LAW 47/1985, OF DECEMBER 27, OF BASES OF DELEGATION TO THE GOVERNMENT FOR THE APPLICATION OF THE LAW OF THE EUROPEAN COMMUNITIES, DELEGATES IN THE GOVERNMENT THE POWER TO DICTATE NORMS WITH RANGE OF LAW ON THE MATTERS REGULATED BY THE LAWS INCLUDED IN THE ANNEX, IN ORDER TO BRING THEM INTO LINE WITH THE COMMUNITY LEGAL ORDER AND TO THE EXTENT THAT SUCH MATTERS ARE AFFECTED BY IT. THIS ANNEX INCLUDES, AMONG OTHER RULES WITH A RANGE OF LAW, THE RECAST TEXT ON FOREIGN INVESTMENTS IN SPAIN APPROVED BY DECREE 3021/1974 OF 31 OCTOBER.

THIS REAL LEGISLATIVE DECREE THEREFORE SEEKS TO COMPLY WITH THIS MANDATE BY ADAPTING THE SPANISH LEGISLATION ON FOREIGN INVESTMENTS TO THE PRINCIPLES AND CRITERIA CONTAINED IN THE COMMUNITY RULES GOVERNING THE MOVEMENT OF CAPITAL.

THE REAL DECREE ESTABLISHES A NEW DEFINITION OF THE INVESTMENT MODALITIES ACCORDING TO THE COMMUNITY CATEGORIES. THIS SECTION HIGHLIGHTS A MUCH MORE TECHNICAL DEFINITION OF DIRECT INVESTMENT AND PORTFOLIO INVESTMENTS, USING AS A DIFFERENTIATING CRITERION THE INFLUENCE ON THE MANAGEMENT OF SOCIETY AND NOT ON THE EXCHANGE RATE, WHICH HAS A MUCH MORE FORMAL CHARACTER. ON THE OTHER HAND, AS WELL AS IN THE COMMUNITY SCHEME, FINANCIAL LOANS OF MORE THAN FIVE YEARS ' DURATION HAVE BEEN INCLUDED IN DIRECT INVESTMENT.

THE PLANNED FREE INVESTMENT REGIME, WITH THE EXCEPTION OF EXCEPTIONAL CIRCUMSTANCES WHICH IN NO WAY ALTER THE LIBERALISATION COMMITMENTS RESULTING FROM OUR INCORPORATION INTO THE EUROPEAN ECONOMIC COMMUNITY, IS BASED ON A PROCEDURE OF ADMINISTRATIVE VERIFICATION, REFERRED TO IN THE COMMUNITY ORDER ITSELF. THIS VERIFICATION TECHNIQUE EMPOWERS THE ADMINISTRATION TO CARRY OUT A TASK OF VERIFYING THE NATURE AND REALITY OF THE TRANSACTIONS AND TRANSFERS.

A SPECIFIC REGULATION IS FINALLY FORESEEN FOR THOSE SECTORS IN WHICH SPAIN, IN ACCORDANCE WITH ARTICLES 56.1 AND 223.1 OF THE TREATY OF ROME, MAY IMPOSE LIMITATIONS ON THE RIGHT OF ESTABLISHMENT.

IN ITS VIRTUE, ON THE PROPOSAL OF THE MINISTER OF ECONOMY AND FINANCE, HEARD BY THE COUNCIL OF STATE, AND AFTER DELIBERATION OF THE COUNCIL OF MINISTERS OF THE DAY 13 OF JUNE 1986, I HAVE:

ONLY ARTICLE. THE TEXT OF THE LAW ON FOREIGN INVESTMENTS IN SPAIN, WHICH IS THEN INSERTED, IS APPROVED BY FORCE OF LAW.

DADO IN MADRID TO 27 JUNE 1986.

JOHN CARLOS R.

THE MINISTER OF ECONOMY AND FINANCE, CARLOS SOLCHAGA CATALAN TEXT OF THE LAW OF FOREIGN INVESTMENTS IN SPAIN CHAPTER FIRST GENERAL PROVISIONS ARTICLE 1. 1. FOR THE PURPOSES OF THIS LAW, FOREIGN INVESTMENTS SHALL BE CARRIED OUT IN SPAIN BY FOREIGN PRIVATE PERSONS, NATURAL OR LEGAL PERSONS, WHATEVER THEIR RESIDENCE, AND BY SPANISH RESIDENTS RESIDING ABROAD.

2. THE PERSONS AND ENTITIES MENTIONED MAY INVEST THEIR CAPITAL IN SPAIN, COMPLYING WITH THE REQUIREMENTS ESTABLISHED BY SPANISH LEGISLATION UNDER THE SAME CONDITIONS AS THE SPANISH RESIDENTS, EXCEPT FOR THE LIMITATIONS SET OUT IN THIS ARTICLE. LAW AND ITS REGULATION, OR IN SPECIAL LAWS.

3. LIKEWISE, FOR THE PURPOSES OF THIS LAW, FOREIGN INVESTMENTS SHALL BE CONSIDERED:

(A) IN THE PERCENTAGES TO BE ESTABLISHED, THOSE CARRIED OUT BY SPANISH COMPANIES HAVING FOREIGN PARTICIPATION IN THEIR CAPITAL, BY THE FORMATION OF OTHER SPANISH COMPANIES OR BY THE ACQUISITION OF SHARES OR PARTICIPATIONS OF THE SAME.

B) THE INVESTMENTS MADE BY THE ESTABLISHMENTS AND BRANCHES IN SPANISH TERRITORY OF FOREIGN PRIVATE PERSONS, NATURAL OR LEGAL, OR OF SPANIARDS RESIDING ABROAD.

ART. 2. FOREIGN INVESTMENTS MAY BE MADE BY:

1. THE USE OR CONTRIBUTION OF FOREIGN CAPITAL.

THEY WILL HAVE FOREIGN CAPITAL CONSIDERATION AS FOLLOWS:

(A) THE EXTERNAL CASH CONTRIBUTION, IN THE CASES AND FORMS THAT ARE REGULATED.

B) THE DIRECT CONTRIBUTION TO A CAPITAL EQUIPMENT COMPANY OF FOREIGN ORIGIN. (C) THE DIRECT CONTRIBUTION TO A FOREIGN-MADE TECHNICAL ASSISTANCE, PATENT AND LICENSING UNDERTAKING.

D) THE USE OF ANY OTHER MEANS, PRIOR TO ADMINISTRATIVE AUTHORIZATION. 2. THE USE OR CONTRIBUTION OF INTERNAL CAPITAL, UNDER THE CONDITIONS LAID DOWN IN REGULATION.

ART. 3. FOREIGN INVESTMENTS MAY TAKE EFFECT THROUGH THE FOLLOWING FORMS: 1. DIRECT INVESTMENT.

2. PORTFOLIO INVESTMENTS.

3. INVESTMENTS IN REAL ESTATE.

4. OTHER FORMS OF INVESTMENT.

ART. 4. HOLDERS OF FOREIGN INVESTMENTS IN ANY OF THE FORMS REFERRED TO IN THE PRECEDING ARTICLE, MADE FROM OUTSIDE CAPITAL IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 2 (1), SHALL ENJOY THE RIGHT TO TRANSFER ABROAD, WITHOUT QUANTITATIVE LIMITATION:

(A) THE CAPITAL INVESTED AND THE CAPITAL GAINS OBTAINED FROM THE SECURITIES THEY CARRY OUT.

B) THE LEGALLY DISTRIBUTED PROFITS AND DIVIDENDS AND EVEN THE PROCEEDS OF THE SALE OF SECURITIES SECURITIES SUBSCRIPTION.

THE TRANSFER RIGHT MAY BE EXERCISED FROM THE MOMENT THE INVESTMENT HAS BEEN DECLARED IN DUE FORM FOR REGISTRATION IN THE INVESTMENT REGISTER.

THE ADMINISTRATION MAY ONLY DENY THE RIGHT OF TRANSFER WHEN, UPON ADMINISTRATIVE VERIFICATION, IT IS FOUND THAT THE PROFITS AND CAPITAL GAINS HAVE BEEN OBTAINED IN VIOLATION OF THE LEGAL RULES OF THE SPANISH LEGAL SYSTEM.

CHAPTER II DIRECT INVESTMENTS ART. 5. THE PROVISIONS OF THIS CHAPTER ARE SUBJECT TO THOSE INVESTMENTS WHICH ARE INTENDED TO BE CARRIED OUT BY:

(A) THE PARTICIPATION IN A SPANISH COMPANY THAT ALLOWS THE FOREIGN INVESTOR TO HAVE AN EFFECTIVE INFLUENCE ON THE MANAGEMENT OR CONTROL OF THAT COMPANY, IN THE PROPORTION THAT IS REGULATED.

(B) THE ESTABLISHMENT OF BRANCHES OR ESTABLISHMENTS OF FOREIGN COMPANIES OR OF HOLDINGS PERFORMING NON-RESIDENT NATURAL PERSONS.

(C) THE GRANTING OF LOANS OF MORE THAN FIVE YEARS IN ORDER TO ESTABLISH OR MAINTAIN LASTING ECONOMIC LINKS.

D) THE REINVESTMENT OF PROFITS MADE BY THE FOREIGN INVESTOR IN ORDER TO MAINTAIN LASTING ECONOMIC TIES.

ART. 6.

1. INVESTMENTS WHICH ARE INTENDED TO BE CARRIED OUT BY PARTICIPATION IN SPANISH COMPANIES, IN THE CASES PROVIDED FOR IN PARAGRAPHS (A) AND (D) OF THE PREVIOUS ARTICLE, ARE FREE WHEN, AS A RESULT OF THE INVESTMENT, FOREIGN PARTICIPATION DOES NOT EXCEED OF THE 50 PER 100 OF THE SOCIAL CAPITAL.

2. THEY ARE EQUALLY FREE, BUT SUBJECT TO THE ADMINISTRATIVE VERIFICATION PROCEDURE:

THE FOREIGN INVESTMENTS MENTIONED IN THE PREVIOUS NUMBER, WHEN, AS A RESULT OF THE INVESTMENT, FOREIGN PARTICIPATION EXCEEDS 50 PER 100 OF THE SHARE CAPITAL.

THE REINVESTMENT OF PROFITS MADE BY BRANCHES OR ESTABLISHMENTS OF FOREIGN COMPANIES OR BY HOLDINGS PERFORMING NON-RESIDENT NATURAL PERSONS.

INVESTMENTS INTENDED TO BE CARRIED OUT THROUGH ANY OF THE MODALITIES PROVIDED FOR IN PARAGRAPHS (B) AND (C) OF THE PREVIOUS ARTICLE.

ART. 7.

FOR THE PURPOSES OF DETERMINING THE PERCENTAGE OF FOREIGN INVESTMENT IN A COMPANY, IN THE FORM THAT IT IS REGULATED, IT SHALL BE COMPUTED AS SUCH THE INVESTMENT MADE IN IT BY ANOTHER COMPANY OF SPANISH NATIONALITY IN THE THAT, IN TURN, THERE IS FOREIGN PARTICIPATION, AS WELL AS THOSE MADE THROUGH THE CONTRIBUTION OF INTERNAL CAPITAL TO THOSE REFERRED TO IN ARTICLE 2., NUMBER 2 OF THIS LAW.

ART. 8 SPANISH COMPANIES WITH FOREIGN PARTICIPATION AND BRANCHES AND ESTABLISHMENTS ESTABLISHED IN SPAIN BY FOREIGN COMPANIES MAY USE DOMESTIC AND EXTERNAL CREDIT UNDER THE SAME GENERAL CONDITIONS FOR THE SPANISH COMPANIES.

CHAPTER III PORTFOLIO INVESTMENTS. OPERATIONS WITH Titles ART. 9.

THE PROVISIONS OF THIS CHAPTER ARE SUBJECT TO THOSE INVESTMENTS WHICH ARE INTENDED TO BE MADE BY THE ACQUISITION OF SHARES, WHETHER ADMITTED OR NOT TO OFFICIAL STOCK EXCHANGE, PROVIDED THAT THEY DO NOT CONSTITUTE DIRECT INVESTMENTS.

IN THE SAME WAY, INVESTMENTS TO BE MADE THROUGH THE ACQUISITION OF PUBLIC FUNDS, PRIVATE FIXED-INCOME SECURITIES OR SHARES IN INVESTMENT FUNDS WOULD BE GOVERNED BY THE PROVISIONS OF THIS CHAPTER. AS THOSE TITLES OTHER THAN THE PREVIOUS ONES TO BE DETERMINED REGULATIVELY.

ART. 10. FOREIGN INVESTMENTS COVERED BY THIS CHAPTER MAY BE MADE FREELY UNDER THE CONDITIONS WHICH ARE DETERMINED.

CHAPTER IV INVESTMENTS IN REAL ESTATE ART. 11. FOREIGN INVESTMENTS IN REAL ESTATE ARE SUBJECT TO THE PROVISIONS OF THIS CHAPTER.

ART. 12. WHERE THE ACQUISITION OF IMMOVABLE PROPERTY IS CARRIED OUT BY FOREIGNERS, WHETHER RESIDENT OR NON-RESIDENT, THE LEGISLATION DICTATED BY STRATEGIC OR NATIONAL DEFENCE GROUNDS SHALL APPLY TO THEM, IF THE PROPERTY WHICH IS THE SUBJECT OF THE ACQUISITION IS IN ANY OF THE AREAS OF THE NATIONAL TERRITORY SPECIFIED IN THAT LEGISLATION.

ART. 13. 1. THEY ARE FREE, SUBJECT TO NO PRIOR ADMINISTRATIVE PROCEDURE, THE FOREIGN INVESTMENTS THAT THEY INTEND TO MAKE BY THE ACQUISITION OF REAL ESTATE, EXCEPT AS ESTABLISHED IN THE FOLLOWING NUMBER.

2. THEY ARE EQUALLY FREE, BUT SUBJECT TO THE PROCEDURE OF ADMINISTRATIVE VERIFICATION, INVESTMENTS WHICH AIM AT THE ACQUISITION OF REAL ESTATE BY FOREIGN LEGAL PERSONS, AS WELL AS INVESTMENTS IN IMMOVABLE PROPERTY WHICH THEY INTEND THE ACQUISITION OF REAL ESTATE OF A RUSTIC NATURE BY FOREIGN NATURAL PERSONS, NOT RESIDENTS OF SPAIN, MEDIANTE:A).

B) THE ACQUISITION OF SOLAR, CONSIDERED AS URBAN BUILDINGS ACCORDING TO LAND LEGISLATION AND URBAN PLANNING.

C) THE ACQUISITION OF COMMERCIAL PREMISES.

D) THE ACQUISITION OF MORE THAN 3 DWELLINGS IN THE SAME BUILDING OR, IN GENERAL, MORE THAN 3 UNITS OF THE SAME HORIZONTAL DIVISION.

3. WHERE THE PROPERTY TO BE ACQUIRED IS INTENDED FOR AN ACTIVITY OF A BUSINESS NATURE, THE INVESTMENT SHALL BE GOVERNED BY THE PROVISIONS LAID DOWN IN CHAPTER II.

ART. 14. THE DECLARATION OF NATIONAL TOURIST INTEREST, IN ACCORDANCE WITH THE PROVISIONS OF LAW 197/1963 OF 28 DECEMBER, WILL ENTAIL THE GRANTING OF THE AUTHORIZATION PREVENTED BY THE LEGISLATION DICTATED BY STRATEGIC OR NATIONAL DEFENSE REASONS THAT IS REFERRED TO IN ARTICLE 12 OF THIS LAW, WITHOUT PREJUDICE TO THE EASEMENTS AND CONDITIONS LAID DOWN THEREIN.

CHAPTER V OTHER FORMS OF INVESTMENT ART. 15. FOREIGN INVESTMENTS IN WHICH ANY OTHER FORM NOT PROVIDED FOR IN THE PREVIOUS CHAPTERS SHALL BE USED SHALL REQUIRE PRIOR ADMINISTRATIVE AUTHORISATION.

CHAPTER VI REGISTRATION OF FOREIGN INVESTMENTS ART. 16. 1. FOREIGN INVESTMENTS WILL BE FORMALIZED IN A DOCUMENT AUTHORIZED BY FEDATARY PUBLIC SPANISH.

2. THEY ARE OBLIGED TO DECLARE FOREIGN INVESTMENTS AND THEIR LIQUIDATION FOR REGISTRATION IN THE INVESTMENT REGISTER OF THE MINISTRY OF ECONOMY AND FINANCE, IN THE CASES AND FORMS WHICH ARE DETERMINED TO BE DETERMINED:

A) FOREIGN INVESTMENT HOLDERS.

B) FEDATARIOS WHO INTERVENE IN ANY OF THE ACTS RELATING TO THEM.

(C) THE BANKING INSTITUTIONS THROUGH WHICH FOREIGN PAYMENTS AND CHARGES ARISING FROM FOREIGN INVESTMENT ARE MADE.

ART. 17. THE DIRECTORATE-GENERAL FOR EXTERNAL TRANSACTIONS, THROUGH THE INVESTMENT REGISTER OF THE MINISTRY OF ECONOMY AND FINANCE, WILL MONITOR COMPLIANCE WITH THE PROVISIONS OF THIS LAW.

CHAPTER VII POWERS AND PROCEDURE ART. 18. COMPETITION IN MATTERS GOVERNED BY THIS LAW CORRESCAN TO THE FOLLOWING BODIES: COUNCIL OF MINISTERS.

MINISTRY OF ECONOMY AND FINANCE.

FOREIGN TRANSACTION GENERAL ADDRESS.

FOREIGN INVESTMENT BOARD.

THE REGULATION WILL DETERMINE THE SPECIFIC COMPETENCE OF EACH OF THEM.

THE COUNCIL OF MINISTERS SHALL BE RESPONSIBLE FOR AUTHORIZING, ON A PROPOSAL FROM THE FOREIGN INVESTMENT BOARD, INVESTMENTS IN THE SECTORS OF ACTIVITY REFERRED TO IN CHAPTER VIII OF THIS ACT.

ART. 19. THE PROCEDURE FOR THE ADMINISTRATIVE HANDLING OF FOREIGN INVESTMENTS SHALL BE ESTABLISHED IN A REGULATED MANNER.

CHAPTER VIII REGULATION OF THE ESTABLISHMENT OF FOREIGN INVESTORS IN SPECIFIC SECTORS ART. 20. 1 ARE SECTORS WITH SPECIFIC REGULATION ON THE RIGHT OF ESTABLISHMENT, IN APPLICATION OF THE PROVISIONS OF ARTICLES 56.1 AND 223.1 OF THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY, THE FOLLOWING: GAME.

ACTIVITIES DIRECTLY RELATED TO NATIONAL DEFENSE.

TELEVISION.

RADIO.

AIR TRANSPORT.

2. THE CREATION OF ANY OTHER SECTOR OF A SPECIFIC NATURE OR THE MODIFICATION OF THE ABOVE WILL REQUIRE THE RULE OF LAW.

FINAL PROVISIONS FIRST. IN ACCORDANCE WITH THE PROVISIONS LAID DOWN IN ARTICLE 6 (3) AND (4). ACTS CONTRARY TO THIS LAW AND THOSE CARRIED OUT IN FRAUD AGAINST IT SHALL BE NULL AND VOID OF THE PRELIMINARY TITLE OF THE CIVIL CODE.

SECOND. ADMINISTRATIVE ACTS ISSUED PURSUANT TO THIS LAW MAY BE THE SUBJECT OF THE RELEVANT RESOURCES, INCLUDING THE ADMINISTRATIVE DISPUTE, IN ACCORDANCE WITH THE PROVISIONS OF THE LAW GOVERNING THAT JURISDICTION.

THIRD. THIS LAW SHALL ENTER INTO FORCE ON 1 JULY 1986.

FOURTH. THE GOVERNMENT, WITHIN ONE MONTH, WILL PUBLISH THE "FOREIGN INVESTMENT REGULATION IN SPAIN", WHICH WILL DEVELOP THIS LAW.

QUINTA. DECREE 3021/1974 OF 31 OCTOBER 1974 AND ANY PROVISIONS OF EQUAL OR LOWER RANK ARE HEREBY REPEALED.

ADDITIONAL FIRST STEPS. THE INTERNATIONAL FINANCIAL CORPORATION MAY MAKE INVESTMENTS IN SPAIN IN ACCORDANCE WITH THE PROVISIONS OF DECREE-LAW 2/1962 OF 25 JANUARY.

SECOND. AUTHORISATIONS TO INVEST IN SPAIN, IN FAVOUR OF FOREIGN PRIVATE LEGAL PERSONS, SHALL LAPSE IF THE AUTHORISED LEGAL PERSON IS THE SUBJECT OF NATIONALISATION IN HIS COUNTRY, UNLESS THE SPECIAL AUTHORISATION PROVIDED FOR IN THE ADDITIONAL PROVISION BELOW.

THIRD. GOVERNMENTS AND ALL OFFICIAL FOREIGN SOVEREIGNTY ENTITIES WILL NEED SPECIAL AUTHORIZATION TO MAKE INVESTMENTS IN FOREIGN CAPITAL IN SPAIN.

FOURTH. 1. THE PERSONS LISTED IN ARTICLE 1. THAT, BY SUCCESSION TESTED OR INTERNED, DONATION BY CAUSE OF DEATH OR ACTS OF A SIMILAR NATURE, THEY ACQUIRE OWNERSHIP OF ANY OF THE INVESTMENTS PROVIDED FOR IN ARTICLE 3., THEY SHALL REQUIRE PRIOR ADMINISTRATIVE AUTHORIZATION TO:

(A) THE TRANSMISSION OF THE INFORMATION TO ANY PERSON LISTED IN ARTICLE 1.

B) THE TRANSFER ABROAD OF THE PROFITS AND RETURNS THEY PRODUCE.

C) THE TRANSFER ABROAD OF THE CAPITAL SO ACQUIRED AND THE AMOUNT OF ITS DISPOSAL.

2. THE AUTHORISATIONS REFERRED TO IN THE NUMBER 1 OF THIS ADDITIONAL PROVISION SHALL NOT BE NECESSARY IN THE EVENT THAT THE DECEASED OR TRANSNATIONALS ALREADY FULFILS THE CONDITIONS OF FOREIGN INVESTOR AS DEFINED IN ARTICLE 1. OF THIS ACT, AND THE INVESTMENT WOULD HAVE BEEN MADE IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 2 (1).