The reform that encourages long-term shareholder engagement at listed companies has been approved and it introduces amendments in terms of corporate governance and the functioning of capital markets

España - 25 / 03 / 2021

Corporate Spain Commentary

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The Spanish parliament has approved the Law amending the Companies Act (Legislative Royal Decree 1/2010, of July 2, 2010) and other pieces of financial legislation, as regards the encouragement of long-term shareholder engagement at listed companies.

The purpose of the law is the transposition into Spanish law of Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement. The law also takes the opportunity to introduce other important amendments and changes into Spanish law, above all in relation to corporate governance and to encourage and enhance the functioning of capital markets.

Key changes:

It sets out the regime for related-party transactions systematically, new rules are introduced for the approval of these transactions and transparency is enhanced. The approval of intra-group transactions is made easier, in line with the legislation in the main European countries.
Listed companies are allowed to introduce loyalty shares with double voting rights in their bylaws.
Virtual-only shareholders’ meetings are allowed to be held for all capital companies including listed companies.
The appointment of legal persons as directors of listed companies is banned.
Rules are introduced on the right of listed companies to know the identity of the ultimate beneficiary owners and enabling them to exercise rights.
The transparency of institutional investors and asset managers is enhanced.
The role of proxy advisor is regulated for the first time.
New rules are introduced to speed up and add flexibility to processes for issuing shares and convertible bonds at listed companies and companies that are in the process of making an IPO.
The obligation for listed companies to publish quarterly financial information is removed.
It lays down that new remuneration policy proposals have to be approved before the end of the last fiscal year in which the policy in force applies.
In relation to takeover bids, the offeror is required to have reached, at least, 75% of the voting share capital of the target company for it to be able to delist the company without having to make a delisting takeover bid.
A number of corporate governance obligations are streamlined and revised.