AIFM passporting in Spain

The AIFMD was transposed mainly into Spanish law by means of Law 22/2014 of 12 November on venture capital entities, other closed ended collective investment schemes and their management companies (“LECROSI”) and came into force on 14 November 2014.

According to the letter of the law, EEA AIFMs would be able to manage and market open and/or closed ended EEA and Non EEA AIFs in Spain on a freedom to provide services and/or freedom of establishment basis.

If an EEA AIFM wishes to manage and market open and/or closed ended EEA AIFs to professional investors located in Spain, a passporting process must be carried out in order to legally offer those EEA AIFs. The passporting process would be similar to that foreseen for UCITS. The process will involve the EEA State competent authority sending a management passport notification to the Spanish securities market regulator (the “CNMV”) on behalf of the EEA AIFM.

On the other hand, if an EEA AIFM wishes to manage and market open and/or closed ended Non EEA AIFs to professional investors located in Spain, an authorization process must be carried out in order to legally offer those Non EEA AIFs.

Finally, if an EEA AIFM wishes to manage and market AIFs, regardless of whether they are open or closed ended or EEA or Non EEA, to retail investors located in Spain, an authorisation process must be carried out in order to legally offer those AIFs.

Law 18/2022, on creation and growth of companies, has recently introduced several amendments to the LECROSI, in particular, permitting the marketing of a particular kind of Spanish AIFs (entidades de capital riesgo) to retail investors, subject to the compliance with the following conditions:

1. A personalised recommendation is issued by an entity authorised to provide investment advice;
2. The minimum initial investment is made for a minimum of 10,000 euros (compared to the minimum of 100,000 euros previously required in the former text of LECROSI); and 
3. The initial investment does not exceed the 10% of the investor's total assets, provided that the total assets of the investor are not higher than 500,000 euros. 

For such purposes, the LECROSI defines “marketing” of fund interests as the advertising activity carried out on behalf of the collective investment institution or any other entity acting on its behalf or on behalf of any of its traders to solicit clients, so these clients contribute with funds, assets or rights. Hence, marketing activity entails making offers at the initiative of the fund managers or on their behalf.

• Regulation (EU) 2019/1156 on facilitating cross-border distribution of collective investment undertakings, which is directly applicable in Spain, and 
• Directive (EU) 2019/1160 with regards to cross-border distribution of collective investment undertaking, transposed into Spanish law by means of the Royal Decree-Law 24/2021 without introducing any material amendment,

introduced new rules relating to the cross-border marketing and distribution of collective investment undertakings within the EU, which include, among others, a “pre-marketing” definition.  In accordance with that, “pre-marketing” in Spain means the provision of information or communication, direct or indirect, on investment strategies or investment ideas by a management company, or on its behalf, to potential professional investors domiciled or with a registered office in Spain and in the rest of the European Union in order to test their interest in a qualifying fund which is not yet established, or in a qualifying fund which is established, but not yet notified for marketing in Spain or in the member State in which the professional investors are domiciled or have their registered office and which in each case does not amount to an offer or placement to the potential professional investor to invest in the units or shares of that qualifying fund. 

Consequently, the management companies of AIFs need to submit a pre-marketing notification form to the CNMV prior to engaging in pre-marketing activities in Spain, and any subscription of an investor within 18 months of the fund interests shall be considered marketing to which the registration procedure applies.

If a third country AIFM wishes to manage and market AIFs, regardless of whether they are open or closed ended or EEA or Non EEA, to either retail or professional investors located in Spain, an authorisation process must be carried out in order to legally offer those AIFs.

EEA and/or third country AIFMs established in Spain as a branch could be required to pay periodic fees depending on the regulated activities they are conducting there. However, such fees will not apply to AIFMs passported into Spain on a services basis.

The CNMV does not charge an application fee for outward or inward AIFMD passport notifications. However, upon registration, AIFs will have to pay a lump sum of EUR 2,601.51 and from registration onwards an annual flat fee of EUR 3,121.81. 

* Fee amounts subject to updates under each annual General State Budget.