The Council of Ministers has approved the Bill (PL) that regulates Venture Capital Entities and Collective Investment Entities of a closed type and which modifies the Law on Collective Investment Institutions (IIC). The main changes seek to favor sources of direct financing for companies, currently too dependent on bank credit. In venture capital, the objective is to reorient the investment towards the financing of companies in the early stages of development and expansion, with new figures and more flexible financing formulas. In addition, the community directive of managers of alternative investment funds is transposed, which implies new rules regarding structure, organization, risk management and remuneration for the management companies and a new cross-border marketing and management regime with a European passport.

As regards venture capital, the figure of the SME Venture Capital Entity (ECR-SME) is created, which will allow the creation of debt funds aimed at financing SMEs. This figure will benefit from a more flexible financial regime, invest at least 70% of its assets in SMEs, being able to use both capital instruments, participatory loans and debt to provide financing to these SMEs.

The rule also makes the financial regime of risk capital entities more flexible, with various adjustments to facilitate the operation of these entities, such as greater use of participatory loans, more flexibility in the calculation of deadlines for compliance with the mandatory investment coefficient and the possibility that Venture Capital Funds may distribute results periodically.

The PL approved today also transposes the Alternative Investment Fund Managers Directive that sets the harmonized framework of conditions for authorization, commercialization, conduct and organization of the managers of these investment funds at European level. These funds correspond to venture capital entities, closed-type collective investment entities and non-harmonized collective investment institutions, such as free investment IICs (hegde funds) or real estate IICs.

Among the main novelties is the speeding up and reduction of administrative burdens in the regime of venture capital entities, since the authorization regime is maintained exclusively for its managers. On the other hand, venture capital entities and collective investment entities of closed type will be subject to a simpler regime of simple registration with the CNMV. And on the other hand, as for the management companies, although they are subject to a strict authorization regime, certain charges are waived in the case of those that do not sell to retailers and do not exceed a certain threshold of volume of managed assets (100M € or € 500M depending on whether the funds are leveraged or not).

Requirements are established for all management companies in terms of their structure and organization to ensure control of risks, liquidity and conflicts of interest. This includes the requirement to comply with a remuneration policy that avoids taking excessive risks. The remuneration policy must be compatible with the business strategy, it will be approved by the management body that is responsible for its application and will be periodically evaluated. Guidelines for variable remuneration are also established, so that at least 50% of this is received in the form of participations of managed institutions or similar property interests and the deferral of at least 40% is established.

The commercialization of ECR ​​is limited to qualified investors, professional investors and retailers provided they commit to invest at least 100,000 euros and declare in writing that they are aware of the risks linked to the planned commitment. Finally, the cross-border marketing and management system of alternative investment funds managed by European and foreign management companies is also included. This new regime is based on the existence of a passport for European funds by European managers authorized under the directive, thus promoting a genuine internal market for alternative investment funds.

Finally, the Law on the Regulation of Pension Plans and Funds is modified to comply with the transposition of the Directive. Specifically, alternative investment fund managers will be allowed to manage the investments of the pension funds, without prejudice to the express reference to the pension plan and pension fund regulators alternative investment funds.



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