Preliminary draft of the Creation and Growth Law (Ley Creación y Crecimiento)

In this regard, according to the preliminary draft and subject to its future approval, the new proposed law aims to facilitate investments in Spain by, among others, (i) simplifying the procedures to create private limited companies and (ii) strengthening financial instruments of corporate growth regarding crowdfunding, collective investments and venture capital.

Concerning the different measures regulated in this preliminary draft, we highlight the following:

• The minimum share capital to create a private limited company is reduced to one euro. However, until the share capital reaches the amount of €3,000, the company must allocate 20% of the profits to the legal reserve until the reserve, together with the share capital, has reached the amount of €3,000.
• The legal regime of crowdfunding platforms (CPs), harmonized by Regulation (EU) 2020/1503 of the European Parliament, is transposed and, in particular:

1. Crowdfunding service providers will have available to any potential investor a key investment information sheet of the main investment data, in accordance with the European Regulation; and
2. The CPs may group investors in vehicles whose sole corporate purpose and activity consists of holding the shares of the invested company.

• A specific regulation is introduced for debt funds or collective investment undertakings of the closed-end lending type (CIUCL), as well as the obligations that have to be assumed by self-managed CIUCLs or their managers. In particular, we highlight that these entities must have a credit risk management procedure, and a system of valuation and classification of the loans object of an investment. Further, before an investment takes place, these entities must also have a method to analyse and evaluate borrowers' solvency as well as monitoring this risk on a regular basis..
• The threshold on the number of employees of companies in which the ECR-Pyme may invest is increased up to 499 (now, it is currently 250 employees).
• The minimum share capital subscribed by a venture capital firm (VCF) is reduced at the time of being incorporated. It is specifically proposed that the minimum share capital subscribed equals 25% of the committed capital to said VCF. However, within 12 months after registering the VCF with the CNMV, the subscribed share capital must be equal to the committed capital to said VCF.
• The base of potential retail investors in an ECR is increased. It is currently limited to investors undertaking a minimum investment of €100,000 and declare in writing their acknowledge of the risks associated with their investment. The preliminary draft foresees the investment by other retail investors, as long as they undertake to invest a minimum of 10,000 euros and meet the eligibility conditions that the Spanish Government will establish.