ALTERNATIVE EQUITY MARKET REGULATION REFORM: OVERVIEW,
GROWTH COMPANIES AND SPANISH REAL ESTATE INVESTMENT ENTITIES
MODIFICATION OF LISTING REQUIREMENTS AND INFORMATION SUBMITTED BY GROWTH
COMPANIES AND SOCIMIS
OTHER AMENDMENTS 5
On February 10, 2016, the Alternative Equity Market (Mercado
Alternativo Bursátil, “MAB”) published the revised text of its general
regulations and a series of new circulars, providing a comprehensive
review of the market’s operation, the listing requirements, and the
reporting obligations of the companies whose shares can be traded on
the MAB. This new regulation incorporates the changes needed to adapt
I CORPORATE AREA
March 17, 2016
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to the Act to Promote Business Financing1
(“LFFE”), the new audit legislation3 ,
and post-trade system reforms.4
It also includes several technical corrections and
adapts legislative references to the revised LMV text. The effective date of most
updates introduced by the reform is March 9, 2016. However, the new regulations
foresee some exceptions and transitional periods and regimes on certain issues.
This legal flash explains the most significant updates concerning the overall
market, registered advisors, and admission and trading in the growth companies
and SOCIMIs segments.
MODIFICATION OF LISTING REQUIREMENTS AND INFORMATION SUBMITTED BY
GROWTH COMPANIES AND SOCIMIs
MAB regulation now includes a more detailed description of the obligations and
duties of security issuers admitted to the market. Specifically, it lays out the rules
of conduct with regard to market abuse, disclosure and processing of information
and obligations concerning the market capitalization of entities. MAB regulatory
reform includes the approval of Circular 6/2016, establishing the requirements for
market listing; and Circular 7/2016, governing the disclosure requirements
applicable to growth companies and SOCIMIs. Circular 6/2016 also details the
procedure for delisting securities through a delisting procedure led by the MAB’s
Updated requirements for market admission
(a) On joining the MAB, growth companies must have a capitalization less than
€500 million. However, if, during a continuous period of six months, growth
companies and also SOCIMIs admitted for trading on the MAB exceed a
capitalization of €500 million, they must request admission to a regulated
market —i.e., the stock exchanges— within nine months. Article 77.3 of the
Act 5/2015, of April 23. The most noteworthy aspects of this regulation are detailed in our Legal flash - Main
Innovations in the Law on Promoting Business Financing.
MAB regulation includes, i.e., the provisions of article 323 of the revised text of the Securities Market Act
(“LMV”), on the responsibility of the issuer and its management for the information disclosed to the market.
Act 22/2015, of June 20.
The reform of the securities registration, clearing, and settlement systems has been accomplished mainly
through Act 11/2015, of June 18 and Royal Decree 878/2015, of October 2. Details of the post-trade system
reform are featured in our Legal flash - Royal Decree 878/2015: Reform of Spanish Post-Trading Systems.
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LMV5 allows the CNMV to establish certain exemptions to this rule, and it
was expected that some would apply specifically to SOCIMIs. However, to
date, this has not occurred and the application of exemptions is analyzed on
a case-by-case basis.
(b) The shareholding diffusion requirements for growth companies have
changed. For these entities, the distribution requirement of the initial, sale
offer before listing is eliminated. They are now only subject
to the general diffusion requirements (estimated value of shares equal to or
greater than €2 million owned by shareholders holding less than 5% of the
The diffusion requirements7 for SOCIMIs have not been amended. However,
those that do not meet these requirements on admission will have one year
to comply. In the case of SOCIMIs that have been already admitted, this
one-year period will begin on the effective date of Circular 6/2016, March 9,
2016, and will extend to March 9, 2017. If a SOCIMI does not comply with
this obligation, the company may be delisted, which would affect its tax
The MAB admission document must specify the number of shareholders for
both types of entities.
(c) The Circular requires that growth companies and SOCIMIs that will be listed
on the MAB have an internal code of conduct regarding securities markets.8
The board of directors must provide a report confirming that the company
has prepared this document.
(d) Additional formalities and documentation are required for the admission file.
In addition to the admission document (the content of which is now regulated
in detail in Appendix I of Circular 6/2016), growth companies and SOCIMIs
must prepare and submit, as applicable:
This obligation was introduced by the LFFE through the drafting of the new section 2 of former article 32, which
corresponds to current LMV article 77.
Under Circular 4/2014, if before joining the MAB, there was an offer of sale or subscription, the estimated value
of the shares offered could not be less than €2 million, and it had to be owned by shareholders holding less
than 5% of the share capital.
Shareholders with less than 5% of the share capital are required to own at least an estimated €2 million in
shares or 25% of the share capital.
It is worth noting that article 322.3 LMV (previously article 121) had already established that Chapter II of Title
VII of the LMV on market abuse applied to trading via multilateral trading systems.
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(i) A valuation report from an independent expert to determine the initial
trading price, unless it has carried out a preliminary placement or
financial transaction establishing this price in the six months before the
application for admission.
(ii) Reports from the board of directors on the statements included in the
admission document and confirming that, after conducting an adequate
analysis, the company has:
the working capital to conduct its activity in the 12 months
following admission. It may be convenient for the board to rely
on the opinion of an independent expert; and
an organizational structure that will enable compliance with the
applicable reporting obligations, particularly with regard to
internal control of financial information.
These reports will be analyzed and evaluated by a registered advisor (see
(iii) The appropriate documents and reports (e.g., a comfort letter from the
auditor or a certificate from the author(s) of the due diligence report)
specifying the scope and the date, addressed to the registered advisor
who has to be able to verify and assess: (i) the legal and financial due
diligence process conducted and its adequacy for the purposes of
admission; and (ii) the financial information provided by the company
in the admission document.
(iv) The cover of the admission document must include a warning to
investors about the increased risk of investing in the MAB, which
requires advice from an independent professional.
Updated reporting requirements for growth companies and SOCIMIs
The reform also increases the reporting requirements growth companies and
SOCIMIs must fulfill once admitted for trading. While trading on the MAB was
already subject to market abuse regulations under the LMV, the regulation now
introduces the obligation of issuers to report relevant information as defined in
Regulation 596/20149 and articles 228 and 323 of the LMV.
Regulation (EU) 596/2014 of the European Parliament and of the Council of April, 16, 2014, on market abuse.
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Specifically, the following obligations will apply to SOCIMIs and growth
(a) They must submit the half-year financial report for limited review by the
auditor. This obligation will be applied for the first time to the financial
information for the first semester of 2016. As a result of this new
requirement, the deadline to disclose the half-year report is extended to four
months following the close of the first semester of each year.
(b) They must inform the market if any administrator does not sign the financial
statements and why, and if any votes are cast against the formulation of the
They must also report any limitations of scope, lack of opinion,
or provisos in the auditor’s report.
(c) The issuers are obliged to immediately report significant shareholdings to
the market as soon as they receive the notification from their shareholders.
(d) They must report, as swiftly as possible and well in advance, all corporate
and financial transactions that affect the securities, especially corporate
decisions and policies regarding the rights associated with these securities,
(recognition, amendment, and effective terms and dates). Corporate
resolutions regarding rights for any payment have to be approved at least
five days before the payment date.
Both Circulars, 6/2016 and 7/2016, are applicable from March 9, 2016, excluding
the exceptions foreseen for certain obligations, as we have detailed.
Strengthen of the role of registered advisor
Circular 8/2016 establishes the requirements and role of registered advisors,
which it defines as “specialized professionals” who must ensure that issuers
effectively comply with their formal and substantive obligations. Their duties are
extended so that they are no longer limited to assisting and advising companies
in the process of admission and the subsequent trading of shares on the MAB;
they now supervise their compliance performance.
Specifically, during the MAB admission process, registered advisors must: (a)
analyze and assess the business model, sector, and context of the company that
Article 253.2 of the Companies Act (Ley de Sociedades de Capital) already imposed the obligation of companies
to specify in the accounts and the management report any missing signatures of directors and the cause.
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will be admitted; (b) analyze and assess the company’s business plan, structure,
financial information internal control system and the board of directors’ working
capital report; (c) review and evaluate the auditor’s comfort letter and the due
diligence report, assessing their adequacy and scope; and (d) analyze and assess,
initially and every year after admission, the procedures that ensure consistency
of the company’s disclosure of information and the means available to the
company’s board, directors and managers to meet the entity’s obligations.
Once the company has joined the market, the registered advisor will assist and
advise the company to meet its obligations and supervise its performance. The
registered advisor will maintain regular contact with the company, proving that
by providing a schedule of regular meetings and a list of those in attendance;
The requirements to be a registered advisor on the MAB are regulated in the
strictest sense by Circular 8/2016. The main updates are:
The registered advisor must be subject to the supervision of the CNMV, the
Bank of Spain or the ICAC11 . Alternatively, it must provide reports evidencing
its suitability to perform the role (i.e. detailing its organization and structure,
management of conflicts of interests or compliance with money laundering
regulations). They must have at least three years’ certified prior experience
performing a key role in advising companies on their actions in the securities
Employees assigned to perform the duties of registered advisor (with the
exception of ESIs, credit institutions and their managers) must prove their
integrity and professional reputation by issuing an express statement.
Registered advisor’s regulations on conflicts of interest extend to its qualified
employees and any other professional who assists in this activity. Registered
advisors cannot belong to the same group as the company they advise.
Entities that the CNMV has sanctioned for breach of their obligations of
conduct cannot act as advisors.
Circular 8/2016 will apply from March 9, 2016, replacing and superseding the
previous Circular 10/201012 and section 4 of Circular 2/2013.13 However, the
Institute of Accounting and Auditing.
Circular 10/2010, of January 4, on Registered Advisors in the MAB.
Circular 2/2013, on the regime applicable to Spanish real estate investment trusts (SOCIMIs), whose securities
are listed on the Alternative Equity Market.
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provisions on the content of the relationship between the issuer and the registered
advisor, under the Fourth Rule,14
will apply from July 31, 2016, to the appointment
of registered advisors effective from the publication date of this Circular.
Changes to the functioning of the market
The main changes to the operation of the MAB are a result of reforming the posttrade
systems. The MAB’s systems are adapted to the new procedures for
registering, clearing and settling securities under article 328 of the LMV.
Title VII of the MAB regulation establishes that registration of securities admitted
on the MAB will be conducted by Iberclear, which will serve as the central
securities depository. BME Clearing will be the market’s central counterparty
clearing the transactions. Iberclear will also be responsible for the settlement that
will be moved up to T+2.
The updates regarding market members and the registration, clearing, and
settlement of securities will enter into force on April 27, 2016, with the exception
of the shortened T+2 settlement deadline, whose effective date will be determined
Finally, the regulation is amended to reinforce market oversight. Specifically, (i)
it details the oversight and control methods that may apply to issuing entities,
registered advisors, and market members; (ii) it classifies in greater detail the
causes of noncompliance they may incur; (iii) it regulates the possibility of
interrupting the actions of market members and operators as a precautionary
measure; and (iv) it regulates the applicable disciplinary procedures more clearly.
© 2016 CUATRECASAS, GONÇALVES PEREIRA. All rights reserved.
This document contains legal information prepared by Cuatrecasas, Gonçalves Pereira. This information does not
constitute legal advice. Cuatrecasas, Gonçalves Pereira owns the intellectual property rights to this document. Any
reproduction, distribution, transfer or use of this document, whether fully or partially, will require the prior consent
of Cuatrecasas, Gonçalves Pereira.
The Fourth Rule states that the relationship between the registered advisor and the entity will be part of a
professional advisory services relationship and will cover all obligations and services provided in the regulation
and the circular. The agreements must foresee the issuers’ obligation to provide their registered advisors with
the information necessary to meet their obligations.