Actualidad Spain

Corporate governance in the consolidated text of the securities market law (LMV)

Royal Legislative Decree 4/2015, 23nd October

The Consolidated Text of the Securities Market Law (TRLMV), passed under Royal Legislative Decree in October, brings the original law's provisions into line with the latest international standards in corporate governance. Three of its additional provisions cover the following material:

  • Annual Corporate Governance Report. The seventh additional provision extends the duty in article 540 of the Corporate Enterprises Law to companies that are not constituted as Sociedad Anónima. They must thus also publish an annual corporate governance report, and the Ministry of the Economy & Competitiveness is empowered, with express authorisation from the securities market commission, CNMV, to determine the content and structure of the report.
  • Obligations in remuneration Under the eighth additional provision, companies whose shares are listed for trading on an official secondary market must comply with certain obligations regarding disclosure to the CNMV, publishing and publicising various aspects with respect to scrip dividends and option rights over these; and also the remuneration systems and their amendments, when indexed to the listed price of the companies' shares.
  • Supervision of the audit committee of entities of public interest The eleventh additional provision gives the CNMV powers to supervise the audit committees of entities of public interest, whilst also recognising the powers of the Audit & Accounts Institute (Instituto de Contabilidad y Auditoría) to supervise the financial auditing activity.