Markets
Spain: fair value, and the ten per cent that caps the discount
Spain permits a market-referenced price, but only a shallow one. Under the Ley de Sociedades de Capital, where the derecho de suscripción preferente is excluded in a listed company the issue price must be fair value, and fair value is presumed to be the quoted price only if the issue is not more than 10% below it. An open-ended floating price cannot sit inside that presumption.
Key takeaways
- Ten per cent is the modification. Article 504 presumes valor razonable to be the market value established by reference to the stock-exchange quotation, provided the issue price is not more than 10% below that quotation. That is a maximum discount expressed as a valuation rule.
- Twenty per cent is the ceiling on size. A delegation to the board to increase capital with the pre-emptive right excluded may not cover more than 20% of the company's capital at the moment of the authorisation.
- Convertibles do not get their own bucket. Shares issuable on conversion of obligaciones convertibles issued under a delegation with pre-emption excluded aggregate against that same 20%.
- The expert report is now optional inside the ceiling. Within the delegation the company may obtain the independent expert report voluntarily; it becomes a requirement where the board proposes an issue with pre-emption excluded above the threshold.
Why a Spanish facility has to be re-priced before it is written
The structure this directory is about works because the price is unknown at signing and is discovered, drawdown by drawdown, against a recent market window. Spain does not prohibit that. It prohibits the depth. The valor razonable presumption gives a Spanish board a safe harbour, and the safe harbour has an edge at 10% below the quotation.
A conversion or subscription price struck at 90% of a reference price is at that edge. Anything deeper leaves the presumption. Article 504 still contemplates an issue below fair value, but on a directors' justification and an independent expert report on the resulting economic dilution. That is not impossible, but it converts a mechanical pricing formula into a contested valuation exercise on every drawdown, which is the opposite of what a drawdown facility is for. The practical answer in Spain is a documented floor under the discount.
| What the structure needs | What Spanish law provides |
|---|---|
| A discount discovered at each drawdown | Permitted, but only within 10% of the quoted price if the fair-value presumption is to hold |
| Capacity to keep drawing for years | 20% of capital at the date of the authorisation, on a board delegation |
| A separate allowance for conversion shares | None. Convertible-security delegations aggregate against the same 20% |
| Pricing without a fresh shareholder vote | Available. The junta general may delegate the fixing of the price to the board |
| An independent valuation on every issue | Not required inside the delegation; the expert report may be obtained voluntarily |
| Summary of the statute only. Title XIV of the Ley de Sociedades de Capital carries further conditions Spanish counsel must apply. | |
The one provision that makes a facility workable
Article 505 is the hook a Spanish drawdown structure hangs on. The general meeting may fix the date, price and other conditions of the issue, or delegate that fixing to the board; and the board may either set the price itself or establish a procedure for determining it that it considers reasonable and that, consistently with accepted market practice, produces a price corresponding to fair value.
A pricing procedure, rather than a price, is exactly what a committed equity facility needs. Spain gives you that. What it does not give you is a procedure that can output any number the market happens to reach.
The alternatives a Spanish issuer actually uses
The domestic convention is the colocación acelerada, an accelerated placement run inside the 20% delegation at a shallow discount, priced overnight and settled through Iberclear. For an issuer on BME Growth or BME Scaleup, both multilateral trading facilities, the admission-prospectus question falls away entirely, which is why smaller Spanish issuers reach for repeated private placements by a public company rather than a standing facility. A convertible remains available, but the conversion price has to be bounded in advance: see convertible notes for listed issuers.
General information, not legal advice. Title XIV of the Ley de Sociedades de Capital was amended by Ley 5/2021 of 12 April 2021 and the article numbering in secondary commentary is inconsistent. Whether a given issue falls inside the fair-value presumption or the delegation ceiling depends on the company's own capital and authorisations. Take advice from qualified Spanish counsel and confirm the position with the CNMV where it is in doubt.
Resale is not the Spanish constraint
New shares are registered with Iberclear, are fungible with the listed line and trade on admission. There is no Spanish holding period and no resale registration. Admission of shares fungible with those already admitted is exempt from a prospectus up to 30% of the number already admitted over 12 months, raised from 20% by Regulation (EU) 2024/2809 with effect from 4 December 2024. Issuers with a US register still need to read Rule 144 and restricted securities separately.
Send the capital figure, the standing delegations and the last authorisation date and we will tell you what headroom is left.
Primary sources
- BOE — Ley de Sociedades de Capital, consolidated text
- BOE — Ley 5/2021 of 12 April 2021
- LSC Article 506 — delegation excluding the pre-emptive right
- Comision Nacional del Mercado de Valores
Financing Spanish listed issuers: frequently asked questions
Can a Spanish listed company issue a convertible with a floating conversion price?
Only within a narrow band. Where the pre-emptive right is excluded the issue price has to be fair value, and the Ley de Sociedades de Capital presumes fair value to be the quoted market price provided the issue is not more than 10 per cent below it. A conversion price that can refix downward without limit sits outside that presumption, so the discount has to be capped in the documents.
How large can a Spanish equity facility be?
If it runs off a board delegation, the ceiling is 20 per cent of the company's capital at the moment the authorisation was given. Shares issuable on conversion of convertible securities issued under a delegation with pre-emption excluded count against the same 20 per cent. A larger facility has to go back to the junta general for each issue.
Is an independent expert report always required?
No, and this is where Spanish practice changed. Within the 20 per cent delegation the company may obtain the independent expert report voluntarily rather than as a condition. The report becomes a requirement where the board proposes to issue shares with the pre-emptive right excluded above that threshold. Confirm the current position with Spanish counsel, because Title XIV was amended in 2021.
How quickly do the new shares trade?
Quickly. Shares are registered with Iberclear, are fungible with the listed line and trade on admission, with no Spanish holding period and no resale registration. Admission of shares fungible with those already admitted is exempt from a prospectus up to 30 per cent of the number already admitted over 12 months. The constraint in Spain is on issuance, not on exit.
If this is about a live situation
Spain allows a market-referenced price and caps the discount at 10%, inside a 20% ceiling on everything issued under a delegation with pre-emption excluded. Both numbers are consumed by earlier raises, so how much of the twenty per cent is left decides more than the terms do, and the instrument comparison starts there.