Before a Public Takeover Bid | Spain | Global Public M&A Guide

3. Before a Public Takeover Bid

[Last updated: 1 January 2025, unless otherwise noted]

3.1 Shareholding rights and powers

The table below provides an overview of the different rights and powers that are attached to different levels of shareholding within a Spanish listed company. Unless otherwise stated, the relevant percentages needed to exercise the relevant rights may be reached by the shareholders individually or jointly with other shareholders.

Shareholding	Rights
One share	In general, and amongst others: The right to participate in the company's profit and to receive a dividend on a pro-rata basis to its stake in the company. A pre-emptive right to subscribe new shares in the issuance of new shares or convertible bonds, on a pro-rata basis to its stake in the company. The right to attend, participate and vote at general shareholders' meetings. However, the by-laws of the company may require the holding of a minimum number of shares in order to attend the meeting (never greater than 1,000 shares though) and a limitation to the maximum number of votes a shareholder may be entitled to cast. The right to obtain information and clarification relating to the matters included in the agenda of an upcoming shareholders' meeting. However, the directors may refuse to give such information in case they consider the information may be used for purposes unconnected with the company or its disclosure may pose a threat to the company, unless the information is requested by shareholders representing at least 25% of the company´s share capital, in which case the directors may not refuse its disclosure. The right to submit questions to the directors at general shareholders' meetings (either orally at the meeting, or in writing prior to the meeting). The right to request the convening of a shareholders' meeting in order to decide upon the dissolution of the company if, due to the losses incurred, the net assets become lower than half the share capital, unless the company is bound to file for insolvency. If the directors do not convene such meeting, any shareholder or third party with a legitimate interest (including creditors) may request the dissolution at the courts of justice. The right to request the appointment of an auditor from the Commercial Registry, in case the shareholders´ meeting does not appoint it, or if the appointed auditor does not accept its nomination or cannot carry out its functions. The right to bring legal proceedings against the directors (acción individual de reponsabilidad) if their managerial actions have caused direct damage to the interests of the shareholders. The right to cumulative voting for the appointment of members of the board of directors, as the SCA expressly recognizes the shareholders' general right to designate a proportional number of directors of the board depending on the share capital owned by them, including a specific procedure to put this general right into effect with the sole vote of the relevant shareholders (i.e. proportional representation right). This proportional representation procedure may only be exercised when a vacancy in the board of directors is yet to be covered.
1‰ (one per mille)	The right to challenge the resolutions of the general shareholders’ meetings or the board of directors.
1%	The right to request the attendance of a Notary Public at shareholders´ meetings. The right to request, from the relevant court of justice, the adoption of an interim measure (medida cautelar) whereby the decision of the shareholders’ meeting or the board of directors which is being challenged is temporarily suspended.
3%	The right to request the board of directors to convene a general shareholders' meeting. The right to include additional items on the agenda of a general shareholders' meeting and alternative draft resolutions for items on the agenda. The right to file a minority claim against the directors on behalf of the company (acción social de responsabilidad) if their managerial actions have caused damage to the company's interests when (i) the shareholders have requested the directors to call a general shareholders' meeting to agree on the filing of the suit and the directors did not call the meeting; (ii) the company does not file suit within one month from the general shareholders' meeting agreeing to do so; or (iii) the general shareholders' meeting does not agree to file a suit. In addition, the shareholders representing 3% of the share capital are also entitled to file claims directly (without the need of having the general shareholders' meeting passing a resolution on that regard) against the directors for any breach of their duty of loyalty. The right to object to the waiver or settlement of the corporate claim for directors' liability (acción social de responsabilidad). The right to obtain certain personal data concerning the rest of the shareholders, including their respective addresses and contact details, exclusively for the purpose of contacting them in order to exercise their rights and to better protect their common interests. The right to request the Commercial Registry to appoint an independent expert in order to valuate any in rem, i.e., non-monetary, assets contributed to the company, with certain exceptions.
Quorum and voting majorities	In accordance with the SCA, a general shareholders' meeting is validly convened, in the first call, when shareholders account for at least 25% of the capital with voting rights. In the second call, the general shareholders' meeting is validly convened regardless of the capital represented at the meeting. Resolutions at a general shareholders' meeting are passed by simple majority, i.e., more yes- votes than no-votes, of the capital represented at the meeting. However, the following matters are subject to legal enhanced quorum and majority voting requirements: the increase or decrease of the company´s share capital, or any other amendment of the company's by-laws; the issuance of bonds; the suppression or limitation of the pre-emptive right of shareholders in the context of the issuance of new shares or convertible bonds; and the transformation, merger, spin-off, global transfer of assets and liabilities, and the change of corporate address to a foreign jurisdiction. For the approval of these matters, the SCA requires a quorum of shareholders that account for at least 50%, in the first call, and 25% in the second call. Additionally, these particular resolutions have to be passed by absolute majority, i.e., more than half of the votes, except in the second call, where if capital present or represented accounts for less than 50% of the share capital, it will be necessary to have the favorable vote of two-thirds of the capital present or represented at the meeting. The by-laws of the company may enhance the legal quorum and majority voting requirements. Additionally, regarding the appointment of directors, shares that are voluntarily pooled so that they constitute an amount of capital greater than or equal to that which results from dividing total capital by the number of members of the board, will have the right to appoint those that, exceeding whole fractions, result from the corresponding proportion.

3.2 Restrictions and careful planning

Public takeover bids are complex transactions that require very careful planning and coordination. Therefore, it is key to involve sophisticated external advisers from the very early stages of the process particularly on the legal, financial and communication fronts. Spanish law and the Market Abuse Regulation contain a number of rules that are applicable before a public takeover bid is announced. These rules impose restrictions and hurdles in relation to prior "stake building" by a bidder, the preparation process and announcements of the takeover bids. The main restrictions and hurdles have been summarized below.

3.3 Inside information and market abuse

In general, before, during and after a takeover bid, rules regarding inside information and market abuse remain applicable. Nevertheless, there are certain rules regarding insider dealing which shall be specifically taken into account in relation to takeover bids or which are expressly aimed at these.

In accordance with the Market Abuse Regulation, the mere fact that a person uses their own knowledge to acquire or dispose of financial instruments in the acquisition or disposal of those financial instruments shall not of itself constitute use of inside information for the purpose of the prohibitions regarding insider dealing and unlawful disclosure of inside information.

In particular, the Market Abuse Regulation specifically provides that the mere fact of a potential bidder having access to inside information relating to a target company and using it in the context of a public takeover bid should not be deemed to constitute insider dealing, provided that, at the point of acceptance of the offer by the shareholders of that company, any inside information has been made public or has otherwise ceased to constitute inside information (usually referred as 'cleansing'). This exception does not apply to "stake-building", i.e., to the previous acquisition of securities in the target company below the threshold that triggers a mandatory takeover bid.

With regard to a potential "stake-building", the following consequences that the previous acquisition of securities in the target company may have on the design and structure of the relevant takeover bid must be taken into consideration:

the highest price paid in such acquisitions may constitute the minimum price for a mandatory public takeover bid or for a voluntary public takeover bid that is launched at equitable price. See 3.4 and 3.9(f) below.
The higher number of shares held by the bidder before the launch of a public takeover bid the more difficult it would be in theory to reach the thresholds required for (i) the exception to launch a mandatory public takeover based on the acceptance of a prior voluntary public takeover bid (see 3.9.(f) below); and (ii) the squeeze out right (see 7 below).

3.4 Disclosure of shareholdings

The rules regarding the disclosure of shareholdings and transparency apply before, during and after a public takeover bid.

Pursuant to these rules, if a potential bidder starts building up a stake in the target company, it will be obliged to announce its stake if the voting rights attached to its stake have passed an applicable disclosure threshold. The relevant disclosure thresholds in Spain are 3%, 5%, 10%, 15%, 20%, 25%, 30% (which triggers the obligation to launch a mandatory takeover bid), 35%, 40%, 45%, 50%, 60%, 70%, 75%, 80% and 90%.

When determining whether or not a threshold has been reached, a potential bidder must also take into account certain other voting rights or percentages, as they will be attributed to the bidder (see 3.8(b) below).

Furthermore, from the public announcement of a takeover bid until its settlement or withdrawal, the following requirements shall apply:

the bidder shall communicate to the market, by means of a regulatory disclosure (otra información relevante), any acquisition of shares of the target company, as well as the prices paid or agreed thereupon; and
other shareholders shall inform the CNMV if they reach or exceed 1% of the voting rights of the target company. Those shareholders that already have a stake of over 3% in the target company shall inform the CNMV about any transaction in the company's shares. The CNMV shall disclose such information immediately.

3.5 Inside information, preparation process and intermediate steps

The preparation of a takeover bid normally includes various intermediate steps until the final decision to launch the takeover bid and its definite terms and conditions are decided. In fact, in the Spanish market, takeover bids are usually preceded by certain negotiations and dealings with the shareholders and the target company itself. During this preparation process, the requirements related to inside information must be borne in mind.

Under the Market Abuse Regulation, certain 'precise information' may be inside information. During the preparatory period before a takeover bid is launched there may be events or circumstances that may be deemed to be precise and, therefore, constitute inside information.

The target company, as the issuer, is subject to the general obligation to publicly disclose any inside information as soon as possible. However, it may delay such public disclosure provided that (i) immediate disclosure is likely to prejudice its legitimate interest; (ii) the delay of the disclosure is not likely to mislead the public^[1]; and (iii) the issuer is able to ensure the confidentiality of that information.

[1] Pursuant to Regulation (EU) 2024/2809 of the European Parliament and of the Council of 23 October 2024 amending Regulations (EU) 2017/1129, (EU) No 596/2014 and (EU) No 600/2014 to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises, this requisite shall be replaced as from 5 June 2026 by “the inside information that the issuer or emission allowance market participant intends to delay is not in contrast with the latest public announcement or other type of communication by the issuer or emission allowance market participant on the same matter to which the inside information refers”.

3.6 Information leakages, early disclosures, and Put-up or shut-up

The bidder shall be obliged to immediately announce the takeover bid once the decision has been adopted or made public, or whenever the obligation to launch the bid arises, but only after ensuring it can fulfil any consideration resulting from the takeover bid in full. Therefore, Spanish takeover bid regulation does not contemplate an early disclosure obligation, and in particular, the put-up-or-shut-up rule is not provided for under Spanish regulation.

Nevertheless, and without prejudice to the general obligation of the issuer regarding premature, partial or distorted disclosure (see 3.5 above), in those cases where there has been a leak to the market about a potential takeover bid, the CNMV normally requires that the target company or the bidder issues an "inside information release" (comunicación de información privilegiada) which clearly and precisely indicates the status of the transaction under way or contains a preview of the information to be provided.

3.7 Due diligence

The Spanish public takeover bid rules do not contain specific rules regarding the question of whether a prior due diligence review of the target company can be organized, nor how such due diligence is to be organized. However, RD 1066/2007 lays down the principle of "equal amount of information for all competing bidders", i.e., all existing or potential bidders shall have access to the same amount of information or, at least, shall have the opportunity to have access to the same information.

Be that as it may, the concept of a prior due diligence or pre-acquisition review by a bidder is generally accepted in the market and by the CNMV as well. Appropriate mechanisms have been developed in practice to organize a due diligence or pre-acquisition review and to cope with potential market abuse and early disclosure concerns. These include the use of strict confidentiality procedures and data rooms in accordance with the provisions mentioned in 3.5 above. See 3.3 above in connection with the required "cleansing" of the potential inside information that a bidder may have access to in the context of the due diligence review of a target company.

Prior to conducting a due diligence review, it is market practice for the target company and the future bidder to enter into a confidentiality agreement whereby the recipient of the information undertakes not to use the information made available by the target company for any purpose other than launching the takeover bid.

3.8 The acquisition of a controlling interest as the backbone of the Spanish public takeover bid regime

The concept of control
The obligation to launch a mandatory public takeover bid is set forth in RD 1066/2007 as a consequence of having acquired a controlling interest in a given listed company. Such controlling interest would be deemed to have been acquired in either of the following situations:
1. when ownership directly or indirectly reaches or exceeds 30% of the voting rights of the target company, i.e., excluding the shares that the target company directly or indirectly keeps as treasury shares and any other shares without voting rights; or
2. when a percentage of voting rights lower than 30% is acquired and a given number of directors is appointed which, in addition to those already appointed by the bidder, if any, exceeds half the number of board members of the target company within 24 months of said acquisition. RD 1066/2007 establishes a series of conditions that must be met in order to consider that such board members were appointed by the owner of the relevant stake.
Under Spanish law there is an acquisition of a controlling interest that triggers the obligation to launch a mandatory takeover bid if a person acquires "effective control". In relation to this:
1. an exemption from the obligation to launch a takeover bid may be permitted provided there is another shareholder that, individually or jointly with others, holds a percentage of voting rights that is greater than or equal to the stake in question. Said exemption must be expressly granted by the CNMV and requires both that the other shareholder referred to above does not subsequently lower its stake to an amount that is less than the one that is exempted from the takeover bid obligation, and that the exempted shareholder does not appoint more than half the members of the target company's board of directors;
2. the acquisition of a controlling interest is linked to the ownership of shares or securities that confer voting rights in the target company, but not to the ownership of those securities or instruments that entitle their holders to an eventual redemption, subscription or acquisition of the underlying shares. Those situations will only involve the obligation to launch a takeover bid when said redemption, subscription or acquisition takes place. Consequently, the signing of call option agreements or so-called "irrevocable undertakings" (which are customary in the context of the actions carried out prior to or in preparation of the bid) will not trigger a mandatory takeover bid and will enable the relevant bidder to launch the takeover bid under the more flexible regime provided for voluntary takeover bids.
Ways of acquiring a controlling interest and action in concert
For the purposes of determining the obligation to launch a public takeover bid, the acquisition of a controlling interest in a listed company may take place by means of any of the following procedures:
1. by acquiring shares or other securities that directly or indirectly confer voting rights in the target company;
2. by entering into agreements to act in concert with other holders of securities in order to obtain a controlling stake in the target company; or
3. as a result of an indirect or incidental acquisition of a controlling interest (see 4.1(c) below).
For the purpose of the Spanish takeover bid rules, persons "act in concert" if they collaborate with any other person on the basis of an express or tacit, oral or written, agreement aimed at acquiring the control over the target company. There is a legal presumption of the existence of such acting in concert in cases where the relevant parties enter into a shareholders' agreement with the aim of establishing a common policy with respect to the management of the company or to significantly influence such management, or that, with the same objective, regulates voting rights on the board of directors or the executive committee of the company.
Calculation of voting rights
For the purposes of calculating the number of voting rights to obtain a controlling interest, one must take into account both the ownership of shares with voting rights attributed and the voting rights held by means of usufruct, pledge or otherwise.

In addition, the percentage of voting rights held by the following persons or entities shall be attributed to the bidder:
- the voting rights held by any other company pertaining to its group of companies and, unless proven otherwise, their board members;
- the voting rights held by the parties that act in their own name but with which the bidder acts in concert or may be deemed to act in concert;
- the voting rights that the bidder can exercise freely and on a permanent basis pursuant to the relevant powers granted to the bidder by the owners of the shares, in the absence of specific voting instructions; and
- the voting rights attributed to shares held by nominees that act in their own name but on behalf of the bidder, i.e., by those people to whom the bidder has wholly or partially spared from the risks inherent to acquiring, possessing or transferring such shares.

3.9 Exceptions to the obligation to launch a public takeover bid

RD 1066/2007 establishes several exceptions to the need to launch a takeover bid when the acquisition of the controlling interest in a listed company has taken place as a result of any of the following situations:

acquisitions or other transactions performed by guaranteed funds or other similar institutions subject to the rules of publication and competition established in their specific regulations;
acquisitions or other transactions performed according to the Spanish Mandatory Expropriation Act (Ley de Expropiación Forzosa), and any other transactions that may arise from competent authorities exercising their legally established powers under public law;
transfers or swaps of securities that are unanimously approved by all the relevant company's security holders and which provide for the delisting of such securities;
acquisitions or other transactions that arise from the conversion or capitalization of credits in companies whose financial viability is in serious or imminent danger (even when the companies are not undergoing insolvency proceedings) and when said acquisitions or transactions are aimed at guaranteeing the long-term financial recovery of the relevant company. In such cases, the CNMV would be entitled to waive the obligation to launch the takeover bid; however, no waiver from the CNMV would be necessary where the transaction refers to refinancing agreements approved by a court of justice and which have obtained a favorable report by an independent expert pursuant to the provisions of the Spanish Bankruptcy Act (Ley Concursal);
acquisitions made in contemplation of death (mortis causa) and free acquisitions between living persons provided that, in relation to the latter, the acquirer has neither acquired shares during the 12 months immediately prior nor entered into an agreement or concert with the transferor thereto;
when the controlling interest is obtained pursuant to a voluntary takeover bid for all the securities of the target company, provided said bid (i) was launched at an equitable price (see 4.3 below); or (ii) was accepted by at least 50% of the security holders (excluding securities held by shareholders that had reached some agreement with the bidder in relation to the bid); and
when the controlling interest is obtained within the context of a merger transaction affecting the target company, provided that (i) the parties that are obliged to launch the takeover bid did not vote in favor of the merger at the relevant general shareholders' meeting of the target company; and (ii) it can be proven that the main objective of the takeover was not to obtain a controlling interest but rather to meet some commercial or business goal. In any event, the CNMV would have to issue the relevant exemption from the obligation to launch the bid.

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