JOHN CARLOS I,

KING OF SPAIN

To all who present it and understand,

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

Reason exposure

The effective implementation of the Real Estate Collective Investment Institutions, a piece of government housing policy, requires, given its novel character, the modification of certain provisions of the Law 46/1984, of December 26, regulator of the Collective Investment Institutions, to provide legal cover to the tax and financial regime of the Companies and Real Estate Investment Funds.

As for the tax regime, this is mainly characterized by the fixing of reduced rates in the Corporate Tax for the Funds and Real Estate Investment Companies that invest exclusively in the housing or other real estate for later lease.

At the financial level, on the one hand, the necessary specialties are needed to provide a suitable legal regime for the Companies and the Real Estate Investment Funds, on the other hand, the specialties of the regime are particularized sanctioning for the aforementioned institutions.

This Law also regulates, for the first time in Spain, the so-called "Mortgage Securitisation Funds". These funds, pools of mortgage units whose legal and financial configuration must be distinguished from that of the Mobiliary Investment Funds, shall be transformed into homogeneous, standardised and, consequently, fixed income securities. (a) for trading on organised securities markets, units of holdings in mortgage loans acquired by credit institutions. This will make it easier for mortgage loans to be mobilized, which will stimulate competition between them, allow their greater specialization in the various functions inherent in the granting and subsequent administration. of mortgage loans and, as a result, will contribute to cheaper housing acquisition loans.

Article first.

1. Article 32.2 (d) of Law 46/1984 of 26 December 1984, the regulator of the Collective Investment Institutions, is hereby reworded, which shall be as follows:

" (d) The excess investment in the coefficients set out in Article 4., or those which are fixed pursuant to Article 33, provided that it is of a transitional nature and does not exceed 20 per 100 of the limits legal. "

2. New wording is given to Article 32.3 (c) of Law 46/1984, which will remain as follows:

"(c) excess investment in the coefficients of Article 4. º, or those that are regulated in accordance with the provisions of Article 33, where the infringement is not to be classified as minor."

3. New wording is given to Article 32.3 (d) of Law 46/1984, which will remain as follows:

"(d) The excess in the limitations imposed in Article 11 on obligations towards third parties, or those that are regulated in accordance with the provisions of Article 33."

4. Article 32.3 (h) of Law 46/1984 is hereby reworded, which shall be as follows:

" (h) Failure to comply with the minimum investment coefficient of Articles 10 and 18 or to be established pursuant to Article 33 where the lack of investment is transitory and does not exceed 20 per 100 of the same. "

5. New wording is given to Article 32.4 of Law 46/1984, which will remain as follows:

"(e) Failure to comply with the minimum investment coefficient of Articles 10 and 18, or to be established in accordance with the provisions of Article 33, where it is not to be qualified as a serious infringement."

6. New wording is given to paragraph l) of the current Article 32.4 of Law 46/1984, which is worded as follows:

"(l) Failure to comply with the time limits for the investments set out in Articles 34a 4 and 35a 4 of this Law."

7. A new paragraph (ll) is inserted in Article 32.4 of Law 46/1984, with the following wording:

" (ll) Failure by management companies to act within the framework of this Law on the valuation of immovable property to be established in accordance with the provisions of Article 33 of the Treaty. This Law. "

8. The present paragraph (l) of Article 32.4 of Law 46/1984 becomes paragraph m) of the same article with the same wording.

Article 2.

1. New wording is given to Article 33 of Law 46/1984 of 26 December, regulating the Collective Investment Institutions, which will be worded as follows:

" Article 33. Legal regime.

1. The non-financial collective investment institutions which are established under this Law shall be adjusted in their constitution and amendment to the provisions of Article 8.

2. The general arrangements provided for in the preceding Title shall apply to these institutions, and in particular to Articles 31, 32 and 32a.

3. The principle of risk diversification contained in Article 2.2 of this Law, as developed by Article 4, shall be adapted to the nature and type of investments of these institutions.

4. Furthermore, in the determination of their legal status, regulations may be established, inter alia, for specialties in respect of valuation criteria, obligations towards third parties, the setting up of guarantee rights on assets or property members of their equity and subscription and redemption of shares.

5. The names that are regulated for collective investment institutions of a non-financial nature shall be proprietary to those registered in the corresponding registers.

6. In the case of Companies and Real Estate Investment Funds, neither the partners or members of the said Institutions nor the persons connected with them may be tenants of the immovable property which integrates the assets or assets of the (a) not to be the holders of other rights on the same rights other than those arising from their status as partners or members.

7. In the case of Real Estate Investment Funds, the property and rights of your property may be entered in your name in the Land Registry. "

2. Article 34 (3) of Law 46/1984 of 26 December 1984 on the regulation of collective investment institutions shall be worded as follows:

" 3. The operations of incorporation, capital increase and the merger of companies of capital investment of fixed capital whose capital is represented by securities admitted to trading on stock exchange, will be exempt in the form of transactions Member States of the Tax on Proprietary Transmissions and Documented Legal Acts. "

Third item.

Two new articles, 34 bis and 35a, are added to Law 46/1984 of 26 December, regulating the institutions of collective investment, with the following wording:

" Article 34a. Tax regime of Real Estate Investment Companies.

1. Real estate investment companies which, with the character of non-financial collective investment institutions, have as their exclusive social object the investment in housing for their lease, will have the same tax regime as The items 2 and 3 of the previous article for the Mobilia Investment Company, irrespective of whether or not they are listed on the Stock Exchange. Furthermore, the acquisition by these companies of houses for leasing will enjoy a bonus of 95 per 100 of the Tax on Proprietary Transmissions and Legal Acts, without prejudice to the conditions that They can be set up.

2. The Real Estate Investment Companies which, with the character of Non-financial Collective Investment Institutions, have as their exclusive social object the investment in buildings of an urban nature for their lease, and in addition, the housing represent at least 50 per 100 of the total of the asset, shall have the same tax regime as that provided for in the preceding paragraph of this Article, except for the following specialties:

(a) The rate of tax on the Company Tax will be 7 per 100.

(b) The 95-per-100 bonus for the Tax on Proprietary Transmissions and Documented Legal Acts will be limited to the purchase of homes for lease.

3. The exclusivity of the object referred to in the preceding numbers shall be compatible with the coverage by the companies of the various liquidity or investment ratios in securities which they regulate are established.

4. The application of the tax regime referred to in the preceding numbers shall require that the immovable property which is part of the assets of the Real Estate Investment Company shall not be completed until four years have elapsed since its acquisition, unless, by way of exception, the National Securities Market Commission is expressly authorised to do so.

5. Real estate investment companies which, with the character of non-financial collective investment institutions, have a social object other than that provided for in the preceding numbers shall be taxed under the general scheme provided for in the legislation fiscal.

6. If the regulatory provisions implementing the legal regime applicable to Real Estate Investment Companies, by way of exception, consent to the provision of immovable property or other rights for the purposes of determining the increase or A reduction in the assets to be produced in respect of the contributing partner, for the purposes of the Company Tax and the Income Tax of the Physical Persons, shall be taken as the value of the transmission resulting from the administrative verification the value of the goods or rights provided, as provided for in Article 52 of the Law 230/1963, dated December 28, General Tax. "

" Article 35a. Tax regime of the Real Estate Investment Funds.

1. The Real Estate Investment Funds which, with the character of Non-financial Collective Investment Institutions, have as their exclusive object the investment in housing for their lease will have the same tax regime as provided for in the article. prior to the Investment Funds. In addition, the acquisition of houses for lease by the Funds under any heading shall be granted a bonus of 95 per 100 of the Tax on Proprietary Transmissions and Legal Acts, without prejudice to the the conditions which they may regulate.

2. The Real Estate Investment Funds which, with the character of Non-financial Collective Investment Institutions, have as their exclusive object the investment in buildings of an urban nature for their lease, and in addition, the houses represent, to the less, 50 per 100 of the total of the asset, shall have the same tax regime as that provided for in the previous number of this article, except for the following specialties:

(a) The rate of charge in the Company Tax shall be 7 per 100.

b) The 95-per-100 bonus for the Tax on Proprietary Transmissions and Documented Legal Acts will be limited to the acquisition of homes for leases.

3. The exclusivity of the object referred to in the preceding numbers shall be compatible with the coverage by the Funds of the different liquidity or investment ratios in securities which are regulated.

4. The application of the tax regime referred to in the preceding numbers shall require that the immovable property which is part of the assets of the Real Estate Investment Fund shall not be used until four years have elapsed since its acquisition, unless it mediates, by way of exception, the express authorisation of the National Securities Market Commission.

5. Real estate investment funds which, with the character of non-financial collective investment institutions, have an object other than that provided for in the preceding numbers, shall be taxed in accordance with the general scheme provided for in the legislation in force. fiscal.

6. If the regulatory provisions implementing the legal regime applicable to the Real Estate Investment Funds, in exceptional circumstances, provide for the contribution to those of real estate or other rights, for the purposes of determining the increase or A reduction in the amount of assets to be produced in respect of the participating participant, for the purposes of the Corporate Tax and the Income Tax of the Physical Persons, shall be taken as the value of the transmission resulting from the verification the value of the goods or rights provided, as provided for in Article 52 of the Law 230/1963, dated December 28, General Tax.

7. Management of Real Estate Investment Funds shall be exempt from Value Added Tax. "

Article 4. Mortgage shareholdings.

1. The following paragraph is added to Article 15 of Law 2/1981 of 25 March of Regulation of the Mortgage Market:

" In the event of bankruptcy of the holding entity, the business of issuing the holding shall be impeachable only in the terms of Article 10 and, consequently, the holder of that participation shall be entitled to the right of participation. No separation in the terms provided for in Articles 908 and 909 of the Trade Code.

Equal separation right will assist you in case of suspension of payments or similar situations of the entity issuing the participation. "

2. A new point (h) is added to Article 8.1 of Law 14/1985 of 29 May of Tax Regime for certain financial assets, with the following wording:

"h) The returns of mortgage participations that constitute income from Mortgage Securitisation Funds."

Article 5. Mortgage Securitization Funds.

1. For the issue of the securities referred to in this Article, pools of mortgage securities referred to as "Mortgage Securitisation Funds" shall be established.

The Funds shall constitute separate and closed assets, without legal personality, which, without prejudice to the provisions of No 7, shall be integrated, in respect of their assets, by the mortgage participations and, as regards its liability, for securities issued in amounts and financial conditions such that the Fund's net equity value is nil.

2. The administration and legal representation of the Funds shall be the responsibility of the managing companies which have created them. The establishment of each Fund shall be formalised in public writing. In this writing:

1. The mortgage participations grouped in the Fund shall be identified and, where applicable, the replacement rules in the case of early repayment of those units.

2. The content of the values to be issued, or the content of each of the strings, if they are multiple, will be defined precisely.

3. The other rules to be adjusted by the Fund shall be laid down, in particular the operations which, in accordance with number 7, are to be carried out on their own account.

3. Given the writing of the Fund, it may not be altered but in exceptional circumstances and with the conditions to be laid down.

The formation of funds must be the subject of verification and registration by the National Securities Market Commission in the terms provided for in the Law 24/1988 for the issuance of securities, with the adjustments to be regulated. can be established. Neither the Funds nor the securities issued by them shall be the subject of registration in the Trade Register, nor shall they be subject to the provisions of Law 211/1964 of 24 December on the issuance of obligations by legal persons other than the anonymous companies.

The Funds shall in any event be extinguished by the full amortisation of the mortgage holdings which they bring together. It may also be expressly provided for in the instrument of incorporation for early settlement where the amount of the outstanding mortgage interest is less than 10 per 100 of the initial payment, and must be determined in the write the manner in which the remaining assets of the Fund will be available.

4. Mortgage participations grouped in the Funds, as well as corresponding to loans which meet the requirements laid down in Section II of Law 2/1981 of 25 March of Regulation of the Mortgage Market, must have a maturity equal to that of the investee loans.

5. The minimum amount to be granted by the Funds at the time of their establishment may be fixed.

6. The securities issued from the Funds may differ in interest rates, which may be fixed or variable, term and form of depreciation, early repayment arrangements in the event of the mortgage interest, right (a) the payment of the amount of the debt or other special benefits in the event of default of the mortgage interest, or any other characteristics.

Without prejudice to differences that may be established between their different series, the principal and interest flows corresponding to the set of securities issued under the Fund shall be in line with those of the mortgage participations grouped in it, without further differences or temporary gaps than those arising from commissions and administrative and management fees, insurance premiums or other applicable concepts. Such concepts and temporary gaps may be limited.

7. Subject to the provisions of the preceding number and to the provisions of the instrument of incorporation of the Fund, management companies may, in order to increase the security or regularity in the payment of the securities issued, neutralise the differences in interest rates between mortgage holdings grouped in the Fund and the securities issued by it or, in general, to transform the financial characteristics of all or some of those securities, to contract on behalf of the Financial swap fund, insurance contracts, reinvestment contracts at a guaranteed interest rate or other financial operations for which the purpose is intended. They may also, in order to cover the temporary gaps between the calendar of the principal and interest flows of the mortgage holdings and the interest of the securities issued, acquire financial assets of equal quality. or higher than the best credit rating securities issued from the Fund itself.

8. The financial risk of securities issued from each Fund shall be the subject of an assessment by a qualifying entity recognised for that purpose by the National Securities Market Commission. The rating given to the securities shall be included in its issuance prospectus.

The holders of the securities issued by the Fund shall be at risk of default on the mortgage holdings grouped in the Fund, subject, where appropriate, to the established special benefit and priority scheme. for the different sets of values in the writing of the Fund. The holders of the securities shall have no action against the management company of the Fund, but for failure to perform their duties or failure to comply with the provisions of the articles of association.

9. The securities issued from the Funds shall be represented exclusively by means of a note, with the public deed referred to in the preceding number 2 having the effect of that provided for in Article 6 of the Law 24/1988, of the Values.

The management companies of the Funds will have to apply for admission to trading of securities issued in an official or organised market established in Spain, with the exceptions they may regulate. set.

10. The Mortgage Securitization Funds will be subject to Corporate Tax at the general rate. Its constitution shall be exempt from the concept of "corporate operations" of the Tax on Proprietary Transmissions and Legal Acts.

The consideration of any securities issued under the Mortgage Securitisation Funds shall, in any event, be considered to be a consideration of capital income, in accordance with the Article 1. of Law 14/1985 of 29 May of Tax Regime of Certain Financial Assets.

The management of the Funds by the management companies shall be exempt from the Value Added Tax.

11. Special constraints may be imposed on the acquisition by institutions of collective investment of securities issued from mortgage securitization funds managed by companies belonging to the same group as the companies managing those institutions.

Article 6. Mortgage Securitisation Fund management companies.

1. The establishment of Mortgage Securitisation Funds shall be carried out by specialised management companies, known as the 'Mortgage Securitisation Fund Management', which shall have their exclusive subject matter.

Managing Societies may be responsible for the administration and legal representation of one or more Funds. The representation and defence of the interests of the holders of the securities issued under the Funds which they administer shall be the responsibility of the management of the business.

2. The creation of management companies will require authorization from the Minister of Economy and Finance, which will be granted prior to the National Securities Market Commission. Once authorized, they must be registered in the Special Register opened for this purpose by the National Securities Market Commission.

The maximum participation of the same person, entity or group of entities in the capital or voting rights of a Management Society may be limited, or the use of any other means of exercising the effective control over it.

3. The Management Companies and the Mortgage Securitisation Funds that administer shall be subject to the supervision, inspection and, where appropriate, sanction by the National Securities Market Commission.

It will be applicable to both, as appropriate, the provisions of Chapter V of Title I of Law 46/1984 of 26 December, regulating the institutions of collective investment. In addition to this, the following are considered to be very serious:

(a) The investment of the Fund's assets in assets, or the hiring of operations, which are not authorized in the writing of the Fund's constitution or are contrary to the provisions of this Article and the precedent or its development standards.

b) The negative or resistance to the inspector activity.

(c) The lack of communication of the information required of them by the National Securities Market Commission, where such failure is not considered to be a serious or minor infringement.

Additional disposition.

The Government is authorized to develop the provisions of this Law in accordance with the provisions of this Law.

In particular, the Government may establish a specific name for securities issued from Mortgage Securitisation Funds, and reserve it exclusively for such securities.

Therefore,

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

Madrid, July 7, 1992.

JOHN CARLOS R.

The President of the Government,

FELIPE GONZÁLEZ MARQUEZ