On Saturday (2 March 2019), the Spanish Official State Gazzette (Boletín Oficial del Estado) published Royal Decree-Law 5/2019, approved on 1 March 2019, concerning the contingent measures approved by the Spanish Government in the event that a deal is not reached on the United Kingdom’s exit from the European Union.
The approved measures will enter into force only in case of a no-deal exit of the United Kingdom from the European Union and assuming that reciprocal measures are put in place by the UK for all natural and legal persons of Spanish nationality. Where said reciprocal measures are not put in place by the British authorities within the two months following the entry into force of the Spanish Royal Decree-Law, the approved measures will be suspended (a specific resolution of the Spanish Council of Ministers shall be required for this purpose).
Chapter IV of the Royal Decree-Law addresses the approved measures concerning the economic activities performed by UK companies providing financial services in Spain, whether established in the United Kingdom or Gibraltar.
With regards to the agreements relating to services considered reserved activities in Spain (i.e. banking, investment and/or insurance-reserved activities), where a UK company with registered office in the UK or Gibraltar provides services in Spain – authorised by the competent authority in the United Kingdom or in Gibraltar – which were entered into prior to the effective exit by the United Kingdom of the European Union, said contracts will remain enforceable after said exit and, therefore, all legal covenants between the parties shall be fully applicable.
As from the exit, said UK entities will be governed by the Spanish regulations applicable to third-countries (non-EU countries), irrespective of the validity and effectiveness of the contracts, as described above. Therefore, such entities shall be obliged to apply for a new authorization in order to be able to renew said contracts and to include any amendments that may result in the provision of new services in Spain or which affect the essential obligations of the parties, to provide new management activities related to said contracts which may require authorization (i.e. deposit-taking activities, investment advice and/or insurance brokerage or distribution) and to enter into new contracts. The management activities related to said contracts which do not need authorization will not require a new license.
Notwithstanding the above, the license originally granted by the competent British authorities will remain temporarily granted for a period of nine (9) months as from the exit of the United Kingdom from the European Union with regards to those contracts entered into prior to said date, with the aim of:
- Terminating or assigning said contracts in favour of a duly authorised entity in an orderly manner, in accordance with the contractual provisions in place;
- Applying for a new license in Spain in accordance with any of the legal regimes set out in the applicable legislation, including the incorporation of a subsidiary company. In this case, the temporary regime shall be effective as from the date when the relevant entity applies for the authorization or as from the date of enforcement of the Royal Decree-Law, whichever occurs last.
During said temporary regime, financial entities shall be governed by the same legal regime applicable prior to the exit of the United Kingdom from the European Union. The Bank of Spain (Banco de España), the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores) and/or the Spanish General Directorate of Insurance and Pension Funds (Dirección General de Seguros y Fondos de Pensiones) shall be entitled to ask the supervised entities for any documents or information they deem pertinent and, in case the information is not provided, to suspend the application of this temporary regime for the relevant entity. Furthermore, the Bank of Spain, the Spanish Securities Market Commission and/or the Spanish General Directorate of Insurance and Pension Funds shall be able to approve any measures they deem appropriate in order to ensure the required legal certainty and to protect the interests of the users that may be affected by the exit of the United Kingdom from the European Union.