JOHN CARLOS I

KING OF SPAIN

To all who present it and understand it.

Sabed: That the General Courts have approved and I come to sanction the following Law.

EXPLANATORY STATEMENT

Capital-Risk is a financial activity consisting of providing resources in the medium and long term, but without the vocation of unlimited permanence, to companies that have difficulties in accessing other sources of financing. This Law establishes a stable and comprehensive legal framework for Spanish venture capital institutions.

The current legal regime of these financial institutions has its origins in the requirements contained in Royal Decree-Law 1/1986 of 14 March on urgent administrative, financial, tax and administrative measures. work (Articles 12 to 16).

These legal forecasts have been the subject of successive reforms. These include those introduced by Law 33/1987 of 23 December; the one contained in the fourth provision of Law 3/1994 of 14 April, adapting the Spanish legislation on credit institutions to the second Banking Coordination Directive and other amendments relating to the financial system; and finally those produced by Royal Decree-Law 7/1996 of 7 June on urgent measures of a fiscal nature and of promotion and liberalization of economic activity.

Among the main new features of the law is the establishment of a legal system of authorization, supervision, inspection and approval for the rest of the individuals who act in our financial markets. In coherence, the National Securities Market Commission is attributed the bulk of the supervisory powers to the new subjects: Capital-Risk Societies, Capital Funds-Risk and management companies of Capital-Risk entities. The Law even admits that the management companies of the Collective Investment Institutions manage Capital Funds-Risk or the assets of the Capital-Risk Societies, regardless of whether such managers are regulated in another location Regulations (Law 46/1984 of 26 December, regulating the institutions of collective investment).

In terms of the investment policy to be developed by the Companies and Funds of Capital-Risk, it has been followed and deepened in the line marked by the Royal Decree-Law 7/1996, of June 7, on Urgent Measures of Fiscal Character and for the Promotion and Liberalization of Economic Activity. In addition to its traditional social object of temporary participation in the capital of non-financial and unlisted companies, two important functions are combined. On the one hand, the granting of participative loans (and, with certain limitations, any other form of financing), and, on the other hand, professional advice regarding the companies involved.

The text also incorporates some changes in the tax regime currently applicable to the Capital-Risk Entities. Thus, the possibility of extending the period of exemption from income which is obtained from the transfer of shares or units of undertakings constituting the main object of their activity is opened. Similarly, the exemption in respect of Value Added Tax on the management of assets of Capital-Risk Societies is extended.

The Law incorporates an additional provision that, without being strictly related to risk capital, seeks to promote and promote the financial activity known as factoring. The protection of certain credit transfers in the face of the insolvency of the transferor is particularly reinforced with this provision.

Finally, it should be noted that this Law is dictated by the application of the competences provided for in Rule 11 and 6 of Article 149.1 of the Constitution.

PRELIMINARY TITLE

Scope

Article 1. Scope of application.

1. The purpose of this Law is the regulation of the Capital-Risk Entities and the managing companies of Capital-Risk Entities.

2. They are Capital-Risk Entities and Capital-Risk Funds.

Article 2. Capital-Risk Societies.

1. Capital-Risk Societies are public limited companies whose main social object is the taking of temporary holdings in the capital of non-financial companies whose securities are not listed in the first market of Stock Exchanges.

2. For the development of its principal social object, Capital-Risk Societies may provide participative loans, as well as other forms of financing, in the latter case only for participating companies. They will also be able to carry out counselling activities.

3. Within the social object you will not be able to understand activities not covered by this Law.

Article 3. Capital-Risk Funds.

The Capital-Risk Funds are assets managed by a management company, which will have the same main object as the one defined in the previous article, corresponding to the management company advice provided in the same.

Article 4. Managing companies of Capital-Risk Entities.

1. The management companies of Capital-Risk Entities are public limited companies whose main social object is the management and management of Capital-Risk Funds and Capital-Risk Societies. As a complementary activity, they will be able to carry out advisory tasks to companies with which they are linked as a result of the exercise of their main activity.

2. They will also be able to manage Capital Funds-Risk and Capital Partnership assets-Risk, the management companies of Collective Investment Institutions regulated in Law 46/1984, of December 26, regulatory of the Investment Institutions Collective.

Article 5. Home.

The Capital-Risk Entities governed by this Law, as well as its management companies, must be domiciled in national territory and have its central administration in it.

Article 6. Name.

1. The names "Capital-Risk Company", "Capital-Risk Fund" and "Capital-Risk Entity Management Company", or their abbreviations "SCR", "FCR" and "SGECR" shall be reserved for the institutions authorized under this Law and registered in the Administrative Register which is created in the National Securities Market Commission.

2. Capital-Risk Societies, Capital-Risk Funds and Capital-Risk Entities managing companies are required to include in their social reason the respective denomination or their abbreviation.

3. The Commercial Registry and other public records shall not include entities whose denomination is contrary to the regime established in this Law. Where, however, such inscriptions have been carried out, they shall be null and void. Such nullity shall not prejudice the rights of third parties in good faith, acquired in accordance with the content of the relevant records.

TITLE I

General provisions

CHAPTER I

Authorization regime

Article 7. Conditions of access to the activity.

To be able to start your activity, the Capital-Risk Entities must:

(a) Have obtained prior authorization of the draft constitution by the Minister of Economy and Finance on a proposal from the National Securities Market Commission.

b) Be constituted in public deed and register in the Mercantile Register.

(c) Be registered in the corresponding administrative register of the National Securities Market Commission.

Article 8. Prior authorization.

1. The Capital-Risk Entities for obtaining the authorization required in paragraph (a) of the previous Article shall meet the following requirements:

a) Limit your object to that set by this Act.

b) Dispose of the equity or equity established in this Law for each type of entity.

c) Present an entity's financial project.

2. Capital-Risk Societies shall, in addition to the above, comply with the following requirements:

a) Contar with a good administrative and accounting organization, as well as with the human and technical means appropriate to the characteristics and volume of its activity.

b) That its Board of Directors consists of at least three members and its directors, as well as its directors-general and assimilated persons with a recognized commercial, business or professional good repute.

c) That none of the members of its Board of Directors, as well as any of its Directors General or Assimilated, has been, in Spain or abroad, declared to be bankrupt or a competition of creditors without having been rehabilitated, is processed, or, in the case of the procedure referred to in Title III of Book IV of the Law of Criminal Procedure, has been ordered to open the oral trial, or has a criminal record, for crimes of (i) the Commission's proposal for a Council Directive on the approximation of the law of the European Parliament and of the Council violation of secrets, money laundering, reception and other related conduct, embezzlement of public funds, property, or is disabled or suspended, criminal or administratively, to exercise public or public office administration or management of financial institutions.

d) That the majority of the members of its Board of Directors, as well as all general and assimilated directors have adequate knowledge and experience in financial or business management matters, as well as natural persons representing legal persons who are counsellors.

Article 9. Records.

The National Securities Market Commission will take the following public records:

a) Registration of management companies of Capital-Risk Entities.

b) Registration of Capital-Risk Societies.

c) Capital-Risk Funds Register.

d) Registration Of Significant Holdings.

e) Registration of Brochures And Annual Memories.

Article 10. Authorization procedure.

1. It will be up to the Minister of Economy and Finance to authorize the Capital-Risk Entities on a proposal from the National Securities Market Commission.

The resolution shall be reasoned and shall be notified within three months of receipt of the request, which shall be deemed to be dismissed with the effects provided for in the Law of Legal Regime of Public Administrations. and of the Common Administrative Procedure, if the previous period has not been passed on to the Joint Administrative Procedure.

2. The application for authorisation may be refused only for the following reasons:

(a) For non-compliance with the requirements laid down in Article 8.

b) For the existence of serious difficulties in obtaining information that the National Securities Market Commission deems necessary for the proper development of its supervisory functions.

3. The Minister of Economy and Finance or, with his express rating, the National Securities Market Commission, will determine for each type of Capital-Risk Entity, attending to its specialties:

a) The requirements and standard models for authorization request.

(b) The standard models of the documents to be accompanied, including, necessarily, the draft of their Statutes or of their Rules of Procedure, an information leaflet and a report on the project of the institution.

4. The explanatory memorandum for the project shall contain all the information necessary to enable a correct assessment of the entity intended to be created and between it, necessarily, that corresponding to the identification of the promoters, and their respective shares, their relationship with other financial institutions and possible links between them, purposes and objectives of the future Capital Partnership-Risk or Capital Fund-Risk, investment and distribution policy results, as well as the personal and geographical scope in which the corresponding entity.

5. The information leaflet shall contain the Statutes or the Regulation as appropriate, as well as the main aspects of the institution of a financial and legal nature.

Article 11. Constitution.

1. Once authorized, the Capital-Risk Entity may proceed to its constitution in public deed.

2. Contributions for the formation of equity or equity may be made in cash or, in the case of a Capital-Risk Company, in kind, in accordance with the criteria set out in Article 23.

3. The Capital-Risk Entities, once incorporated in public deed, shall be entered in the Trade Register.

Article 12. Registration.

1. In order to obtain their registration in the corresponding administrative register of the National Securities Market Commission, the Capital-Risk Entities shall submit to the National Securities Market Commission the documents of incorporation duly registered in the Register Trade and the authorization issued by the Ministry of Economy and Finance. The registration may only be refused if any alteration of the initially authorized project has occurred.

2. The time limit and the content of the pre-registration verification shall be determined in accordance with the relevant administrative register.

3. After one year from the authorization without having produced the registration in the Register of the National Securities Market Commission for reasons not attributable to the Administration, the latter shall be deemed to be expired.

Article 13. Revocation.

The revocation of the authorization of a managing company or of a Capital-Risk Entity may be agreed upon, upon file with an audience of the person concerned, for the following reasons:

a) Due to the failure to meet the requirements for authorization.

b) For incurring, if any, in suspension of payments or bankruptcy.

c) As a sanction, in the cases referred to in Title IV.

This revocation will be agreed upon by the Council of Ministers, on the proposal of the Minister of Economy and Finance and the initiative of the National Securities Market Commission.

Revocation of the authorization will involve the exclusion of the corresponding Administrative Registry.

CHAPTER II

Exercise Conditions

Section 1. General Regime

Article 14. Scheme of action.

1. Capital-Risk Entities shall at all times comply with the following requirements:

a) Those required by this Law for authorization.

b) The percentages of investment in certain assets fixed by this Law and by the regulations that develop it.

2. Any amendments that take place within the Board of Directors shall be notified to the National Securities Market Commission within the time limit and to be determined in a regulatory manner.

Article 15. Amendments to the Statutes of the Capital-Risk Societies and the Capital-Risk Fund Management Regulations.

1. They shall comply with the same procedure laid down for the authorisation, but the application for authorisation of the statutory amendments may be made, on a conditional basis, by the directors of the Capital-Risk Society in advance. to the approval by the General Shareholders ' Meeting.

2. Regulations will determine those changes that, because they are of little relevance, will only require communication to the National Securities Market Commission.

Section 2.

Article 16. Mandatory investment coefficient.

1. Capital-Risk Societies and Funds shall align their investment policy with the criteria expressly laid down in their Statutes or Management Regulations, respectively.

2. In any event, they shall maintain at least 60% of their assets in shares and holdings in the capital of undertakings which are the subject of their business. Within this percentage, they may dedicate up to 30 percentage points of the total of their assets to participative loans to companies that are the subject of their activity, whether or not they are involved in the Capital-Risk Entity.

Article 17. Coefficient of free disposal.

The remainder of your asset not subject to the required investment coefficient as defined in Article 16 above may be maintained at:

a) Fixed income securities traded on organized secondary markets.

(b) Capital shares of companies that do not meet the requirements of Article 2 (1) of this Law.

(c) Cash, in the form of a liquidity ratio, or other particularly liquid assets which are required to be regulated, in those cases where periodic repayments are provided for or regulated.

d) Participatory loans.

e) Financing of any kind to participating companies.

f) In the case of Capital-Risk Societies, up to 20 per 100 of its share capital, in assets necessary for the development of its business.

Article 18. Group limitations.

1. Capital-Risk Entities may not invest more than 25 per 100 of their assets in the same undertaking, nor more than 35 per 100 in companies belonging to the same group of companies, as defined in Article 4 of Law 24/1988, of 28 July, on the Stock Market.

2. The Capital-Risk Entities may not invest in companies belonging to their group, as defined in Article 4, previously cited, of Law 24/1988.

For these purposes, the companies in which the Capital-Risk Entities directly participate, which meet the requirements set out in Article 2.1 of this Law, are not companies belonging to the group. of the Capital-Risk Entity in question.

Article 19. Temporary defaults on investments.

1. The percentages provided for in Article 16 (f) of Article 16 (f) and Article 18 (1) may be breached by the Capital-Risk Entities during the following periods:

a) For the first three years, from its constitution.

b) For twenty-four months, to be counted from the occurrence of a disinvestment characteristic of the mandatory coefficient.

2. In the case of return of contributions to members or partners, the coefficients shall be computed taking into account the initial assets.

3. The National Securities Market Commission may, by way of exception, exempt from the percentages provided for in Article 16 (2), or authorise the extension of the time limits referred to in paragraph 1 of this Article, to Request from the Capital-Risk Society or the management company of the Fund, in consideration of the market situation and the difficulty of finding projects to adequately cover the percentage mentioned.

Article 20. Other limits to investments.

1. The investment in certain types of assets may be subject to regulation as well as a minimum liquidity ratio to maintain, where appropriate, the Capital-Risk Funds.

2. For the purposes of calculating the percentages provided for in the preceding articles, the Minister of Economy and Finance is enabled to determine the accounting concepts that make up the asset of the Capital-Risk Entities.

3. Rules may be laid down to limit the amount of funding to be obtained by the Capital-Risk Entities.

Section 3. Information and Audit Obligations

Article 21. Reporting, auditing and accounting obligations.

1. Without prejudice to the general reporting obligations, the Capital-Risk Funds shall publish for dissemination among the unit-holders an annual report and an information leaflet, in accordance with the following: specifications:

(a) The information leaflet shall be edited by the entity prior to its registration in the Administrative Register, and shall be updated at least annually.

b) The annual memory shall contain the information that is regulated.

These documents must be forwarded to the National Securities Market Commission for the exercise of their supervisory and registration functions, as well as positions made available to members at the company's registered office. The management of the Capital-Risk Fund, within the time-limits to be determined by regulation.

2. Capital-Risk Societies, Capital-Risk Management Companies, as well as the management companies of Collective Investment Institutions that manage Capital-Risk Funds shall provide the National Market Commission with Values as required and, in particular, on activities, investments, resources, assets, financial statements, shareholders or unit-holders, financial economic situation, as well as on relevant facts, with the frequency, scope and content to be established by the Minister for Economic Affairs and Finance; with its express rating, the National Securities Market Commission.

3. The Capital-Risk Entities shall submit their financial statements to the audit report in accordance with the provisions of the law on auditing of accounts.

Article 22. Arrangements for significant shareholdings.

When a single partner or participant, by itself or by person, acquires or transmits shares or units of a Capital-Risk Entity and, as a result of such operations, the percentage of subscribed capital or Property that is in its power reach, exceeds or falls below 20 per 100 and all its multiples, up to 100 per 100 of the social capital, in the cases permitted by this Law, must be communicated to the Entity and to the National Commission of the Market of securities within 10 working days of the acquisition or transfer, the percentage of the capital or the property that has been left in its power after the operation.

This percentage may be regulated in cases where it is deemed necessary in the interests of investors and investment specialties.

TITLE II

Capital-Risk Societies and Funds

CHAPTER I

Capital-Risk Societies

Article 23. Applicable law and requirements of the constitution.

1. The Capital-Risk Societies shall be governed by the provisions of this Law and, as not provided for by it, by the recast text of the Law of Companies, approved by Royal Decree 1564/1989 of 22 December 1989.

2. The registered share capital shall be at least 200 million pesetas, with a payment of 50 per 100 and, the rest, at one or more times, within three years of the formation of the company. Disbursements shall be made in cash or in assets that integrate their fixed assets, not being able to exceed the latter 10 per 100 of their share capital.

3. The share capital shall be represented by shares with equal nominal value and with the same rights, represented by securities, in which case they shall be nominative, or by means of notes.

4. The remuneration or benefits of the founders or promoters provided for in the Companies Act shall be prohibited.

5. In addition to the specifications provided for in the Law of Companies, the investment policy, as well as the possibility that the management of investments, prior to the agreement of the General Meeting, will be collected in its Social Statutes will be collected a management company of Capital-Risk Entities with which it contracts the said service.

CHAPTER II

Capital-Risk Funds

Article 24. Heritage.

1. The initial minimum equity of the Capital-Risk Funds shall be 275 million pesetas.

2. Contributions for the initial and subsequent constitution of the assets shall be made exclusively in cash.

3. The assets shall be divided into shares of the same characteristics as those conferred on the holder by a right of ownership. Such holdings shall be nominative, have the consideration of marketable securities and may be represented by securities or notes.

Article 25. Establishment of the Fund and specifications of the content of its Regulation.

1. The Fund shall be constituted by the pooling of cash which shall be part of its assets.

2. The contract of incorporation must be formalized in public deed, in which it must be expressly stated:

a) The name of the Fund.

(b) The object, limited exclusively to the activities referred to in Article 3 of this Law.

(c) The equity of the Fund at the time of its establishment.

d) The name and address of the management company.

e) The Fund Management Regulation.

3. The Capital-Risk Fund Management Regulation shall be drawn up in accordance with the standard model that is regulated and shall include at least the following:

(a) The duration of the Fund, if any.

(b) The arrangements for the issuance and redemption of the units, including, where applicable, the reimbursements that are guaranteed, periodicity of the shares, and pre-warning arrangements if any.

c) The duration of the subscription and refund ban, if any.

(d) The periodicity with which the value of the units shall be calculated for subscription and redemption purposes.

e) Rules for the administration, management and representation of the Fund.

f) Determination and form of distribution of results.

(g) Requirements for the amendment of the contract of incorporation, the Management Regulation and the conditions for exercising, where appropriate, the right of separation by the participant.

h) Replacing the management company.

i) Rules for the dissolution and liquidation of the Fund.

j) Types of remuneration of the management company.

k) The investment policy.

4. Investment policy shall mean, for the purposes of the preceding paragraph and Article 16.1 of this Law, the set of coordinated decisions aimed at the fulfilment of its object on the following aspects:

a) Business sectors to which investments will be oriented.

b) Geographical areas to which investments will be oriented.

(c) Types of societies in which they are intended to participate and criteria for their selection.

(d) general maximum and minimum participation rates to be held.

e) Maximum and minimum temporary criteria for the maintenance of investments and disinvestment formulas.

(f) Types of financing to be granted to participating companies.

g) ancillary services that the management company may perform in favour of the participating companies, such as advice or similar services.

h) Modes of intervention of the managing body in the participating societies, and formulas of presence in their corresponding administrative organs.

5. The public deed of incorporation of the Fund shall be granted by the management company, and shall be entered in the Administrative Register and the Trade Register in the form set out in Articles 11 and 12 of this Law.

Article 26. Subscription and redemption arrangements for the units.

1. The management company shall issue and refund the shares in the Fund in accordance with the conditions laid down in its Management Regulation.

2. The value of each share shall be the result of dividing the Fund's assets by the number of units in circulation, valuing that equity in accordance with the criteria laid down by the Minister for Economic Affairs and Finance.

3. The managing company may, on behalf of the issuer, manage the subscription and redemption of shares in Capital-Risk Funds, as well as for own account or for its transmission.

Article 27. Administration.

1. The management and administration of the Capital-Risk Funds shall be governed by the provisions of the Management Regulation for each Fund, which shall necessarily be the responsibility of a management company of Capital-Risk Entities or a management company of Institutions of Collective Investment with the requirements to be fixed in this last case, if applicable, regulatively.

2. Under no circumstances may the acts and contracts carried out by the managing company of the Fund with third parties in the exercise of the powers conferred on it in accordance with the provisions of the This Law.

3. The Fund's creditors shall not be able to make effective their claims on the equity of the unit-holders, the liability of which is limited to their shares.

Article 28. Assessment of the wealth and distribution of results.

1. The value of the Fund's assets shall be the result of deducting from the sum of its actual assets the creditor accounts by determining the value of the assets in accordance with the criteria to be established by the Minister for Economic Affairs and Finance.

2. The results shall be the result of deducting from all the revenue obtained by the Fund the management company's commission, as well as the other expenditure provided for in the Fund's management regulation, including those of audit.

3. In no case shall the assets of the Fund be liable for the debts of the management company.

Article 29. Merger, dissolution and liquidation.

1. Capital Funds may be merged-Risk either through absorption already with the creation of a new Fund.

The initiation of the procedure will require the prior agreement of the management company of the Funds to be merged.

The merger will be previously authorized by the Minister of Economy and Finance on a proposal from the National Securities Market Commission.

The merger processes must be communicated to the unit-holders so that, within one month from that date, the right of separation can be exercised, with the repayment of the shares without any expense, to the value of the (a) a settlement determined in accordance with Article 26.2 corresponding to the day of the end of the period of the exercise of the right of separation.

2. The Fund shall be dissolved, the settlement period being opened accordingly, for the completion of the term or period, or for the reasons set out in its Management Regulation of the Fund.

3. The settlement of the Fund shall be carried out by its management company. The National Securities Market Commission may condition the effectiveness of the dissolution or to subject the development of the dissolution to certain requirements, in order to reduce the potential damage caused to the participating entities.

TITLE III

Capital Entity Management Companies-Risk

Article 30. Requirements.

1. Capital-risk management companies shall be limited liability companies that meet the following requirements:

(a) An initial minimum social capital of 50 million pesetas, fully disbursed.

(b) Shares representing their share capital may be represented by means of nominative securities or by means of an account.

(c) All of its directors and directors shall comply with the requirements of good repute and suitability as set out in Article 8.2 (b), (c) and (d) of this Act.

2. The conditions and requirements for the authorisation and registration of the companies managing the Capital-Risk Entities shall be those laid down in Chapter I of Title I and Section 1 of Chapter II of Title I, with the specialities collected in this Title of this Law.

3. The Minister for Economic Affairs and Finance is enabled to establish, where appropriate, the system of own resources of the present entities.

Article 31. Management companies of Collective Investment Institutions.

1. In all matters relating to the management of Capital-Risk Funds and assets of Capital-Risk companies, the management companies of Collective Investment Institutions shall be subject to this Law and its provisions for development.

2. References to the management companies of Capital-Risk Entities contained in this Law shall also be construed as references to the management companies of Collective Investment Institutions that manage Capital Funds-Risk or Company assets Capital-Risk.

Article 32. Functions.

1. The managing companies of Capital-Risk Entities shall act in the interests of the members or shareholders in the investments and assets they manage, in accordance with the provisions of this Law.

2. They shall be liable to the members or shareholders of all the damage caused to them by the failure to comply with the obligations laid down in this Law.

3. The functions of the managing companies of Capital-Risk Entities shall be as follows:

(a) Redaction of the Fund Management Regulation.

(b) Taking account of the Capital-Risk Funds and the assets of the Venture Capital Company, with separation of their own.

(c) Determination of the value of the units and shares under the arrangements set out in the Management Regulation.

(d) Issue of certificates of participation and other documents provided for in this Law.

e) Distribution of exercise results.

f) Setting the investment criteria.

g) Designation of persons who will participate in the management or administration bodies of the participating companies.

h) Determination of media and technical, economic and financial advisory programs.

4. The managing companies of Capital-Risk Entities shall submit their financial statements to the audit report in accordance with the provisions of the audit legislation. That report shall be referred to the National Securities Market Commission within the time limit to be determined by regulation.

Article 33. Replacement of managers.

1. The management company of Capital-Risk Entities may request its replacement when it considers it appropriate, by means of a request made jointly with the new management company before the National Securities Market Commission, in which the new company Management company is willing to accept such functions.

2. In the case of insolvency proceedings of the management company, the management company shall request the change in accordance with the procedure described in the previous paragraph. The National Securities Market Commission may agree to such a substitution where it is not requested by the management company.

3. The effects of the replacement shall be produced from the time of the registration of the statutory or statutory amendment in the National Securities Market Commission.

TITLE IV

Monitoring, inspection, and sanction regime

CHAPTER I

General provisions

Article 34. Subjects.

Are subject to the regime of supervision, inspection and sanction of this Law:

a) Capital-Risk Societies.

b) Capital-Risk Entities managing companies.

c) The Capital-Risk Funds.

(d) Any entity for the purposes of verifying the infringement of the name reservation provided for in Article 6.

e) The management companies of Collective Investment Institutions, in all matters relating to the management of Capital-Risk Funds and the assets of Capital-Risk Societies.

Article 35. Responsibility.

1. The managing companies of the Capital-Risk Entities shall be responsible in the exercise of their activity for all breaches of this Law and its development regulations, with respect to the entities they manage.

2. The entities provided for in the previous article, as well as those who have administrative or managerial positions or act as if they are held by them, who infringe the provisions of this Law shall incur administrative responsibility. sanctionable in accordance with the provisions of this Title.

They hold administration or management positions in the entities referred to in the preceding paragraph, for the purposes of the provisions of this Title, their administrators or members of their collective management bodies, as well as their general and assimilated directors, in the understanding of those persons who develop in the institution functions of senior management under the direct dependence of their management or executive committees or delegated members of the same.

Article 36. Competencies.

1. The National Securities Market Commission may collect from the entities referred to in the previous article how much information it deems necessary on the matters of interest related to the matters covered by this Law. In order to make this information clear or to confirm its veracity, the National Securities Market Commission may perform as many inspections as it deems necessary.

2. The Capital-Risk Societies and the Capital-Risk Entities management companies are required to make available to the National Securities Market Commission how many books, records and documents it considers to be accurate. software and magnetic, optical or any other class files.

3. The actions of verification and investigation may be carried out, at the choice of the services of the National Securities Market Commission:

a) In any office, office, or dependency of the inspected entity or its representative.

b) On the premises of the National Securities Market Commission. Where the verification and investigation actions are carried out in the places referred to in paragraph (a) above, the working day of the same shall be observed, without prejudice to the fact that it can be acted upon by common agreement in other hours and days.

4. The competition for the opening and instruction of the sanctioning files for the infringements described in the following chapter shall be the responsibility of the National Securities Market Commission.

5. The imposition of penalties for very serious infringements shall be the responsibility of the Minister for Economic Affairs and Finance, on a proposal from the National Securities Market Commission, except for the revocation of the authorization, which shall be imposed by the Council of Ministers.

6. The imposition of penalties for serious and minor infractions shall be the responsibility of the National Securities Market Commission.

CHAPTER II

Violations and penalties

Article 37. Procedure.

1. In all the provisions of this Law, the sanctioning procedure applicable to Capital-Risk Societies and to the management companies of Capital-Risk Entities shall be governed by the provisions of Articles 19 to 25 of Law 26/1988, of 26 of July, on Discipline and Intervention of the Credit Entities, with the references contained in the same to the Banco de España, as well as by Law 30/1992, of 26 November, of Regime, being understood to the National Securities Market Commission. Legal framework for public administrations and the common administrative procedure, and its rules of procedure development.

2. It shall also be applicable in the exercise of the power of sanction on the Capital-Risk Societies and the managing companies of Capital Entities-Risk as provided for in Articles 7, 14, 15 and 27 of Law 26/1988 of 26 July 1988. Discipline and Intervention of Credit Entities.

Article 38. Violations.

1. They constitute very serious infringements of the natural and legal persons referred to in Articles 34 and 35 of this Law, the following acts or omissions:

a) Carage the Capital-Risk Entities or their management companies legally required or to carry it with essential vices or irregularities that prevent the entity's financial and financial situation from being known.

b) Obtain the authorization as a Capital Entity-Risk by means of false statements or by other irregular means, or to fail, in a manner not merely occasional or isolated, the conditions that gave rise to their authorization.

(c) Seriously Breach the mandatory investment percentages referred to in Articles 16 and 18 of this Law and its implementing rules where adverse consequences may result from such non-compliance the partners and members of the Capital-Risk Entities.

d) The concealment of information to the National Securities Market Commission or the hindering or resistance to its inspector's performance.

e) Serious infringements when during the five years prior to their commission were imposed on the infringer's firm sanction for the same type of infringement.

2. They constitute serious infringements of the natural and legal persons referred to in Articles 34 and 35 of this Act the following acts or omissions:

(a) Failure to comply with the reporting obligations to partners and members provided for in Article 21 of this Law and its provisions for development.

(b) Failure to comply with the significant participation scheme provided for in Article 22 of this Law and its implementing provisions.

c) The fixing of remuneration or advantages to the founders referred to in Article 23.4 of the Law.

(d) The determination of the value of the equity of a Capital-Risk Fund in breach of the rules laid down in the applicable rules or in the Management Regulation.

e) The keeping of the books of accounts with a delay of more than four months, as well as the irregularities of accounting order when they were not constitutive of very serious infractions.

f) Serious non-mandatory investment percentages set forth in this Act.

g) Incompliance with serious injury to the unit-holders of a Capital Fund-Risk of the subscription and redemption arrangements for participations.

(h) The failure to refer to the National Securities Market Commission for any documents or information not referred to in the preceding letters must be sent to, or required in the exercise of their duties, that the body would have recalled in writing the obligation or repeated the requirement.

i) Failure to comply with the obligation to act in the interests of all its partners or members, when decisions are taken that give preference to some to the detriment of others.

j) Minor infringements where, during the two years prior to their commission, the infringer has been subject to a firm sanction for the same type of infringement.

3. They constitute minor infractions of the entities and persons referred to in Articles 34 and 35 of this Law, any infringement of this Law or provisions of development, which does not constitute a serious or very serious infringement in accordance with the provisions of this Law. in the previous two paragraphs.

Article 39. Penalties.

1. For the commission of very serious infringements one or more of the following penalties shall be imposed on the infringer:

a) Multa for 25 to 50 million pesetas.

(b) Mull per amount not less than and not more than twice the tax benefits obtained.

c) Revocation of the authorization as the Capital-Risk Entity.

The sanctions for very serious violations will be published in the "Official State Gazette" once they are firm on the administrative path.

2. In any event, the entity that has committed a qualified infringement as a very serious one must enter into the Treasury the unprescribed amount of all the tax benefits that it has enjoyed with the interest of the corresponding delay.

3. One or more of the following penalties shall be imposed on the infringer by the commission of serious infringements:

a) Multa for amount not exceeding 25 million pesetas.

b) Mull for amount not exceeding the tax benefits obtained.

c) Public assembly, with publication in the "Official State Gazette".

4. One of the following penalties shall be imposed on the infringer by the commission of minor infractions:

a) The private assembly.

b) Multa of up to one million pesetas.

5. In addition to the appropriate sanction to be imposed on the infringer by the commission of serious or very serious infringements, one of the following sanctions may be imposed on those who, exercising administrative or management positions in the infringer, are responsible for the violation:

a) Multa for up to three million pesetas to each of those responsible.

(b) Suspension in the exercise of any steering charge for a term of not more than three years.

c) Separation of the charge with disablement to exercise management or management positions in the same entity for a period not exceeding five years.

6. The purpose of the graduation of the penalties laid down shall be, with the necessary specialties, to meet the criteria laid down in Article 14 of Law 26/1988, of July 29, of Discipline and Intervention of Credit Entities.

Article 40. Intervention and replacement measures.

It will be applicable to the Companies of Capital-Risk and to the management companies of Capital Entities-Risk to the Entities of Credit in Title III of Law 26/1988, of 26 July of Discipline and Intervention of the Credit Entities. The competence to agree the intervention or replacement measures shall be the responsibility of the National Securities Market Commission.

Additional disposition first. Records.

The Records of Capital-Risk Management Entities and Companies regulated in Royal Decree-Law 1/1986 of March 14, shall be incorporated into the Records provided for in Article 9, upon the entry into force of this Law.

Additional provision second. Value Added Tax and Corporate Tax.

1. Point (n) of paragraph 18 of Article 20 of Law No 37/1992 of 28 December 1992 on the value added tax shall be read as follows:

" n) The management and deposit of the Collective Investment Institutions, of the Capital Entities-Risk managed by management companies authorized and registered in the administrative special registers, of the Funds Pension, Mortgage Market Regulation, Asset Entitlement and Retirement Collective, constituted in accordance with your specific legislation. "

2. Article 69 (1) of Law 43/1995 of 27 December 1995 on the Tax on Societies shall be read as follows:

" Capital-Risk Societies and Funds, which are regulated in the Capital-Risk Entities ' Regulatory Law and their management companies, shall enjoy partial relief from the income they obtain in the transmission of shares and shares in the capital of undertakings, as referred to in Article 2.1 of that Law, in which they participate, according to the year of transmission computed from the time of the acquisition. This exemption shall be 99 per 100 from the third year onwards and up to and including the twelfth year.

Exceptionally an extension of the latter period may be permitted up to and including the 17th year. Regulations shall determine the assumptions, conditions and requirements that they enable for such an extension.

Except for the assumption referred to in the preceding paragraph, in the first two years and from the twelfth year the exemption shall not apply. "

3. Article 45 (l) (c) of the Royal Decree of 24 September 1993 on the recast of the Tax on Proprietary Transmissions and Legal Acts of the European Parliament 1/1993 of 24 September 1993 is hereby amended. redacted as follows:

"The operations of the Capital Entities ' constitution and capital increase-Risk in the terms established in the Regulatory Law of the Capital-Risk Entities and their management companies."

Additional provision third. Arrangements for certain credit transfers.

1. This provision shall apply to transfers of appropriations which are carried out under a transfer contract which meets the following conditions:

1. The transferor is an entrepreneur and the credits transferred from his business activity.

2. The transferee is a credit institution.

3. That the appropriations to be transferred under the contract do not have the debtor of a public administration.

4. That the appropriations under the contract already exist at the date of the contract of disposal, or are born of the business activity which the transferor carries out within the maximum period of one year from that date, or which The identity of the future debtors is included in the transfer contract.

5. th The transferee pays the transferor, in cash or in time, the amount of the credits transferred with the deduction of the cost of the service provided.

6. In the event that the transferee is not agreed to respond to the transferor of the creditworthiness of the transferred debtor, it is established that the transferee has paid to the transferor, in whole or in part, the amount of the loan given before his/her expiration.

2. The disposals of the business loans referred to in this provision shall be effective against third parties from the date of conclusion of the transfer contract referred to in the preceding number, provided that the date of certainty of the date is justified. by any of the means laid down in Articles 1218 and 1227 of the Civil Code or by any other means admitted in law.

3. In the event of the failure of the transferor, the nullity referred to in Article 878, paragraph 2.^or, of the Trade Code, in respect of the disposals regulated in this provision, shall not be declared if the requirements laid down in that provision are met and consists of the certainty of the date of the transfer by any of the means of proof referred to in the previous paragraph.

4. Payments made by the debtor on loan to the transferee shall not be subject to the revocation provided for in Article 878, paragraph 2.^or, of the Commercial Code in the case of bankruptcy of the debtor of the credits transferred.

However, the bankruptcy syndicate may exercise the revocation action against the transferor and/or transferee when it proves that the latter, or in his case the latter, knew the insolvency of the debtor on the date of payment by the transferee to the transferor. Such revocation shall not affect the transferee but shall be expressly agreed upon.

First transient disposition. Adaptation of the entities already registered in the Registry of the Ministry of Economy and Finance.

1. Capital-Risk Management Entities and Companies entered in the Special Register under the Ministry of Economy and Finance at the entry into force of this Law, shall adapt their activity and Regulation or Statutes to the provisions of this Law. this Act within one year.

2. In case of no adaptation to which the previous number refers will be revoked the authorization, the registration of the registration of the National Commission of the Market of Securities is cancelled. From that date, the entity concerned may not use the denomination reserved by this Act to the registered entities and shall lose the expected tax benefits for the Capital-Risk Entities.

3. The acts and documents legally necessary to enable the companies incorporated under the previous legislation to comply with the provisions laid down in this Law within the time limits laid down in these transitional provisions shall be exempt from the Tax on Proprietary Transmissions and Documented Legal Acts.

The government, on a joint proposal from the Minister of Economy and Finance and the Minister of Justice, will set a reduction in the tariff duties that the notaries and the commercial registrars will apply to the granting and registration of the documents and documents necessary for the adaptation of the existing Societies and Funds as provided for in this Law.

Second transient disposition. Adaptation of authorization requests.

1. The promoters of Entities and Companies of Capital Entities-Risk that have pending resolution requests for authorization to the entry into force of this Law, will have to adapt their application to what is established in this Law in the three-month period.

2. After that period without having made such an adjustment, it shall be understood that they have failed to comply with their previous requests.

Transitional provision third. Authorization of existing entities.

The procedure for the authorisation of entities formed before the entry into force of this Law, the social object of which coincides with that described in Article 2 or 3 thereof, and which are not included in any of the two previous provisions, you will have the following specialties:

(a) In those cases where, in the opinion of the National Securities Market Commission, the entity meets all the requirements laid down in this Law, the authorization will entail the immediate registration in the administrative register special.

b) When the entity does not fully meet all the requirements set forth in this Law, the National Securities Market Commission may provisionally authorize its registration in the Special Register, subject to registration. definitive to the observation before one year of the requirements that are expressly determined by the National Securities Market Commission.

Otherwise such authorization will be revoked and from the date of notification of the revocation the affected entity will not be able to use the denomination reserved by this Law to the registered entities. You will also lose the expected tax benefits for the Capital Entities-Risk that you would have been able to enjoy.

Single repeal provision. Regulatory repeal.

Articles 12 to 20 of Royal Decree-Law 1/1986 of 14 March 1986 on Administrative, Financial, Fiscal and Labour Measures and the Ministerial Order of 26 September 1986 on the access to the Administrative Registry of Companies and Capital-Risk Funds.

Final disposition first. Competitive titles.

This Law is issued in accordance with the provisions of the competition law provided for in Article 149.1 of the

.

Final disposition second. Regulatory development.

Within one year of the enactment of this Law, the Government will approve the precise provisions for the proper implementation and enforcement of this Law.

The Government is also enabled to update the amount of taxable penalties provided for in this Act.

Without prejudice to the provisions of Title III of Book I of the Commercial Code, the Minister of Economy and Finance is empowered and, with his express rating, the National Securities Market Commission for the prior report of the Accounting and Audit Institute of Accounts, establishing and modifying in relation to the Capital-Risk Entities and the Capital Entities-Risk management companies, the accounting standards and models to which they will be required to adjust their accounts Annual accounts, which will take into account the prolonged period of maturity of the investments they make the first, as well as those relating to compliance with the coefficients to be established; for these purposes, the information necessary to verify the fulfilment of coefficients or any other derivative of financial supervision; they must incorporate into the memory of the annual accounts into a specific paragraph. The frequency and detail shall also be established with which the relevant data shall be supplied to the Commission or made public in general by the Entities themselves.

Final disposition third. Entry into force.

This Law shall enter into force three months after its publication in the "Official Gazette of the State".

Therefore,

I command all Spaniards, individuals and authorities, to keep and keep this Law.

Madrid, 5 January 1999.

JOHN CARLOS R.

The President of the Government,

JOSÉ MARÍA AZNAR LÓPEZ