Spain – CNMC in Favor of Extending Takeover Regime

• ESP CNMC in favor of extending takeover bid regime to multilateral trading systems.
• Follows draft Royal Decree on regime of public offers for acquisition of securities which will extend its application to multilateral trading systems (IPN/CNMC/008/25).

Multilateral Trading Systems

• Multilateral trading systems are financial markets, distinct from the stock market.
• They are generally used by SMEs and future regulation aims to encourage SMEs to participate in financial markets, reduce dependence on bank financing, foster growth.
• ESP CNMC proposes justifying several aspects, such as the requirement for registration for certain experts, which must be subject to legal reserve.
• The regulation establishes the cases in which an investor seeking to take control of a listed company is required to launch a takeover bid; that is, to publicly offer the same price to all shareholders of the company they wish to acquire, under specific rules.
• Traditionally, takeover bid regulations applied to companies listed on regulated markets, such as the stock market but new Securities Market Law (LMV), approved in 2023, significantly expanded its application to multilateral trading systems.
• ESP CNMC stated extending the takeover bid regime to multilateral trading systems could encourage more SMEs to participate in these financial markets because takeover bid regulations offer greater protection to original investors.
• Furthermore, greater participation in these financial markets would foster business growth, contribute to increased transparency, reduce dependence on bank financing, and allow progress toward greater integration of financial markets at European level.
• All of this can foster more effective competition in different sectors of the economy.

Observations

• It excludes Hedge Funds and Venture Capital Entities without justifying the exceptions.
• It is recommended that they be justified under the principle of competitive neutrality.
• It adopts a standard for multilateral trading systems by extending the period available from three months to 12 months for formulating a takeover bid.
• Extension is not justified and it is recommended under principles of good regulation.
• It requires that experts who can prepare valuation reports on the price at which a takeover bid is formulated be registered in a special registry.
• This requirement, as an authorization regime, should only be established, according to Law 20/2013 on the Guarantee of Market Unity, by a law.