Main measures applicable to companies listed on the Alternative Stock Market to tackle the impact of COVID-19

We examine the most significant measures applicable to companies listed on the Alternative Stock Market (Mercado Alternativo Bursátil, “MAB”)  to tackle the COVID-19 crisis.

Below is an outline of the main regulatory measures applicable to public limited companies (sociedades anónimas) whose shares are admitted to trading on the MAB. The purpose of this measures is to tackle the impact of the COVID-19 crisis.

First, since the MAB is not a regulated market, the measures provided in article 41 of Royal Decree-Law 8/2020 (amended by Royal Decree-Law 11/2020, of March 31, “RD-L 8/2020”) for listed public limited companies do not apply to companies whose shares are admitted to trading on the MAB. Accordingly, they would be subject to article 40 of RD-L 8/2020, applicable to listed companies in general. Some of these measures entail (i) flexibilizing decision-making mechanisms for the governing body and its committees; (ii) extending deadlines to prepare and approve the annual accounts; and (iii) suspending the statutory deadline, until the state of emergency is over, to call a general meeting either to decide on the company’s dissolution or to adopt other resolutions removing the grounds for winding up provided in the law or in the bylaws.

Second, there are also specific measures for these entities. On March 18, the board of directors of Spanish Stock Exchanges and Markets (Bolsas y Mercados Españoles, “BME”) released a notice reporting a deadline extension to submit annual information for the companies admitted to trading on the High Growth and REIT segments (segmentos de Empresas en Expansión y SOCIMIs). Therefore, during 2020, these entities must submit this information to the MAB as soon as possible and, in any event, within six months from financial year-end.

Also, due to the extreme stock market volatility, the Securities and Exchange Commission (CNMV) Report of March 16, 2020 temporarily banned companies listed on the MAB from entering into transactions on securities or financial instruments that entail the creation or increase of net short positions on sharesuntil April 17 (inclusive). The CNMV can extend this ban for additional periods not exceeding three months, if the circumstances so justify it, or it can also lift the ban at any time before the one-month deadline, if it considers it necessary.

Finally, these entities are also subject to the temporary suspension of the liberalization framework for foreign direct investments by non-EU and non-EFTA investors. The suspended foreign direct investments are those in Spain’s strategic sectors connected with public order, public safety and public health, where, as a result of the investment: (i) the investor acquires a stake equal to or greater than 10%, or where (ii) there is effective management or control of the company. Also, if conditions (i) and (ii) are fulfilled, the suspension also applies in specific cases provided in RD-L 8/2020, for example, that the foreign investor be controlled by a third country (as in sovereign funds).

By Roger Freixes