Spain extends restrictions on inbound FDI from Europe

In June 2021, Spain extended until 31 December 2021 its restrictions on foreign direct investments (FDIs) by entities established:

• in other European Union (EU) and European Free Trade Association (EFTA) countries; or
• in Spain whose ultimate owner is established in other EU and EFTA. Such ultimate ownership exists where the entity ultimately holds or controls, directly or indirectly, over 25 per cent of the equity or voting rights of the investor or when through other means exercise control, directly or indirectly, over the investor.

The restrictions apply when these entities invest in companies that carry out certain strategic activities and are:

• listed in Spain, which include companies whose shares are wholly or partly traded on an official Spanish secondary market and that have their registered office in Spain; or
• unlisted Spanish companies if the value of the investment exceeds €500m.

FDIs in these Spanish companies require prior authorisation from the Spanish government if, after the investment, the investor will hold at least 10 per cent of the share capital of the Spanish company or, as per Article 7.2 of Spain’s 2007 competition law, the investment grants the investor (potential) decisive influence over the undertaking.

According to the explanatory memorandum for the June 2021 law, these restrictions were extended to the end of 2021 due to the Spanish economy still being in recovery mode – the same reason that saw the original restriction to June 2021 adopted late last year.

Spain also has restrictions on inbound FDI by entities established outside the EU and EFTA.

For further information on restrictions on inbound FDI by entities established in or outside the EU and EFTA, see our briefing.