On 28 September 2022, the Spanish Parliament approved the new Create and Grow Law (Law 18/2022) directed at the creation and growth of companies. The Create and Grow Law aims to improve Spain’s business climate by boosting start-ups, encouraging business growth and reducing regulatory hurdles.
In particular, the Create and Grow Law grants a set of reforms that seeks to improve collective investment and venture capital in Spain, a sector that has experienced notable transformation in the last two years. In this regard, the Create and Grow Law amends the Venture Capital Law (Law 22/2014) regulating venture capital entities, other closed-end collective investment entities and their management companies and the law on Collective Investment Schemes (Law 35/2003).
One of the main innovations of the Create and Grow Law is to amend Article 75.2 of the Venture Capital Law, making the regime more flexible for non-professional investors in venture capital entities. As an alternative to the requirement of an initial investment of €100,000, marketing to retailers will be permitted provided that:
They access the investment through the recommendation of an entity authorized to provide financial advice;
The investment amounts to at least €10,000 and,
The investment does not exceed 10% of the customer's financial assets if the customer's financial assets do not exceed €500,000.
The Create and Grow law also approves , the European Long-Term Investment Fund (ELTIF) which was created by EU Regulation 2015/760) to incentivise investors, particularly retail investors adverse to locking up their capital for long periods of time. An ELTIF can, under certain conditions, offer early redemption rights to its investors.
Other relevant innovations of the Create and Grow Law are:
- Management companies can be incorporated as limited companies, which in practice will simplify the governance of management.
- The admission of debt funds under the figure of closed-end collective investment schemes for loans as one type of venture capital entity.
- Other measures that will contribute to improving the competitiveness of the sector, such as eliminating quarterly reporting requirements and establishing telematic means as the default form of communication with unitholders.
