The Council of Ministers has approved a Proposed Draft Law (APL) for the Promotion of Business Financing whose objective is to make financing to SMEs more accessible and flexible and, in particular, to lay the foundations to strengthen sources of direct financing. An APL of Venture Capital Entities has also been approved that seeks to promote this formula with the same purpose of improving the financing of SMEs, as well as incorporating European Union law regarding the so-called alternative investment funds. The Council of Ministers has also analyzed a report on refinancing and restructuring of corporate debt for subsequent approval.

The main developments in the APL on the Promotion of Business Financing are the establishment of a system of advance notice and information by credit institutions for those SMEs that are restricted in their financing; the improvement of the functioning of the Reciprocal Guarantee Societies (SGR) and of the Spanish Company of Re-promotion (CERSA); the design of a specific regime for financial credit institutions; an adaptation of the securitization regulation; the improvement of the Spanish regime for issuing obligations; the strengthening of the Alternative Stock Market (MAB); and a proposal for regulation of the so-called crowdfunding.

More in detail, the APL regulates the following aspects:

Advance notice system by credit institutions. Credit institutions are obliged to offer advance notice of at least three months and specific information on the credit status of those SMEs whose financing is to be canceled or significantly reduced.

Improvement of the operation of Reciprocal Guarantee Societies (SGR). It is established that the reactivation of CERSA (Spanish Refinancing Company) is activated before the creditor in case of non-compliance of the SGR after the first requirement. Additionally, in order to strengthen the management, professionalism and good governance of the SGR, the requirements of honorability, knowledge and experience of credit institutions will be extended to their managers.

Specific legal regime for financial credit institutions. These entities will be provided with the most effective legal framework to maintain and enhance their activity. They will be fully oriented to business and consumer financing through alternative channels to strictly banking.

Improvement of the regulation of securitizations in Spain. The adoption of reforms with a double objective is proposed. On the one hand, it is about making the legal regime of securitizations more flexible to adapt this instrument to the current demands of the financial market, in line with the most advanced countries in the field. It also seeks to provide maximum legal certainty and give legal support to the usual operations in the field of securitizations.

Promote the functioning of the Alternative Stock Market (MAB). It is about facilitating the transit of companies from the Exchange to this alternative trading system. For this, the requirement of presenting an exclusion bid will be replaced by another less expensive mechanism, which guarantees adequate protection for minority investors. The transit from the MAB itself to the Stock Exchange of those companies whose development and growth demands the quotation in this official market is made more flexible.

Improvement of the bond issuance regime. Different measures are introduced in commercial regulation, aimed at facilitating the direct access of Spanish companies to debt markets by eliminating limits on the issuance of obligations.

Crowdfunding regulation. In line with the consultations carried out in other countries of our environment, a preliminary regulation proposal is included in the APL in which the conditions for the operation of this new system are established, based on electronic platforms that directly contact investors and projects. The objective is to promote a new tool for direct financing of business projects in their initial stages of development, while protecting investors. To do this, the obligations of these platforms are fixed, ensuring that they are transparent and that investors have sufficient information. Limits are set per investor both per project (€ 3,000) and per platform (€ 6,000 per year).

The APL of Venture Capital Entities (ECR) introduces improvements that will allow the further development of this business financing channel. In particular, through the creation of ECR-SMEs, financing is promoted through capital and debt instruments of companies in their early stages of development and expansion. These types of entities will invest at least 70% of their assets in SMEs, in addition to participating in management and providing advice. They will benefit from a more flexible financial regime than that of traditional venture capital entities as they will be able to make greater use of debt financial instruments.

In line with the transposition of the alternative investment managers directive another series of reforms are addressed:

  • Introduction of new requirements to management companies in terms of their structure and organization to ensure control of risks, liquidity and conflicts of interest, and specifically to comply with a remuneration policy that avoids taking excessive risks.
  • Streamlining and reduction of administrative burdens in the regime of venture capital entities, which will no longer be subject to an authorization regime but of simple registration before the National Securities Market Commission (CNMV).
  • Adjustment of the minimum own resources requirements of the management companies, which are aligned with those of the board and the rest of European partners.
  • Adaptation of the cross-border marketing and management of funds managed by European and foreign management companies.

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