Transitional regime
Aggregation criteria
Persons linked to directors


Law 5/2021 of 12 April 2021, which amended the Corporate Enterprises Act (LSC) and other financial regulations, transposed Directive 2017/828 into Spanish law. According to its explanatory memorandum, this new regulation aims to improve the long-term financing received by listed companies through capital markets, as well as to increase transparency. Among other things, the law regulates the remuneration of directors and transactions between the company and its related parties.

The reform has given rise to many questions, especially regarding the regime of related party transactions provided for in Chapter VII(2) of Title XIV of the LSC. In order to clarify some of the issues raised, on 15 November 2021 the National Securities Market Commission (CNMV) published a Q&A. The CNMV has pointed out, however, that this is a non-binding document. Therefore, it is expected to be updated soon, in light of the numerous questions raised due to its complexity.

The paper provides criteria relating to the corporate governance requirements of:

  • the transitional application of the new related party transactions reporting and approval regime;
  • the aggregate of individual transactions entered into with the same related party;
  • determining the persons linked to directors;
  • the individual reporting thresholds;
  • the relevant aggregates of related party transactions;
  • the time at which related party transactions must be disclosed;
  • the audit committee's report; and
  • the distribution of dividends and other returns on similar contributions.

This article focuses on the first three requirements. A subsequent article will focus on the final five.

Transitional regime

The first transitional provision of Law 5/2021 establishes that the obligations deriving from the new Chapter VII(2) of the LSC will not be applicable until 3 July 2021, which is when it comes into force.

The CNMV has clarified that it refers to transactions entered with the same (related) counterparty as from 3 July 2021 and over a 12-month period, without considering those entered into prior to this date.

Aggregation criteria

Article 529 (21) of the LSC provides that related party transactions carried out with the same counterparty in the last 12 months shall be aggregated to determine whether the thresholds of article 529 (21) of the LSC have been exceeded.

Meaning of "same counterparty"
Law 5/2021 has adapted the meaning of "related party" as defined in the LSC to the one foreseen in the International Financial Reporting Standards. Specifically, regulation 24 of the International Accounting Standards (IAS) defines related parties of a listed company as "persons who do not have a direct relationship with the company but whose inclusion is due to their link with another related party".

The CNMV clarifies what should be understood by the term "counterparty" in article 529(23) of the LSC. It includes both the related natural or legal person itself and any other entity under its control (determined in accordance with article 42 of the Commercial Code). In addition, in the case of natural persons, it includes close relatives as referred to in article 231.1 of the LSC.

Related party transaction reporting requirements
In relation to the requirement to report related party transactions, the CNMV states that:

all transactions with the same related counterparty that have been made in the last 12 months and that transcends, in aggregate, the aforementioned threshold must be subject to the same reporting regime as if they had been made at a single point in time. At the latest, upon concluding the final transaction exceeding the threshold, all transactions carried out in the previous 12 months must be disclosed, including the audit committee's report(s) referred to in the regulations and the details of each transaction.

Therefore, given that this reporting requirement stems from an aggregation of transactions that cannot individually exceed the legal thresholds, companies must file a single report that covers all transactions over the previous 12 months.

The CNMV specifies that, as the amount of these transactions may vary, it is not necessary to identify each transaction individually. Instead, they can be listed in a joint report that is organised into "sub-groups", based on their nature and amount.

Further, the CNMV clarifies that, if certain transactions have already been reported for exceeding the thresholds of article 529 (21), either individually or in aggregate, it will not be necessary to report each subsequent transaction. Once the threshold has been surpassed, the count restarts and no new transaction reports are required until the thresholds are exceeded again, either individually or in aggregate.

Persons linked to directors

Article 231 of the LSC outlines which persons are considered as linked to directors; however, article 529(20)(1) of the LSC also expressly states what is meant by "related party transactions" with respect to listed companies and that the definition of "related party" includes any person who is to be considered a related party in accordance with the IAS as adopted by the European Union.

The CNMV notes that the second rule, which defines the concept of "related party transactions", is a specific regulation for listed companies and, therefore, will be exclusively applicable with regard to the requirement to disclose transactions of listed companies and without considering the definition contained in article 231 of the LSC.

For further information on this topic please contact Alexa Flórez at CMS Albiñana & Suarez de Lezo by telephone (+34 91 451 9300) or email ([email protected]). The CMS Albiñana & Suarez de Lezo website can be accessed at