CFCL Investment regulation – Spain
Reference
Regulatory structure
Please refer to the CBL Market infrastructure - Spain for the complete information about the regulatory structure.
Holding restrictions
Disclaimer
The information contained in the Holding Restrictions is based on a legal questionnaire obtained by CBL that was issued on 28 April 2022. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information. If there is any discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and customers should seek advice from independent professional counsel.
Customers are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.
Holding restrictions – Register Market - Spain
Restrictions on clients
Open-ended funds
No general restrictions on client residency for holdings held through CFCL. However, certain funds may impose specific restrictions on investor domicile.
Some restrictions include:
- Corporate/Investment documentation of the fund (e.g. articles of association or contractual documentation)
- Passporting requirements in relation to marketing/sale in or into the relevant other jurisdiction. If the fund does not have an authorisation to market its shares in a jurisdiction other than Spain, in principle, the fund would not be able to engage clients from that region.
- Spanish funds are subject to laws enforcing UN / EU sanctions which may bar transactions with residents of certain sanctioned countries.
- Spanish funds are also subject to AML laws which impose restrictions on transactions with residents from “high risk” / blacklisted jurisdictions.
- For the open-ended funds such as UCITS, there might be certain transparency requirements for Spanish retail clients.
Restrictions on settlement
There is no general restriction on settlement, however certain funds may impose specific settlement or transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.
Holding restrictions – CSD Market - Spain
Holding restrictions
Foreign investment in Spain and its settlement is generally deregulated according to Royal Decree (RD) 664/1999. This deregulation may be suspended under the following circumstances:
- The Council of Ministers may decide to suspend general deregulation measures in the event that the investments affect activities related to the exercise of public power, public order, security and public health. In this case it is necessary to request prior administrative authorisation.
- Activities directly related to National Defence require prior administrative authorisation and in addition are covered by special conditions (production of weapons, ammunition, explosives and war material).
- Special conditions that affect foreign investment in Spain in matters of air transport, radio, minerals, mineral raw materials of strategic interest and mining rights, television, gambling and telecommunications. This kind of investment must meet the specific legislation that regulates each sector regarding prior authorisations or administrative communications.
The above restrictions are directly related to RD 664/1999 and Law 18/1992 that determine the rules of foreign investment in Spain in matters of air transport, radio and minerals.
Disclosure requirements
Introductory information and categories
This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.
Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.
Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.
For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.
In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.
In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.
The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.
Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.
It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.
N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.
Disclosure categories
Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:
Category 1
Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;
Category 2
Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;
Category 3
Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.
Disclosure requirements – Register Market - Spain
Disclosure Category: 2
Clearstream Fund Centre S.A. (“CFCL”), is under an obligation, on demand, to disclose the identity and holdings of customers and/or ultimate beneficial owners holding Spanish funds.
Consent
In order to comply with the applicable legislation, Clients with holdings in Dutch investment funds or entering into transactions in the Spanish market must consent, and are hereby deemed to consent, to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds / financial instruments in their accounts with CFCL.
Disclosure Requirement
The Spanish asset managers, Spanish undertakings for collective investment in corporate form, and/or the Registrars are entitled to request disclosure of CFCL clients and /or ultimate beneficial owners of the fund units/shares to comply with their KYC obligations.
Background and legal basis
The legal basis for disclosure requirements may arise from the following:
- Law 10/2010 of 28 April 2010 on the prevention of money laundering and terrorist financing (“Ley 10/2010, de 28 de abril, de prevención del blanqueo de capitales y de la financiación del terrorismo”) (“Law 10/2010”).
- Royal Decree 304/2014 of 5 May, approving the Regulation of Law 10/2010, of 28 April, on the prevention of money laundering and terrorist financing (Real Decreto 304/2014, de 5 de mayo, por el que se aprueba el Reglamento de la Ley 10/2010, de 28 de abril, de prevención del blanqueo de capitales y de la financiación del terrorismo) ("RD 304/2014").
Sanctions
Non-compliance with the disclosure requirements by CFCL, CFCL’s client and/or the ultimate beneficial owner may result in the fund manager or its agent refusing acceptance of CFCL as an investor and/or refusing acceptance of the proposed investment. Each subscription of funds will be subject to KYC obligations.
Disclosure requirements – CSD Market - Spain
Disclosure Category: 2
Clearstream Fund Centre S.A. (“CFCL”), is under an obligation, on demand, to disclose the identity and holdings of customers and/or ultimate beneficial owners holding Spanish funds.
Consent
In order to comply with the local regulatory disclosure requirements, customers with holdings in Spanish investment funds must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Customers who do not grant such authority cannot hold such investment funds or financial instruments in their accounts with CFCL.
Disclosure requirements
The Spanish asset managers, Spanish undertakings for collective investment in corporate form, and/or the Registrars are entitled to request disclosure of CFCL customers and /or ultimate beneficial owners of the fund units/shares to comply with their KYC obligations.
Background and legal basis
The legal basis for disclosure requirements may arise from the following:
- Law 10/2010 of 28 April 2010 on the prevention of money laundering and terrorist financing (“Ley 10/2010, de 28 de abril, de prevención del blanqueo de capitales y de la financiación del terrorismo”) (“Law 10/2010”).
- Royal Decree 304/2014 of 5 May, approving the Regulation of Law 10/2010, of 28 April, on the prevention of money laundering and terrorist financing (Real Decreto 304/2014, de 5 de mayo, por el que se aprueba el Reglamento de la Ley 10/2010, de 28 de abril, de prevención del blanqueo de capitales y de la financiación del terrorismo) ("RD 304/2014")
Sanctions
Non-compliance with the disclosure requirements by CFCL, CFCL’s customer and/or the ultimate beneficial owner may result in the fund manager or its agent refusing acceptance of CFCL as an investor and/or refusing acceptance of the proposed investment. Each subscription of funds will be subject to KYC obligations.
Disclaimer
The information contained in the Disclosure Requirements is based on the legal opinion obtained by CBL acting as a sub-custodian for CFCL that was issued on 28 April 2022. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and Clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.