[Last updated: 1 January 2024, unless otherwise noted]

Significant holdings and own shares

A shareholder who acquires or transfers shares with voting rights in a company listed on the Spanish Stock Exchange, or on another regulated market of the European Union provided that Spain has the condition of home member State, must notify the company and the CNMV the proportion of voting rights held by the shareholder when such proportion reaches, exceeds or is reduced below the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 60%, 70%, 75%, 80% or 90% with regards to the share capital of the relevant listed company.

The voting rights will be calculated over the total amount of shares with voting rights, even if the exercise of the voting rights is suspended. Consequently, treasury self-owned shares will also be taken into consideration to this effect.

The percentages described above will be replaced by 1% or successive multiples if the subject required to make the notification has his residence in a tax haven or in a country or territory with no taxation or with which there is no effective exchange of tax information in accordance with applicable law.

The obligation of communication also applies to any person who possesses, acquires or transfers, directly or indirectly, other financial instruments that (i) give the right to acquire, at its sole discretion, shares already issued that attribute voting rights of an issuer; or (ii) are referenced to shares of the issuer and have a similar economic effect, when the proportion of voting rights reaches, exceeds or is reduced below the referred percentages, either by itself or on an aggregated basis with the voting rights attributed by the shares.

In case of a takeover bid, the shareholders of the target company who acquire shares attributing voting rights must notify the CNMV of the acquisition if the proportion of voting rights held reaches or exceeds 1%. Also, the shareholders who already had 3% of the voting rights must provide notice of any transaction which implies a subsequent change in such percentage.

Directors and top executives of an issuer, as well as their persons closely associated, must provide notice of any transaction carried out over shares of the issuer admitted to trading in a regulated market, regardless of the percentage they represent in the issuer's share capital, or over derivatives or financial instruments linked to such shares.

The obligation of communication of significant holdings also applies to any natural or legal person that, irrespective of the ownership of the shares, acquires, transfers or has the possibility of exercising the voting rights attributed by those shares, provided that the proportion of voting rights reaches, exceeds or is reduced below the thresholds referred to above, and is a consequence of any or some of the following actions: (i) the entering into shareholder agreements concerning the concerted exercise of voting rights and which set forth the adoption of a long-lasting common policy regarding the management of the company, or which have the purpose of significantly influencing the same; (ii) the entering into agreements which foresee the temporary transfer, on an onerous basis, of the referred voting rights; (iii) the deposit of shares as a guarantee, if the voting rights are controlled by the person mentioned above and the intention of exercising the same is expressly declared; and (iv) agreements whereby an usufruct over the listed shares is granted.

The obligation of communication of significant holdings also applies to any natural or legal person that possesses the voting rights attributed to the shares acquired or transferred through a nominee (persona interpuesta). In the event of group companies, it will suffice to carry out a single notification by the dominant entity of the group for all the entities that would otherwise be subject to reporting obligations.

The notification to the issuer and to the CNMV must be made no later than four market business days (three in case of directors and officers of the issuer), as of the following day on which the person knew or should have known about the acquisition or transfer of the shares or the possibility of exercising the relevant voting rights.

The issuer of shares admitted to trading on the Spanish Stock Exchange, or on another regulated market with domicile in the European Union for which Spain is the home member State, must notify the CNMV the proportion of voting rights that remains in its power when it acquires self-owned shares (treasury shares) that attribute voting rights and such acquisition reaches or exceeds 1% of the issuer's voting rights. The CNMV will incorporate this information into the registry of regulated information provided for by the Spanish Securities Markets and Investment Services Act.

Periodic public information

Pursuant to Directive 2004/109/EC (the so-called Transparency Directive), the Spanish Securities Markets and Investment Services Act and Spanish Royal Decree 1362/2007, on Transparency Requirements, a listed company must issue an annual financial report within four months after the closing of the relevant fiscal year. This report will include the company's annual accounts and its management report, both audited, together with the relevant directors' responsibility statements, in which the latter will declare that, to the best of their knowledge, the financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and its consolidated undertakings, taken as a whole, and that the management report includes a fair review of the development and performance of the business and the position of the company and its consolidated undertakings, taken as a whole, together with a description of the principal risks and uncertainties they face.

If the issuer is required to prepare consolidated annual accounts, the accounts must be prepared in accordance with IFRS as adopted by the European Commission.

The company must also publish a half-yearly financial report covering the first six months of the relevant fiscal year. The report must be published no later than three months after the end of the period to which it relates and must remain publicly available for at least ten years. Additionally, and unless the annual accounts have been made public within a two-month period as of the closing of the exercise, the company must issue another half-yearly financial report in respect to the second half of the fiscal year. Each of the half-yearly financial reports must be published within three months from the end of the respective half of the year. The half-yearly financial report must include the summarized annual accounts, the interim company management report and the directors' responsibility statements thereto.

If the half-yearly financial report has been voluntarily audited, the audit report must be published in its entirety. Otherwise, the half-yearly financial report must contain a declaration by the issuer stating that the half-yearly financial report has not been audited nor reviewed by the auditors.

If the audit report issued in respect of the individual annual accounts of the entity (or, if applicable, of its consolidated group) contains an opinion with qualifications or if the opinion of the auditor was adverse, or if it denies the opinion, the issuer must demand from its auditors a special report, which will be annexed to the subsequent half-yearly financial report, and which must contain, at least, the following information:

• In the event that the reasons that have caused the opinion to be with qualifications, including the denial of opinion and the adverse opinion, have disappeared, this circumstance must be indicated, as well as the incidence that the introduced corrections may have had on the information of the half-year subject of the report.
• If the reasons that have caused the opinion to be with qualifications, including the denial of opinion and the adverse opinion, persist, this circumstance must be indicated, as well as the effects that may have derived if such qualifications would have been incorporated on the results and, if applicable, on the own funds that appear in the information of the half-year subject of the report.

The interim management report, which is part of the half-yearly report, must include an indication of the important facts that have taken place in the corresponding period and its incidence in the summarized annual accounts. Also, the interim management report corresponding to the first half-year must contain a description of the main risks and uncertainties for the remaining half-year of the same fiscal year. Further, an issuer must include in the interim management report the most relevant transactions among related parties.

The issuer must publish its regulated information on its website and must disclose the regulated information by means that guarantee the free, non-discriminatory and general access within the European Union to the information. Spanish regulation applies to the content, publication and disclosure of regulated information concerning issuers of securities admitted to trading on the Spanish Stock Exchange or on another regulated market with domicile in the European Union if Spain has the condition of home member State. In the event that Spain has the condition of home member State and the issuer has its corporate domicile in a State that is not a member of the European Union, the CNMV may exempt the issuer from the fulfillment of the obligations concerning periodic public information, provided that the legislation of the country where such issuer has its corporate address has requirements equivalent to Spanish regulation or provided that the issuer complies with the obligations imposed by the legislation of a third country that the CNMV considers equivalent to the Spanish one.

Market abuse: disclosure of inside information and applicable prohibitions

On 3 July 2016, Regulation 596/2014 of the European Parliament and of the Council on market abuse (MAR) came into force in Spain. In accordance with its provisions, the following obligations and prohibitions need to be considered:

Disclosure of inside information. Once listed, the company will be subject to an ongoing requirement of disclosure of information to the public. In this sense, the company will be required to inform the public as soon as possible of inside information that directly concerns the company. For these purposes, "inside information" is deemed to be information of a precise nature, which has not been made public, relating, directly or indirectly, to the company or its shares and which, if it were made public, would be likely to have a significant effect on the prices of the shares.

The issuer shall ensure that the inside information is made public in a manner which enables fast access and complete, correct and timely assessment of the information by the public. Additionally, the issuer shall post and maintain on its website for a period of at least five years, all inside information it is required to disclose publicly.

An issuer may, at its own risk, delay disclosure to the public of inside information, provided that all the following conditions are met:

• Immediate disclosure is likely to prejudice the legitimate interests of the issuer (e.g. ongoing negotiations related a major deal).
• Delay of disclosure is not likely to mislead the public.
• The issuer is able to ensure the confidentiality of that information.

Where disclosure of inside information has been delayed and the confidentiality of that inside information is no longer ensured, the issuer must disclose that inside information to the public as soon as possible.

Insider dealing. Pursuant to MAR, any person in possession of inside information must refrain from carrying out, for its own benefit or on behalf of a third party, directly or indirectly, any of the following actions:

• Carry out or attempt to carry out any kind of transaction in respect of the financial instruments to which the inside information refers. The use of inside information by cancelling or amending an order concerning a financial instrument to which the information relates, where the order was placed before the person concerned possessed the inside information is also considered insider dealing.
• Recommend to a third party that he or she acquires or transfers financial instruments to which the inside information relates or induce that person to make such acquisition or disposal. The recommendation, based on inside information, that another person cancel or amend an order concerning a financial instrument to which the information relates is also considered insider dealing.
• Communicate inside information to third parties, except in the ordinary course of his or her work, profession or position.

These prohibitions apply to any person in possession of inside information that knows, or should have known, that the information had such character.

The Spanish Criminal Code provides that any person who uses any information relevant for the quotation of any kind of securities or traded instruments to which such person has had reserved access with the occasion of the exercise of his professional or business activity, and that (i) results in an economic benefit or causes a damage of at least €500,000 (approximately US$552,500); (ii) uses financial instruments equivalent to an amount of at least €2,000,000 (approximately US$2.21 million); or (iii) causes a serious impact on the integrity of the market, is committing a criminal offence.

Market manipulation. According to MAR, any person or entity acting in or related to the securities' market must refrain from engaging or attempting to engage in market manipulation. MAR provides for a non-exhaustive list of actions that will be deemed market manipulation practices. These include, among others, the following:

• Entering into a transaction, placing an order to trade or any other behavior which (i) gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of, a financial instrument; or (ii) secures, or is likely to secure, the price of one or several financial instruments at an abnormal or artificial level, unless it can be shown that such transactions or orders have been carried out for legitimate reasons and in accordance with an accepted market practice (such as liquidity agreements).
• Entering into a transaction, placing an order to trade or any other activity which affects or is likely to affect the price of one or several financial instruments, which employs a fictitious device or any other form of deception or contrivance.
• Disseminating information through the media, including the internet, or by any other means, which gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of a financial instrument or secures, or is likely to secure, the price of one or several financial instruments at an abnormal or artificial level, including the dissemination of rumors, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading. In respect of journalists, when they act in their professional capacity, such dissemination of information is to be assessed taking into account the rules governing their profession, unless those persons gain, directly or indirectly, an advantage or profit from the dissemination of the information in question.

However, certain "safe harbors" for market abuse exist, including: (i) certain operations carried out by or in the name of specific public entities; (ii) transactions over self-owned shares (treasury shares) in the framework of repurchase programs carried out by issuers, or stabilization programs of transferable securities or financial instruments, provided that such operations are carried out in accordance with developing regulation; (iii) transactions carried out for legitimate reasons in accordance with an accepted market practice; and (iv) in general, transactions or orders carried out in accordance with any given applicable law.

The CNMV has approved liquidity agreements as an accepted market practice in Spain with the purpose of enhancing liquidity and the regular trading of shares of companies whose shares are listed on Spanish regulated markets and multilateral trading facilities.

MAR also provides a new "market soundings" safe harbor to the offence of unlawfully disclosing inside information. Market soundings (also known as "pre-marketing") comprise the communication of information, before the announcement of a transaction, to one or more potential investors in order to evaluate their interest in a possible transaction. The market sounding safe harbor applies provided certain disclosure and record-keeping conditions are met.