the foreign bidder does not provide for the duty of passivity as a general duty, and the bidder has not submitted voluntarily thereto under a resolution adopted by its shareholders at a general meeting.

iv Other structures for on-the-ground presence

An alternative to creating a separate structure (i.e., neither a company nor a branch) for marketing and distributing foreign products in Spain is to enter into a distribution agreement or an agency agreement with a local company operating in Spain. Additionally, an investor may carry out a service in collaboration with another company through a joint venture.

Distribution and agency agreements must be carefully negotiated and drafted. When an agency agreement is terminated, the agent is entitled to claim an indemnity from the other company in consideration for the agent having attracted new clients for the principal party or increased sales to existing customers. Courts have also expanded the indemnification obligation to distribution agreements that are not clearly distinct from agency agreements. The indemnification cost may be significant.

Apart from contractual joint ventures, Spanish law provides for two additional forms of joint venture:

  1. temporary business alliances (TBAs), which are established for the purpose of carrying out a specific project or service, allowing several companies to operate together in one common project;11 and
  2. economic interest groupings (EIGs),12 which are commonly used to provide centralised services within the context of a broader association or group of companies, such as centralised purchasing, sales, information management or administrative services.

One of the key differences between TBAs and EIGs is that EIGs are commercial entities with a legal personality separate from their partners.

IV REVIEW PROCEDURE

i Definition of foreign investor and investment

The definition of a foreign investor varies depending on the specific law establishing the relevant foreign investment control.

For the purposes of the Screening Mechanism, foreign investors are:

  1. non-EU and non-EFTA residents; and
  2. EU or EFTA residents beneficially owned by non-EU and non-EFTA residents This occurs when non-EU and non-EFTA residents ultimately possess or control, directly or indirectly, more than 25 per cent of the share capital or voting rights of the investor, or otherwise exercise control, directly or indirectly, over the investor.

With regard to audiovisual communication services, foreign investors are defined as citizens or residents in a country that is not a member of the EEA, whereas for air transportation purposes, they are defined as non-EU nationals.

Furthermore, the concept of 'foreign investment' also depends on the applicable regulations setting out the control. In general, the concept would include:

  1. holdings in Spanish companies;
  2. establishment and an increase of capital allocated to branches;
  3. subscription for and acquisition of marketable debt security issued by residents;
  4. holdings in foreign investment funds registered with the CNMV;
  5. acquisitions of property located in Spain and valued at more than €3,005,060.52, or any investment from a tax haven jurisdiction regardless of the value of the property; and
  6. formation of or participation in joint ventures, foundations, economic interest groupings, cooperatives and co-ownerships if the total value exceeds €3,005,060.52, or any investment from a tax haven jurisdiction regardless of the amount.

Notwithstanding the above, for the purposes of the Screening Mechanism, FDIs are:

  1. investments that result in a foreign investor acquiring a stake of at least 10 per cent of the share capital of a Spanish company; and
  2. any corporate transaction, business action or legal transaction that enables effective participation in the management or control of a Spanish company.

ii Review procedure

The review procedure and the role of the Screening Mechanism (see Section II) with regard to investments in national defence-related activities are as follows:

  1. Under the ordinary procedure, prior authorisation from the Council of Ministers is required to close FDIs of this nature. The legal time frame for the issuance of a decision is six months.
  2. On a transitional basis, and for the Screening Mechanism only, a fast-track 30-day procedure applies for investments (1) agreed but not closed prior to 17 March 2020, and (2) below €5 million. Investments below €1 million are not subject to the Screening Mechanism.

In other sectors, the procedure differs between sectors and varies depending on the type of investment; in some cases, the nationality of the acquirer (i.e., EU versus non-EU investors) also introduces certain peculiarities. Given the limited scope of this chapter, only a brief overview of the main features of this procedure is provided.

The authorisation period ranges from 30 days to six months, depending on the particular sector. It is important to highlight that, in general, these authorisation periods may be suspended by the relevant competent body (through information requests), and the period can therefore be extended. As a general rule, if a resolution denying the acquisition is not issued after expiry of the specified period, authorisation can be presumed.

In the case of authorisations related to the financial sector, the information that must be provided in the authorisation request is broadly described in the applicable regulations and generally aims to offer proof of the investor's integrity, experience, solvency and its ability to comply with all the applicable sectoral legislation.

Except in the case of the energy sector, authorisations generally operate as a condition precedent, and the transaction cannot be closed until authorisation is obtained. In particular, gun-jumping the Screening Mechanism will render the transaction invalid and without any legal effect until the required authorisation is obtained. In addition, fines up to the value of the investment could be imposed.

During the review process, the public bodies concerned are obliged to keep information confidential.13 However, the dissemination of information between different departments has an inherent risk of leakage. In the event that information is leaked, the existence of the transaction could reach the media, but normally information provided to the regulator is not leaked.

With the exception of competition files, in which other participants in the sector may express their views regarding the potential acquisition, authorisation processes involve only the interested parties (the acquirer or the buyer, or both, as the case may be).

A public resolution denying an authorisation is subject to administrative or judicial challenge, or both.

iii Competition

Companies planning to enter the Spanish market should take into consideration the fact that the acquisition of, or merger with, companies active in Spain may be subject to a mandatory merger control review by competition authorities if certain thresholds are met. This mandatory review regime entails an obligation on the acquiring company or on the merging parties to notify the deal and to suspend its execution until clearance is obtained.

Transactions that may be subject to merger control review are mergers of two independent companies, acquisitions of sole or joint control and the creation of a joint venture.

Two sets of rules apply to transactions affecting the Spanish market: EU merger control rules14 and Spanish legislation. For transactions that do not reach the EU thresholds (typically those of a smaller scale), Spanish merger control legislation may apply. According to this legislation, transactions must be notified to the National Competition and Markets Commission if one of the following alternative thresholds is triggered: (1) if the transaction results in the acquisition or increase of a market share of 30 per cent or more in the relevant market in Spain (or 50 per cent if the turnover of the acquired company is below €10 million), or (2) if the combined turnover of the relevant undertakings in Spain amounts to €240 million, provided that at least two of the undertakings concerned have a turnover of €60 million in Spain.

V FOREIGN INVESTOR PROTECTION

Spain is a signatory to a number of multilateral international treaties related to the protection of foreign investments. In 1994, Spain joined the International Centre for Settlement of Investment Disputes (ICSID), whose primary purpose is to provide facilities for conciliation and the arbitration of international investment disputes. In 1998, Spain ratified its adhesion to the Energy Charter Treaty, signed in Lisbon on 17 December 1994, which establishes a legal framework for the promotion of long-term cooperation between its members in the energy sector and provides protection to investors similar to that established in the bilateral investment treaties (BITs) described below.

Moreover, Spain has entered into BITs for the promotion and protection of investments with a significant number of countries.15 These BITs have been agreed with countries that are, or are meant to be, the main focus of Spanish investments and that have a similar structure, which can be summarised as follows:

  1. admission and promotion in their respective territories of investments coming from the other country;
  2. the obligation for the host country to treat the foreign investment fairly and equitably;
  3. non-discrimination, which obliges the host country to confer on investors of the signatory country the same beneficial rights as those offered to third-country investors (most-favoured-nation clause) and to offer to those investors a treatment no less favourable than that granted to national investors (national treatment clause);
  4. the obligation for each country to allow investors from the other country to repatriate the rents, profits and any other payments related to the investments made; and
  5. the banning of expropriation or similar acts, except where, for public interest reasons, with no discrimination, the legal process is followed and there is appropriate compensation.

The BITs include mechanisms enabling investors to bring any dispute to different international tribunals of arbitration after a period of friendly negotiation and, in some cases, after submission of the dispute to the local jurisdiction.

In addition, from the perspective of private relationships between investors, any person has the right to submit any dispute to the Spanish courts (whenever these are competent), the decisions of which can be appealed before a higher court. Moreover, and regarding arbitration, in 1977, Spain adhered to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958, and has incorporated in its internal legislation16 the main features of the UNCITRAL Model Law on International Commercial Arbitration.

Finally, the Lisbon Treaty has given the European Commission full exclusive competence regarding FDI. Accordingly, the European Commission will gradually negotiate and sign new BITs on behalf of all Member States with a view to the progressive replacement of Member State BITs that are in force or may enter into force. However, until this replacement occurs, it is provided that Member State BITs with third countries may remain in force or enter into force as long as they do not constitute a serious obstacle to the negotiation or conclusion by the EU of bilateral investment agreements with third countries.

VI OTHER STRATEGIC CONSIDERATIONS

The choice of strategy for carrying out foreign investment in Spain will obviously depend on the features of the potential investment and the target (i.e., acquiring a controlling stake differs from acquiring a minority stake, and whether a regulatory approval or competition clearance is needed is also relevant).

As in every investment opportunity, it is critical to analyse the financial, legal and tax implications of the transaction beforehand, and the resulting structure, to make sure that any potential synergies are achieved. It is also advisable to gain an understanding of Spanish employment law and check that any labour plans for the target are lawful.

In the event of major investments triggering regulatory approvals by a supervisory authority (other than in a takeover bid scenario, where confidentiality is crucial), it is generally advisable to approach the relevant authority to explain the transaction and the proposed timetable. This will not guarantee that the transaction will be authorised, but it will certainly smooth over the process (when public officials are informed in advance of a given transaction and its background, they are likely to be more interested in starting the file analysis). However, any such approach should be considered on a case-by-case basis and balanced against the potential consequences of information leaks.

VII CURRENT DEVELOPMENTS

i Relevant investments

What follows is a list of the most significant investments made by foreign investors in Spanish companies or assets17 from July 2019 to June 2020:

  1. the acquisition by Vista Equity Partners (United States) of the shares of Accelya for a price over €1.3 billion;
  2. the acquisition by Brookfield (Canada) of 50 per cent of the shares of X-Elio, for a total price of over US$1.1 billion;
  3. the acquisition by F2i (Italy) of the shares of Renovalia for €700 million;
  4. the acquisition by Rhône Capital (France) of 45 per cent of the shares of MaxamCorp Holding, SL (€245 equity value);
  5. the acquisition by Cabot (United Kingdom) and Grove (United Kingdom) of a portfolio of unsecured loans of Banco Santander with an aggregate face value of €914 million;
  6. the acquisition by Deutsche Bank (Germany) and CarVal Investors (United States) of a portfolio of secured and unsecured loans and real estate-owned assets from Banco de Sabadell, SA with an aggregate outstanding balance amounting to around €2.4 billion;
  7. the acquisition by CPPIB (Canada) of special purpose vehicles containing non-performing loans and certificates or mortgages from Banco Santander worth €1.7 billion;
  8. the acquisition by GIC (Singapore) of 15 per cent of the Inspired Education Holdings Limited group for €200 million;
  9. the acquisition by APG Asset Management (Netherlands) of 49 per cent of the Celeo group (€1.2 billion equity value);
  10. the acquisition by Helvetia Insurance (Switzerland) of 70 per cent of the capital and voting rights of Caser for a total price of around €770 million;
  11. the acquisition by Lone Star (United States) of Ferro Corporation for US$492 million;
  12. the acquisition by Carlyle (United States) of 37 per cent of the share capital of Cepsa for around €2.9 billion; and
  13. the acquisition by SIX Group (Switzerland) of Bolsas y Mercados Españoles, by means of a tender offer, for a total price of €2.8 billion.

On a separate note, equity capital market activity in Spain suffered a significant slowdown during the past 12 months as a result of instability and volatility in the markets caused first by political uncertainties and second by the worldwide impact of covid-19. The outlook for the second half of 2020 is uncertain and will very much depend on the evolution of the pandemic.

ii Possible trends

The covid-19 crisis hit Spain very hard from both a public health and an economic standpoint. In this context, the government introduced the new Screening Mechanism as a tool to protect strategic Spanish companies, and the closing of certain foreign investments may be delayed. Notwithstanding this, and as highlighted in the introductory section, foreign investors should generally expect either to have their prospective investments authorised or, if the target is a critical participant in the Spanish market, to be requested to provide guarantees that the Spanish market will not be negatively affected.

The current economic uncertainty is unprecedented. On the one hand, uncertainty is detrimental to international trade and foreign investment, as risk-averse investors could be unwilling to close investments given the unpredictability of future cash flows of target companies – and some investors will abandon (or try to abandon) deals on grounds of material adverse changes, force majeure and similar reasons. On the other hand, the financial detriment suffered by Spanish companies (and by their owners) will lower their prices and increase their need for funding and liquidity, including via foreign investment – circumstances that could make Spanish companies whose business has not been fundamentally affected very attractive targets for all investors.

From a purely legal standpoint, the EU Screening Regulation becomes applicable in October 2020 and Spain will have to adapt the Screening Mechanism review process to EU standards (in particular, to allow other EU Member States and the European Commission to provide comments as part of the review process). In this context, additional amendments could be made to the substantive part of the Screening Mechanism to make the process faster and generally less stringent for the foreign investor. In addition, regulations to further develop the Screening Mechanism should be approved – in particular, to set the de minimis amount below which FDIs are not subject to the Screening Mechanism (until these regulations are approved, this amount will remain at the current figure of €1 million).


Footnotes

1 Edurne Navarro and Alfonso Ventoso are partners and David López Velázquez is a counsel at Uría Menéndez.

3 Source: Spanish Ministry of Economy, Industry and Competitiveness.

4 Source: Spain Invest Professional Services SL: http://sifdi.com/documents/IEDEspana2019.pdf.

5 Royal Decree 137/1993 of 29 January, on the regulation of weapons, and Royal Decree 130/2017 of 24 February, on the regulation of explosives, also establish the requirement of a special authorisation from the Council of Ministers for direct or indirect foreign investments in the firearm production and trade sector and the explosives production and trade sector.

6 Under Article 42 of the Spanish Commercial Code, control is assumed to exist when a person (the controlling person) in relation to another person (the controlled person): (1) holds the majority of the voting rights; (2) has the right to appoint or dismiss the majority of the members of the controlled person's management body; (3) may hold, by virtue of agreements with third parties, the majority of the voting rights; or (4) with its votes has effectively appointed the majority of the members of the controlled person's management body during the prior two fiscal years.

7 For this purpose, shares representing the share capital of Spanish airlines must be in registered form and the nationality of the relevant shareholders must be expressly stated.

8 Key energy assets include nuclear power stations, coal-fired power stations, oil refineries, oil pipelines and oil-bearing storage areas.

9 Red Eléctrica de España and Enagás GTS have additional restrictions in relation to the exercise of voting rights.

10 Law 10/2014 of 26 June on discipline, supervision and solvency of credit entities; Law 20/2015 of 14 July on management, supervision and solvency of insurers and reinsurers; and the Law on the Securities Market (approved by Royal Decree Law 4/2015 of 23 October).

11 Governed by Law 18/1982 of 26 May concerning the tax regime of temporary business groupings and associations and regional industrial development companies.

12 Governed by Law 12/1991 of 29 April on economic interest groupings.

13 Once the authorisation is granted, all or part of the information can be accessed by third parties in the internal registries that most regulatory bodies maintain.

14 If a transaction has an EU dimension, the European Commission will have exclusive jurisdiction over the merger, and the Spanish merger control procedure will not apply. In this regard, Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings sets out the relevant thresholds that trigger the obligation to notify the European Commission.

16 Law 60/2003 of 23 December on arbitration.

17 Sales of foreign assets or companies held by Spanish companies are not included in this list.