18 March 2020

Urgent measures against the economic impact of Covid-19: Spanish Golden Share

Foreign investment in Spain is, on general terms, liberalised in accordance to Law 19/2003 that sets out a general principle of freedom of capital movements and financial transactions with foreign countries. However, the Spanish Government is entitled to suspend or limit that liberalization regime under public order, public safety or public health grounds. In this sense, Royal Decree-Law 8/2020, on the urgent and extraordinary measures against the economic and social impact of Covid-19, which was approved by the Spanish Government on 17 March 2020, included a restriction on foreign direct investments in Spain. Royal Decree-Law 8/2020 enters into force today.

As a result of the introduction of restrictions on foreign investments in Spain, prior governmental authorisation will be required before carrying out foreign direct investments in Spain.

What is considered a foreign direct investment?

Foreign direct investment are defined as any investment made by non-EU or non-EFTA (European Free Trade Association) nationals where either 10% or more of the share capital of a Spanish company is acquired or when as a result of the transaction such investor participates effectively in the management or controls the Spanish target company.

What investments does it affect?

Foreign direct investment will require prior authorisation if they are made in any of the following sectors:

  1. critical infrastructures, whether physical or virtual (including energy, transportation, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructures, and sensitive facilities), as well as land and real estate that are key to the use of such infrastructures;
  2. critical technologies and dual-use items, including artificial intelligence, robotics, semiconductors, cyber security, aerospace, defence, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies;
  3. supply of fundamental inputs, in particular energy, commodities and food safety;
  4. sectors with access to sensitive information, in particular personal data, or with the capacity to control such information;
  5. media; and
  6. additionally, the Spanish Government may restrict foreign direct investment in Spain in those other sectors not referred to above, when they may affect public security, public order and public health.

In addition, prior authorisation will also be required, irrespective of the sector in which the Spanish company operates, if a foreign direct investment is made by a foreign investor that:

  1. is directly or indirectly controlled by a foreign government, including public bodies or the armed forces;
  2. has made investments or participated in activities in sectors affecting security, public order and public health in another EU Member State; and
  3. has any open administrative or judicial proceedings (in Spain or abroad) for criminal or illegal activities.

What are the consequences of not complying with these requirements?

According to Royal Decree-Law 8/2020, any foreign direct investment carried out without the required prior authorisation will be invalid and without legal effect until the necessary authorisation has been obtained. Additionally, failure to seek the prior authorisation or failure to comply with any condition set by the Spanish authorities in relation to the acquisition of the foreign direct investment will constitute a very serious infringement which entails a penalty of both:

  • a fine of up to the economic value of the transaction; and
  • public or private reprimand.


The restrictions on foreign direct investments will be in in force until the Spanish Council of Ministers issues a resolution lifting these restrictions.

Fernando Torrente +34 91 782 9940
Partner, Madrid fernando.torrente@allenovery.com
Íñigo del Val +34 91 782 9832
Partner, Madrid inigo.del.val@allenovery.com
Ignacio Hornedo +34 91 782 9831
Partner, Madrid ignacio.hornedo@allenovery.com
Teresa Méndez +34 91 782 9766
Counsel, Madrid teresa.mendez@allenovery.com
Francisco Martínez +34 91 782 9828
Senior associate, Madrid francisco.martinez@AllenOvery.com
Bosco De Checa +34 93 202 8112
Senior associate, Madrid bosco.decheca@allenovery.com
Reka Palla +34 91 782 9896
Senior associate, Madrid reka.palla@allenovery.com
Pablo Méndez +34 91 782 9703
Senior associate, Madrid pablo.mendez@allenovery.com

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