Country Note Spain 2024

CELIS Country Note on Spain, 2024
by Jesús García Aparicio and Paula Arroyo, CELIS Country Reporter for Spain

Foreign investments in Spain have been liberalized since 2003, except for certain sectors. However, the current legal framework requires pre-closing authorization by the Spanish regulator for screening and control of foreign investments in Spanish companies and/or assets under certain circumstances. The screening mechanism applies when a foreign investor invests in Spanish companies (share deals) or/and assets (asset deals) that operate in or relate to specific strategic sectors that affect public security, public order, and/or public health.
Specifically, these sectors include (i) critical infrastructures, (ii) critical technologies, (iii) supply of key inputs, (iii) sectors with access to sensitive information, and (v) media. The mechanism also applies when the foreign investor meets certain subjective features, irrespective of the target sector in which the investment is made. In this case, the major concern is investments conducted by foreign investors directly or indirectly controlled by foreign governments, their public agencies, or armed forces. The legal framework covers not only the direct acquisitions of Spanish companies and/or assets in critical sectors, but also indirect acquisitions. The general screening mechanism co-exists with other specific sectorial regulations in some key industries such as national defense, telecommunications, or the air sector. In such cases, investments must comply not only with the general screening and control regime, but also with the additional requirements set forth in the applicable sectorial regulation.
If the foreign investment falls within the scope of the screening and control mechanism, the foreign investor must submit an authorization request to the Directorate General of
International Trade and Investments of the Ministry of Economy, Trade, and  Enterprise. The authorization application consists of a formal administrative request for the authorization granted by the relevant Spanish FDI authority and an official standardized questionnaire, which must be duly completed. The procedure must be resolved within three months regardless the amount of the investment. If the investment is conducted without prior clearance, it will be ineffective (null and void) until duly obtained and the investor will not be until them entitled to exercise its political and economic right in the Spanish company. Penalties in case of infringement may result in monetary fines and public or private reprimands. A voluntary consultation procedure is also available if there are doubts about whether the investment is subject to prior clearance or not. An interim legal framework applies to certain investments coming from residents in countries of the European Union (“EU”) or the European Free Trade Association (“EFTA”), other than Spain, or from residents in Spain with an ultimate beneficial owner in an EU or EFTA country until 31 December 2024

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