DECISION OF THE GENERAL DIRECTORATE ON REGISTRIES AND NOTARIAL ACTIVITIES DATED OCTOBER 6, 2015: NO PUBLIC DEED REQUIREMENT FOR REGISTERING PROPERTY JUDICIALLY AWARDED IN AN INSOLVENCY PROCEEDING

The General Directorate on Registers and Notarial Activities (Direccion General de los Registros y del Notariado, the "DGRN") reasoned that under article 155 of the Insolvency Act, registration in the register of acts to dispose of or encumber any assets or rights that are part of the estate requires evidence of the court order approving the transfer . Moreover, the judicial approval must be registered under the appropriate formal deed. Therefore , as a general rule,if an order is limited to the approval of a disposal, registration would require issuance of a public deed to supplement the judi cial approval of the transfer.

However, this case involved a court order (at the request of the insolvency administration and awardee) that stated its character as a public instrument to transfer ownership, and that it was a deed meeting the requirements of registration in the public registers. In view of this, the DGRN qualified the above general rule and held that proof of the court order expressed in these terms was sufficient evidence of a public instrument for registration purposes.

DECISION OF THE GENERAL DIRECTORATE ON REGISTRIES AND NOTARIAL ACTIVITIES DATED JULY 27,2015: POWER OF THE GENERAL SHAREHOLDERS MEETING TO DELIBERATE AND DECIDE ON THE ACQUISITION , SALE OR CONTRIBUTION OF MATERIAL ASSETS TO ANOTHER COMPANY (ARTICLE 160(F) OF THE COMPANIES ACT)

The DGRN considered whether registration of a mortgage on a property as collateral for a loan required substantiation that the mortgaged property was a material asset of the mortgagee company and, if so, w hether registration also required the certificate of the general shareholders meeting's resolution approving or ratifying the creation of the mortgage, all in accordance w ith article 160(f) of the Companies Act.4

Although the resolution did not address whether the scope of the provision's application covers encumbrances on material assets, it ruled on two controversia l points related to its interpretation: (i) it deemed sufficient that the statement regarding the non-material nature of the assets was made by the company's representative, and that this statement was not a requirement for the registration of the deed; and (ii) it applied by analogy article 234.2 of the Companies Act to protect third party purchasers acting in good fa ith and w ithout gross negligence.

DECISION OF THE GENERAL DIRECTORATE ON REGISTRIES AND NOTARIA L ACTIVITIES DATED MAY 14, 2015: APPLICATION OF ACT 2/2009 ON CONTRACT ING WITH CONSUMERS FOR MORTGAGE BACKED CREDITS OR LOANS TO NON-CREDIT INSTITUTION GRANTORS OF MORTGAGE LOANS

The DGRN analysed whether Act 2/20095 was applicable in the case of a mortgage assignment or only to the grant of loans and credits. This rule governs the granting of mortgage backed loans and credits, and intermediary and advisory services rendered by non-credit institution entities in the course of granting loans and credits to consumers. It establishes obligations related to transparency and information, registration in specific professional lender registries created for these purposes, and the purchase of liability insurance or bank guarantees to cover any liabilities incurred towards consumers.

The resolution recognizes that Act 2/2009 aims to ensure transparency in contracting with consumers for loans, and that the obligations imposed must arise in the pre-contractual and loan origination stages. However, the DGRN states that this does not exclude the need for the assignee (a non-credit institution that regularly conducts transactions w ith consumers to grant or assign mortgages) to satisfy its obligations of registration in the public register specific to professional lenders and the purchase of liability insurance or a bank guarantee. These obligations cover the creditors' potential liability in dealing w ith consumers for damages arising from granting loans, w hich arise throughout the life of the loan and not just dur ing its origination stage.

ACCOUNTING AND AUDITING INSTITUTE (ICAC) RESOLUTION OF JUNE 20 15 ON THE INTERPRETAT ION OF THE TERMS "DEBT," "FINANCIAL DEBT," AN D "GROUP" UNDER ARTICLE 71 BIS AND THE 4TH ADDITIONAL PROVISION OF THE INSOLVENCY ACT

The Accounting and Auditing Institute (Instituto de Contabilidad y Auditoria de Cuentas, the "ICAC") published an opinion (consultation no. 1of the ICAC Official Gazette no. 102/2015) in response to a consultation request to clarify discrepancies in the interpretation of several terms in the Insolvency Act as applied to collective refinancing agreements (article 71.1 bis) and court-sanctioned refinancing agreements (4th Additional Provision). We summarize its conclusions below:

  1. "Debt" (article 71 bis.1of the Insolvency Act6) : Sum of the amounts payable to holders of debt claims or otherw ise payable amounts . Calculation of this amount should start from the liabilities portion of the balance sheet and make adjustme nts to exclude any items that are not classified as creditor claims due to not being backed by a debt claim against the company (e.g., deferred tax liabilities,provisions,prepayments and accrued income). Amounts must be calculated based on the debt principal, interest and other amounts due on the date of the refinancing agreement, under the terms and conditions of the agreement. The book value can be used as an approximation for debts va lued at amortized cost.
  2. "Financing debt" (4th Additional Provision of the Insolvency Act7): Claims payable to creditors that have provided financing to the company through capital markets (including bonds and promissory notes) or on a bilateral or multilateral basis. This does not cover employment claims, public claims or commercial claims.
  3. "Group" (article 71 bis.1of the Insolvency Act8): This matches the concept established under article 42 of the Commercial Code.

The opinion also clarifies the following issues concerning group agreements:

  1. Group agreements are collective refinancing agreements in w hich the debtor is the complete set of the group companies that sign the agreement.
  2. Possible structures:
    1. A Spanish parent company and one or more subsidiaries.
    2. Subgroup, understood as a Spanish subsidiary, whic h in turn controls another Spanish company.
    3. Two Spanish subsidia ries controlled by the parent of a group or subgroup.
  3. The three-fifths proportion is calculated individually for each affected company and on a consolidated basis only in respect of group or subgroup companies that signed the agreement. In both cases, the calculation is exclusive of the loans and credit extended by any group company, regardless of w hether it is based in Spain or abroad and whether it signed the agreement .

Calculation on a consolidated basis does not trigger an obligation to prepare consolidated financial statements.