Investment funds in Spain are regulated by the European Union (EU) directives, which provide a comprehensive framework for various types of investment vehicles. The types of investment funds that can be registered in Spain may be set up as open-ended or closed-ended vehicles. These characteristics refer to the limitations that investors can have with regards to the issuance of shares.
Open-ended funds are not limited to a certain amount and the laws referring to their activity are less restrictive than in the case of closed-ended funds. However, businessmen should know that the legal framework available here provides many business opportunities for bothretail and professional investors and our team of agents in company formation in Spain can offer more details on the main advantages of the Spanish investment vehicles.
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Alternative investment funds in Spain
Investors interested in company formation in Spain should know that they can register an alternative investment fund as an investment vehicle or as a corporate entity. At the same time, such funds can be registered as open-ended orclosed-ended, following two different legislations.
Open-ended funds in Spain are regulated by the Collective Investment Schemes legislation and the Royal Decree 83/2015. Closed-ended funds are also regulated under the above mentioned legislation, but also under the Law 22/2014. Our team of consultants in company registration in Spain can present more details on the legislation regulating these types of funds.
According to the legislation regulating alternative investment funds (AIFs), this type of fund can be registered with multiple compartments; regardless of the number of compartments, the basic characteristic of this type of fund is that it is used as a means of raising capital from various types of investors, with the purpose of accomplishing a specific investment policy.
Businessmen who want to open a company in Spain operating as an AIF should also know that this type of fund does not require to obtain an authorization to operate on the local market, as per the regulations of the Directive 2009/65/EC (Article 5).
Although the fund itself does not need to be authorized by the local financial institutions, it is legally required to appoint managers or fund advisers who are licensed in developing their specific activities. The authorization requirement is only applicable to AIFs registered as closed-ended funds, if the fund was incorporated in Spain.
In the case of a closed-ended AIF registered in one of the member states of the EU, the authorization is no longer required, because it is understood that this type of fund has already applied for an authorization in its country of residence. When we refer to AIFs incorporated in third party countries, the procedure for company formation in Spain requires such structures to obtain an authorization before starting any investment activities in this country.
What does the authorization process involve in Spain?
In order to receive the authorization for developing investment activities in Spain, the representatives on an AIF must deposit a set of documents with the Spanish National Securities Market Commission (CNMV). Some of the basic documents investors should prepare in this case are the following: the fund’s rules of management, the fund’s prospectus and the accreditation of good reputations of the persons representing the fund, such as fund administrators.
Regardless of the type of AIF selected during the procedure of company registration in Spain, it is legally required to have the fund registered with the special register of the CNMV. Funds requiring an authorization will receive an answer from the institution in a period of maximum two months since the authorization application was submitted.
The following video offers a short description on the types of investment funds that can be set up in Spain:
What are the statistics on the Spanish investment funds?
The latest data gathered by the Organization for Economic Cooperation and Development (OECD) provides information on the value of the funds registered in Spain. The data collected by the institution divides the Spanish investment funds into two main categories, namely the non-money market funds and money market funds. The following information is available for the activity of such funds at the level of 2018 and it takes into consideration the financial assets of institutional investors:
- in 2018, the total value of the assets held by institutional investors investing in Spain stood at EUR 292,476 million;
- the total value of the non-money market funds in Spain stood at EUR 285,656 million;
- the value of non-money market funds incorporated as open-ended vehicles accounted for EUR 285,248 million;
- closed-ended non-money market funds in Spain had a much lower value, of only EUR 408 million;
- the total value of money market funds in Spain accounted for EUR 6,819 million.
What is the law for foreign fund managers in Spain?
Investment funds in Spain, regardless of their type, must usually be managed by a fund manager, who can be represent by a natural person or a legal entity. When appointing a fund manager for an investment fund in Spain, investors also have the possibility of delegating this task to a foreign fund manager.
Foreign fund managers are allowed to manage funds in Spain if they have obtained an authorization in a EU member state, prescribed under the regulations of the Directive 2009/65/EC. In Spain, the legal framework is given by the Law 35/2003 and it refers to the foreign fund managers managing open-ended funds activating in this country.
With regards to the management of a closed-ended fund, the regulations of the Law 22/2014 will apply. In this case, investors can appoint foreign fund managers, as long as they have been authorized in another EU member state by the same Directive. However, in this situation, they need to file a request for approval with the CNMV. Our team of consultants in company registration in Spain can offer information on the documents fund managers should submit with the institution.
Collective investment funds in Spain
The Spanish collective investment schemes (CIS) can be registered under three main categories: financial CIS, non-financial CIS and private equity CIS. Furthermore, each of these categories is comprised of different legal entities. The financial CIS can be set up as a financial company with variable capital (SICAV) or as an investment fund in which the assets of the fund belong to various investors participating in the fund and our team of agents in company formation in Spain can provide more details referring to the specifics of this type of vehicle.
Non-financial CIS can be set up as closed-ended investment companies in the real estate field or as investment funds established in the same industry. Private equity CIS can also be registered either as a fund or as an investment company. Businessmen interested in receiving more details on the main types of investment funds available in this country are invited to contact our team of consultants in company incorporation in Spain.