Law 2/1981, of March 25, of Regulation of the Mortgage Market, establishes in its article seventh that in order for a mortgage credit to be mobilized by the issuance of the securities regulated in that Law, the goods (a) mortgaged by credit institutions or by other valuation services which comply with the requirements to be laid down by the credit institutions.

These requirements were laid down in Section 3 of Chapter II of Royal Decree 685/1982 of 17 March 1982 on the development of certain aspects of Law 2/1981 of 25 March 2001 on Market Regulation Mortgage.

After the entry into force of these provisions, a number of rules have been adopted both in the area of collective investment institutions, and in insurance and pension funds, which require that the the valuation of immovable property in such areas should be carried out by a company that is valued at those provided for in the mortgage market legislation. Thus, it is established, inter alia, in Article 74.6 of the Regulation of Law 46/1984 of 26 December, regulating the institutions of collective investment, approved by Royal Decree 1393/1990 of 2 November, according to new wording given by the Article 1 of Royal Decree 686/1993 of 7 May 1993 amending the Regulation of Law 46/1984 of 26 December 1984, regulating the institutions of collective investment, specifying the arrangements for companies and investment funds property.

In this same sense, Article 66 of Royal Decree 1348/1985 of 1 August, approving the Regulation on the Management of Private Insurance, provides that one of the requirements to be met by the real estate be eligible for the investment in the coverage of the technical provisions is 'that they have been assessed by the valuation services of the Directorate-General of Insurance or Authorised Entities for the valuation of assets in the mortgage market'.

Finally, Article 37 of Royal Decree 1307/1988 of 30 September 1988 on the regulation of pension funds and pension schemes provides that the valuation of the immovable property in which the investment is to be carried out the pension funds must be made "as provided for in the Mortgage Market Regulation Act and its supplementary legislation".

The basic objectives of this Royal Decree are:

a) Achieve an adequate quality of the assessments made for the purposes that are contemplated in its field, in order to enhance the security of the investor.

(b) Develop the sanctioning regime of the valuation companies, the credit institutions which have their own valuation services and the professionals of the two, established in the additional provision of the Law 3/1994, of 14 April, adapting the Spanish legislation on credit institutions to the Second Banking Coordination Directive and introducing other amendments relating to the financial system. Account must be taken of the amendments made to Law 3/1994 by the fifth additional provision of Law 30/1995 of 8 November 1995 on the Management and Supervision of Private Insurance. To this end, procedural rules are laid down and the powers of each supervisory body in this field are set.

(c) To collect in a single text the general rules on the type-approval regime for companies and assessment services eligible for assessment in the areas referred to therein.

To achieve an appropriate quality of valuations, the following measures are established, inter alia, and without prejudice to the transitional adjustment regime for existing companies:

(a) The need to obtain an approval or administrative authorisation. This requires greater organizational, personal and financial resources. Within this section, it is necessary to highlight the need for a number of related professionals with a minimum of three years ' experience, in order to monitor the achievement of the quality of the assessments.

(b) The valuation companies and services, as well as their professionals, shall be subject to a regime of incompatibilities and obligations of secrecy.

It should be noted that this Royal Decree is covered by Article 149.1.6., 11. and 13. of the Constitution.

In its virtue, according to the State Council, on the proposal of the Ministers of Economy and Finance and Justice, with the approval of the Minister of Public Administrations and after deliberation by the Council of Ministers in its Meeting of the day of 30 May 1997,

DISPONGO:

Article 1. Scope of application.

This Royal Decree develops the legal system of administrative approval of the services and societies of appraisal. Such approval shall be required to enable the assessment of immovable property to be carried out in the following cases:

(a) Loan mortgage collateral serving as part of the mortgage securities hedging portfolio referred to in Law 2/1981 of March 25, of Regulation of the Mortgage Market.

(b) Serve as a cover for the technical provisions of the insurance institutions required by Royal Decree 1348/1985 of 1 August, for which the Private Insurance Management Regulation is adopted.

(c) Forming part of the assets of the real estate collective investment institutions governed by Royal Decree 686/1993 of 7 May 1993 amending Royal Decree 1393/1990 of 2 November 1990 on the Regulation of Law 46/1984, of 26 December, regulating the institutions of collective investment, specifying the regime of the companies and funds of real estate investment.

(d) Forming part of the equity of pension funds regulated in Royal Decree 1307/1988 of 30 September, approving the Pension Funds and Plans Regulation.

e) Any other in which the regulation requires the valuation to be carried out by a valuation company or service.

Article 2. Definitions.

For the purposes of this Royal Decree:

1. Group: that set of entities defined in Article 4 of Law 24/1988, of July 28, of the Stock Market.

2. Professionals: architects, apparatus or technical architects, in the case of assessing urban estates in any case, or solar and buildings built with residential destination, and engineers or technical engineers of the specialty corresponding, depending on the nature of the object of the assessment, in other cases.

3. Related professionals: those professionals who, having a minimum experience of three years in the appraisal activity, have concluded a contract of a civil nature with the valuation company, or with the relevant credit institution; commercial or labor in order to guarantee permanently the effectiveness of the internal control mechanisms necessary to ensure an adequate knowledge of the situation and conditions of the real estate market on which they have to operate, the uniform compliance with the applicable rules of assessment and compliance with the rules obligations and incompatibilities provided for in this Royal Decree.

CHAPTER I

Task Societies

Article 3. Requirements for approval.

1. In order to obtain and retain their approval, the assessment companies shall comply with the following requirements:

a) Revestir the form of anonymised society of simultaneous foundation domiciled in the national territory.

b) Contar with a minimum capital of 50,000,000 pesetas in full. That capital must be represented in nominative shares.

c) By statutory limitation of their social object to the valuation of all types of goods, companies or assets.

(d) Contar with a minimum number of ten professionals, at least three of whom must be related professionals.

e) Dispose of an organization with the technical and personal means, and the internal control mechanisms necessary to ensure both adequate knowledge of the situation and conditions of the real estate market on which they have to operate, such as the uniform compliance with the applicable valuation rules and the obligations and incompatibilities set out in this Royal Decree.

(f) To be insured against third parties for the civil liability that may arise from their valuation activity by means of an insurance policy subscribed to an insurance entity legally entitled to operate on insurance civil liability, for an amount of not less than 100,000,000 pesetas, plus 0,5 per 1,000 of the value of the goods assessed in the immediately preceding financial year, up to the maximum figure of 400,000,000 pesetas.

g) Contar with a Board of Directors consisting of no less than three members. All of them shall be persons of recognized commercial and professional repute, and must possess, at least those who perform the appropriate executive functions, knowledge and experience for their exercise.

2. For the purposes of type-approval, commercial and professional honorability shall be understood to have been observed in those who have been observing a personal trajectory of respect for the commercial and other laws governing the economic activity and the life of the business, as well as good business practices.

In any case, it will be understood that they lack such good repute who have a history or have been convicted by a firm sentence for crimes against the property and against the socioeconomic order, crimes against the Treasury Public and against Social Security, falsehood, infidelity in the custody of documents and violation of secrets, embezzlement; the disabled to exercise public office or administration or management, in financial institutions or companies of assessment; and broken or non-reenabled ones.

3. They have adequate knowledge and experience to perform their executive functions as administrators in the valuation companies who have performed, for a period of not less than two years, senior management, management, control functions or the advice of such entities or on valuation services or functions of similar responsibility in other public or private entities with a dimension at least analogous to that in which the position is to be held.

Such requirements of good repute, knowledge and experience must also be met by the general managers, or assimilated, of the entity.

Article 4. Procedure for approval.

1. The promoters of a valuation company shall direct the application for approval to the Banco de España by providing the following documents:

a) A copy of the entity's corresponding write-up project.

b) Relationship of the components of the first board of directors and senior management of the company, with their professional record.

c) Relationship and professional history of the related professionals.

d) Description of the organization of the company, of the technical and personal means and of the internal control mechanisms with which it will count to carry out the tasks of appraisal.

(e) Justification of having constituted at the Banco de España, in cash or in securities of Public Debt, a deposit equivalent to 10 per 100 of the minimum capital required.

2. The Bank of Spain shall verify the project and, within a maximum period of two months, counted from the date on which the application has entered into any of the records of the competent administrative body or since the completion of the documentation required, where appropriate, issue the appropriate approval.

When the application is not resolved within the time limit, it will be deemed to be dismissed. For the effectiveness of the alleged dismissal, the certification of the alleged act referred to in Article 44 of Law No 30/1992 of 28 November 1992 of the Legal Regime of Public Administrations and of the Procedure shall be requested. Common Administrative.

3. The Banco de España shall refuse to grant approval, by means of a reasoned decision, if one of the conditions laid down for it is not met. In any event, prior to such refusal, the person concerned must be required to provide that, within 10 days, the errors observed or accompanying the documents referred to in paragraph 1 of this Article shall be remedied, indicating that, if not do, you will be given a withdrawal of your request.

4. Once granted or refused, where appropriate, the application, and without prejudice to the remedies against the decision taken, in accordance with the provisions of Law 13/1994, of 1 June, of Autonomy of the Banco de España, will be carried out by the return of the deposit constituted by the promoters when submitting the same.

Article 5. Registration in the official register of valuation companies.

1. The effectiveness of the type-approval granted shall be conditional upon presentation by the promoters of the valuation companies at the Bank of Spain prior to the commencement of the exercise of their activities, and before the period of six months from the date of notification of the approval of the following documentation:

a) Deed of constitution of the society duly registered in the Mercantile Register.

b) The relationship of the professionals with whom the company has an indication of their qualifications. In the case of related professionals, the conditions for the linkage shall also be provided.

2. If the requirements laid down in the previous number are met, the Banco de España shall make the registration of the company in the corresponding special register, grant a registration number and order the publication of such registration in the the "Official State Gazette".

Article 6. Incompatibilities of the valuation companies.

Without prejudice to other specific rules, valuation companies shall not be able to value assets, undertakings or assets owned by natural or legal persons with whom they cannot reasonably maintain a position of independence in disregard of the objectivity of the assessment.

In particular, they should refrain from valuing property, business or property ownership:

(a) From the valuation company itself or from companies belonging to its same group.

(b) Of their shareholders, if they participate directly or indirectly in their share capital or have, by virtue of agreements concluded with other shareholders, voting rights in a percentage higher than 10 per 100.

c) Of their administrators, managers, or assimilated.

d) Of the relatives of the persons mentioned above until the second degree of consanguinity or affinity.

(e) collective investment institutions in which they have investments or whose management or depositary belongs to the same group as the valuation company.

(f) Pension funds in which they have investments or whose manager belongs to the same group as the valuation company.

CHAPTER II

Credit institution rating services

Article 7. Scope of action.

The valuation services may only be valued within the scope of the mortgage market and provided that the real estate to be valued is a mortgage guarantee for those transactions carried out by companies that are part of the mortgage market. group.

Article 8. Requirements for approval and registration.

1. In order to carry out their activities, the assessment services must be previously approved by the Bank of Spain and entered in the relevant Special Register.

2. In order to obtain and maintain approval, the following requirements shall be met:

a) Count at least three related professionals.

b) Dispose of the technical and personal means, as well as the internal control mechanisms necessary to ensure both adequate knowledge of the situation and conditions of the real estate market on which they are to operate, the uniform compliance with the applicable valuation rules and the obligations and incompatibilities set out in this Royal Decree.

Article 9. Procedure for approval and registration.

1. The credit institutions promoting the valuation services shall direct the application for approval and registration to the Banco de España by providing the following documents:

a) The relationship and history of the professionals with whom the service is to be counted.

In the case of the related professionals, the conditions that credit the related relationship will also be provided.

b) Description of the organization of the service, of the technical and personal means, as well as of the internal control mechanisms with which it will count to perform the tasks of appraisal.

2. The Bank of Spain shall verify the project and no later than two months from the date on which the application has entered into any of the records of the competent administrative body or since the completion of the documentation. required, where appropriate, to issue the appropriate approval and to the registration in the relevant Special Register, giving the entity a registration number.

When the application is not resolved within the time limit, it will be deemed to be dismissed. For the effectiveness of the alleged dismissal, the certification of the alleged act referred to in Article 44 of Law No 30/1992 of 26 November of the Legal Regime of Public Administrations and of the Procedure shall be requested. Common Administrative.

Against the resolutions adopted by the Banco de España, it will be possible to institute the resources referred to in Law 13/1994, of 1 June, of Autonomy of the Banco de España.

Article 10. Incompatibilities of the assessment services.

Without prejudice to other specific rules, valuation services may not assess property owned by natural or legal persons with whom they cannot reasonably maintain a position of independence which impairment of the objectivity of the assessment.

In particular, they should refrain from valuing property:

(a) Of the credit institution itself to which they belong or of companies forming a group with that credit institution.

(b) Of the shareholders of the credit institution to which the valuation service belongs, provided that those shareholders directly or indirectly participate in their share capital or have the right to vote in a percentage higher than 1 per cent. 100.

c) Of administrators, managers, or assimilated.

d) From relatives to the second degree of consanguinity or affinity of the persons mentioned in the previous two letters.

CHAPTER III

Common Provisions

Article 11. Obligations of secrecy.

1. The approved valuation companies and the credit institutions with approved valuation services shall be subject to the obligation of professional secrecy. Under their terms, they may not disclose to third parties other than their clients:

(a) The information given to them on the occasion of the application for the assessment.

(b) Information relating to the personal or economic circumstances of the use or exploitation to which the object of the assessment is dedicated.

c) The result of the valuation.

2. By way of derogation from the preceding number, as well as from the provisions of the rules concerning the data to be entered in the valuation report, the valuation companies and services may disclose such data:

(a) To entities that have been the leaders of their clients for the assignment or delivery of the valuation.

b) To the owners of the goods, companies or assets subject to valuation.

(c) The Banco de España, the National Securities Market Commission and the Directorate-General for Insurance for the exercise of its supervisory functions and for the compilation and publication of statistics related to its functions.

3. The managers, directors and assimilated persons of the valuation companies and credit institutions with valuation services, the professionals carrying out valuation activities for the same, as well as the rest of the staff employed, may not use for their own benefit or to disclose to third parties the information they know as a result of the exercise of their business under the contract concluded with those companies and entities with valuation services.

Article 12. Obligations and responsibilities.

1. Approved valuation companies and credit institutions with approved valuation services shall:

1. Contar with an internal record in which the professionals with whom they have to provide the services of assessment will have to register. That record shall contain at least the following data:

a) Identification of the professional.

(b) Accreditation of their qualifications and their professional relationship with the entity.

c) Professional history that accredits your experience in the assessment activity.

2. Present at the Banco de España:

a) A certified copy of the title or registration document in the corresponding College of the related professionals.

b) History of these professionals.

(c) A supporting document for the professional relationship between the entity and those professionals.

d) The casualties of the same, as well as their substitutions, with the corresponding documents.

3. º reflect the registration number in the Banco de España on all documents and communications that may affect third parties.

4. Dispose of a file with the appraisals performed in the last five exercises.

2. The valuation companies shall communicate to the Banco de España, in the form which it establishes and as soon as they are known to them, the transmissions of its shares involving the acquisition by a person or group of at least 20 per 100 of its capital.

3. Irrespective of the penalties provided for under the provisions of the additional provision of Law No 3/1994 of 14 April, any liability of civil order which may result from the assessment shall be borne by the institution of the credit or the valuation company on whose behalf it is made, without prejudice to the liability of the professionals who have carried out the assessment.

Article 13. Incompatibilities of professionals.

1. Without prejudice to other specific rules, professionals carrying out valuation activities for approved valuation companies and in the approved valuation services of credit institutions shall not be able to value assets, undertakings or assets owned by persons with whom the professional cannot reasonably maintain a position of independence, in disregard of the objectivity of the assessment.

In particular, they shall refrain from participating in the valuations of the following goods, companies or assets:

a) Those over which they are professionally intervening by formulating a project or by directing or collaborating in the direction of the works.

(b) Those belonging to the professional himself, to his or her family members up to the second degree of consanguinity or affinity or to societies in which those persons exercise control.

(c) Those that are the property of real estate collective investment institutions in which any of the persons mentioned in the preceding letter have investments.

2. Related professionals shall not be able to provide their services as appraisers to any credit institution or valuation company other than that which they belong to, except those attached to valuation services, which may value assets for integrated companies in the same group as the entity holding those services.

Article 14. Special registers.

The Banco de España will create, in addition to the special registers of the companies and services of valuation in which they will be registered, the following records:

(a) A special register of related professionals in which the identity, title, experience, nature of the relationship with the society and any other relevant data of them will be entered.

(b) A special register of high offices of companies and credit institutions with valuation services in which the persons carrying out the duties of president, vice-president, counsellor or other persons acting on the same charges shall be entered administrator, general manager and assimilated.

CHAPTER IV

Monitoring regime and sanctioning procedure

Article 15. Supervision of services and valuation companies.

1. It will be for the Bank of Spain:

(a) The monitoring of compliance with the requirements for obtaining and maintaining the approval of the valuation institutions and the valuation services of credit institutions and of the other obligations imposed on them in this Royal Decree.

(b) monitoring compliance with the applicable provisions for the preparation of the assessment reports and certificates, where they are intended to have effects within the scope of the mortgage market or are required by the rules governing credit institutions.

2. Supervision of compliance with the provisions applicable to the preparation of reports and certificates of assessment required by insurance and pension funds, on the one hand, and on the other, by the institutions Property collective investment shall be the responsibility of the Directorate-General for Insurance and the National Securities Market Commission, respectively.

3. The Bank of Spain, the Directorate-General for Insurance and the National Securities and Exchange Commission may request, individually or in general, such services or companies as appropriate information for the exercise of their powers and, in particular, they are empowered to access the internal register of professionals.

Article 16. Sanctioning procedure.

1. The applicable sanctioning procedure will be the one regulated in Royal Decree 2119/1993 of 3 December 1993 on the sanctioning procedure applicable to the subjects acting on the financial markets, with the peculiarities established in the The following numbers.

2. The procedure shall always be initiated on its own initiative by the Bank of Spain, either on its own initiative or as a result of a higher order, a complaint or a reasoned request from the Directorate-General for Insurance or the National Market Commission Values.

In this request, it will be made clear that the irregular performance of the valuation society has had an impact on the administrative action field of the body that the formula.

3. The Bank of Spain will be competent to instruct the procedure.

4. The Banco de España, before formulating the motion for a resolution, shall, where appropriate, request a report to the body which has formulated the reasoned request for the initiation of the sanctioning procedure.

Article 17. Sanctioning powers.

1. The imposition of penalties for serious and minor infractions contained in the additional provision of Law 3/1994 of 14 April will be the responsibility of the Banco de España.

2. The imposition of penalties for very serious infringements contained in the additional provision of Law No 3/1994 of 14 April shall be the responsibility of the Minister for Economic Affairs and Finance, acting on a proposal from the Bank of Spain, except for the loss of approval, which shall be the responsibility of the Council of Ministers.

Article 18. Loss of approval.

Shall be causes of loss of approval to provide assessment services:

a) Renunciation.

(b) The dissolution of the valuation company or the credit institution holding the valuation service.

c) The modification of the social object of the valuation societies.

(d) The penalty for the final loss of the approval provided for in the additional provision of Law No 3/1994 of 14 April adapting the Spanish legislation on credit institutions to the Second Directive Bank Coordination and other amendments relating to the financial system are introduced.

e) Non-compliance for a period of at least six months from any of the requirements laid down for approval.

f) The lack of any activity to be carried out by your social object during the last two years.

The final loss of the approval will imply without further processing the reduction in the special register of the Banco de España, which will order its publication in the "Official State Gazette".

Additional disposition first. Changing the regulation of the Mortgage Market.

The following amendments are made to Article 72 of Royal Decree 685/1982 of 17 March 1982 on the development of certain aspects of Law 2/1981 of 25 March of Regulation of the Mortgage Market, which it is worded as follows:

1. Paragraph 1 (b) of paragraph 1 shall be worded as follows:

"b) In the investment of pension fund resources."

2. º A paragraph three is inserted with the following wording:

" Three. In order to enable the assets referred to in paragraph one of this article to be the subject of the investments of the institutions provided for in Law 46/1984 of 26 December, the regulator of the Collective Investment Institutions, they must comply with the requirements laid down in that Law and in its implementing rules. "

Additional provision second. Amendment of the Regulation of the Collective Investment Institutions.

Paragraph 1 (l) is added to Article 9 (3) of the Regulation of Law 46/1984 of 26 December, regulating the collective investment institutions, with the following content:

"(l) Records of Tasers Companies that have communicated to the National Securities Market Commission their intention to value real estate collective investment institutions."

First transient disposition. Valuation companies that have own funds lower than the minimum share capital.

The valuation companies that are already registered in the Special Register of the Banco de España and which, at the entry into force of this Royal Decree, have own funds lower than the minimum capital established for the Newly created entities shall, as long as they are in that situation, comply with the following rules:

a) They will not be able to reduce their share capital.

(b) Before 31 December 2000, the subscribed capital must reach at least the figure of 50,000,000 pesetas with a minimum outlay of 50 per 100. The remainder shall be disbursed before 31 December 2003.

(c) Where changes in the composition of its share capital involve the existence of new dominant partners or control groups, or where a merger takes place between two or more valuation companies to which it is made reference to this provision, the subscribed and paid-up capital must be at least two years before the date on which the change or merger takes place and, in any event, before 31 December 2003, the figures established for newly created societies.

Second transient disposition. Existing valuation companies and services that do not comply with the requirements of approval.

Without prejudice to the provisions of the first transitional provision, the valuation companies and services which, upon the entry into force of this Royal Decree, are entered in the Special Register of the Bank of Spain require a new type-approval and shall have a period of 12 months from the entry into force of this Royal Decree in order to comply with the requirements laid down for approval.

Transitional provision third. Companies and valuation services to be approved.

The promoters of the approval files for companies and valuation services, which are pending registration in the Official Register of the Banco de España at the date of entry into force of this Royal Decree, they shall have a period of three months to adapt their applications, where appropriate, to their content. After that period without having carried out the said adaptation, it shall be understood that they have not been applied for.

Transitional disposition fourth. Conventions.

The agreements which, pursuant to Article 38 of Royal Decree 685/1982 of 17 March 1982, had been concluded before the entry into force of this Royal Decree, will retain their effects until their extinction.

Single repeal provision. Regulatory repeal.

Articles 38, 39 and 40 of Royal Decree 685/1982 of 17 March, as amended by Royal Decree 1289/1991 of 2 August, are repealed.

Final disposition first. Basic character.

The provisions contained in this Royal Decree are declared basic, in accordance with the provisions of Article 149.1.6ª, 11. and 13. of the Constitution.

Final disposition second. Powers of development and entry into force.

1. The Second Vice-President of the Government and Minister of Economy and Finance are hereby authorized to lay down the supplementary and development rules of this Royal Decree. In particular, and in the light of developments in the real estate market and the valuation of the valuation companies, the Deputy Prime Minister and Minister for Economic Affairs and Finance may amend the amounts fixed in the Article 3 (1) (f) of this Royal Decree.

2. This Royal Decree will enter into force three months after its full publication in the "Official Gazette of the State".

Given in Madrid to May 30, 1997.

JOHN CARLOS R.

The First Vice President of the Government

and Minister of the Presidency,

FRANCISCO ALVEZ-HELMETS FERNANDEZ