Listed Spanish Companies Will No Longer Need To Present Quarterly Results, But Just Half-Yearly

The new regulations could improve the transparency of information in firms trading at Ibex35 index

Bankinter | Spain has approved the transposition of the 2017 European directive to promote the long-term involvement of shareholders in listed companies. This will be implemented through a bill that will amend the Law on Corporations (if approved by Congress). The main amendments are as follows:

1.-Shareholders who keep their participation for at least 2 years may be privileged in decision-making, receiving what is called “loyalty shares” or a greater participation in voting. In other words, they may enjoy an increased weighting of their votes, which could even be double that corresponding to the number of shares they hold. This measure must be approved at the Annual General Meeting by 60% of the shareholders or 75% if only 25%-50% of the capital is represented there.

2.- The obligation to present financial information in Q1 and Q3 is eliminated. Therefore, listed companies will only be required to present half-yearly results, not quarterly ones.

3.-In bond issues, companies will only have to present an explanatory prospectus when the issue exceeds 8M€.

4.- Companies will have the right to know the identity of all their shareholders and institutional shareholders (investment funds, insurance companies, SICAVs, etc.) will have the obligation to communicate what their investment strategy is and what they vote on at the meetings.

In our opinion, the new regulations will improve the transparency of information in certain aspects and will lower some costs that today can represent an economic hurdle for smaller listed companies. However, with only half-yearly information available, analysis and monitoring could be less detailed as less information is available. Consequently, the reaction time to a hypothetical change of direction (positive or negative) in the figures will increase.