Update on Spanish loyalty shares proposal

The amendment phase of the draft bill that will incorporate the revised Shareholder Rights Directive (SRD II) into Spanish law ended on December 2, 2020. It is now subject to the issuance of the corresponding report (Informe de la Ponencia) before its approval by the competent parliamentary committee and its referral to the Senate. As agreed in December 2020, the draft bill will be then fast-tracked through Congress and, thus, might be approved during the first quarter of 2021.

Amendments proposed by the different parliamentary groups to the draft bill were published on December 18, 2020. Below is a summary of the most relevant amendments proposed to the loyalty share regime (see our previous updates of March 19, 2020 and September 9, 2020):

• Tightening up shareholder approval requirements to incorporate additional loyalty votes into the by-laws. Specifically, increasing the approval majorities from 60% to 66.67% of the capital stock present in person or by proxy, where the shareholders’ meeting is held on first call and attendees represent, at least, 50% of the company’s voting rights.
• Conditioning the loyalty share regime to a five-year renewal period. Shareholders should renew the loyalty share regime included in the by-laws every five years for it to be valid.
• Delaying the entry into force of the loyalty share regime for companies requesting admission to trading. These companies should not “benefit” from this regime until the fifth anniversary of the date of admission to listing and not upon admission to trading as provided in the draft bill.
• Qualifying the exceptions to the transfer of shares with double voting rights. Exceptions that allow the transfer of shares with double voting rights (including but not limited to mortis causa succession or intragroup transfers) should not apply when the transferor is a controlling shareholder.
• Enhancing transparency obligations. Companies whose by-laws include the loyalty share regime should keep the Spanish Securities and Exchange Commission (CNMV) updated on (i) the number of shares with double voting rights and (ii) the number of shares registered in the special record which have still not met the minimum holding period.