Due to Corona-19 pandemia, the liberalization regime for foreign direct investments is suspended

18 Mar 2020

On 18 March 2020, the Royal Decree-Law No. 8/2020 on extraordinary urgent measures to face the economic and social impact of COVID-19 entered into force. It provides a legal basis for the economic recovery package prepared by the Spanish Government. The Decree-Law states that the pandemic "poses a certain threat to listed Spanish companies, but also to unlisted Spanish companies that are seeing their equity value decline, many of them in strategic sectors of our economy" and that such companies have become an easy target of foreign acquisitions. Consequently, the Decree-Law suspends the liberalization regime for foreign direct investment in Spain regulated in Law 19/2003.

Under the recent enactment, all foreign investors from outside the European Union now require prior governmental authorization to acquire 10% or more of the share capital or an effective management or control of a Spanish company. This applies to Spanish companies engaged in sectors or activities that "affect public order, public safety and public health". This list includes: a) critical infrastructures (energy, transport, water, health, communications, media, data treatment or storage, aerospace, defense, electoral or financial infrastructures, and sensitive facilities), as well as land and real estate that are key to the use of said infrastructures; b) critical technologies and dual-use products, including artificial intelligence, robotics, semiconductors, cyber security, aerospace technologies , defense, energy storage, quantum and nuclear, as well as nanotechnologies and bio-technologies; c) supply of fundamental inputs, in particular energy or those related to raw materials, as well as food security; d) sectors with access to sensitive information, particularly personal data, or with the ability to control such information; e) media.

Furthermore, an authorization is obligatory in relation to foreign investors: a) directly or indirectly controlled by the government, including public bodies or the armed forces; b) that have already made investments or participated in activities in sectors that affect safety, public order and public health in another EU Member State; c) against who an administrative or judicial proceeding has been opened in another EU Member State or in the State of origin or in a third State for carrying out criminal or illegal activities.

Nature of measure:

• Entry restriction

Type:

• Entry and establishment (Access to land, Approval and admission - screening)

Industry:

• Primary (Agriculture, forestry and fishing)
• Manufacturing (Manufacture of food products, beverages and tobacco products, Manufacture of basic pharmaceutical products and pharmaceutical preparations, Manufacture of basic metals, Manufacture of computer, electronic and optical products, and electrical equipment, Manufacture of machinery and equipment n.e.c., Manufacture of transport equipment)
• Services (Electricity, gas, steam and air conditioning supply, Water supply, sewerage, waste management and remediation activities, Transportation and storage, Publishing, audiovisual and broadcasting activities, Telecommunications, Computer programming, consultancy and related activities, Financial and insurance activities, Scientific research and development, Other professional, scientific and technical activities, Public administration and defence; compulsory social security, Human health activities)

Sources:

• Boletín Oficial del Estado, Real Decreto-ley 8/2020, de 17 de marzo, de medidas urgentes extraordinarias para hacer frente al impacto económico y social del COVID-19., https://www.boe.es/diario_boe/txt.php?id=BOE-A-2020-3824, 18 Mar 2020