These are public limited companies principally dedicated to providing temporary finance to non-financial, unlisted companies with difficulties accessing other sources of financing. They also administer and manage venture capital funds and the assets of venture capital entities respectively and provide managerial expertise to the companies with which they work.

A List of Venture Capital Entities [es]

Characteristics

Law 1/1999 of January 5 establishes the legal framework for Venture Capital Entities and their management companies.

Venture Capital Entities

• Venture Capital Companies:
  
  
  
  • These are public limited companies whose main purpose is to temporarily hold an interest in the capital of non-financial companies that are not listed on the stock exchange.
    
  • They can provide equity loans, as well as other forms of financing, although the latter case is only possible with companies in which they hold an interest, and provide advice.
    
  • The subscribed share capital must be at least 1,202,024.0 €, and 50% must be paid in at the moment the company is set up. The remaining amount can be made in one or more payments, within a period of 3 years after the company has been established.
    

    Payments must be made in cash or assets that will become part of the company's fixed assets, although these may not represent more than 10% of the total capital. The capital will be represented by shares, which will have the same nominal value and provide entitlement to the same rights. These will be in the form of registered securities or book entries.

  
  
• Venture Capital Funds:
  
  
  
  • These are handled by management companies and have the same main purpose as venture capital companies. The management company will be responsible for providing all the advice needed beforehand.
    
  • Initial assets must come to 1,652,783.30 €.
    
  • The payments made when initially setting up the company, and all later ones, must be in cash.
    
  • The equity is divided into nominal securities with the same characteristics. These will be considered negotiable and can be represented by registered securities or book entries.
    
  • Management and administration will be governed by the provisions in the Administration Regulation of each Fund, although this responsibility must fall upon a Venture Capital Management Company  or on a Collective Investment Scheme Management Company.

Venture Capital Management Companies

• These are public limited companies whose main purpose is to administer and manage Venture Capital Funds and the assets of Venture Capital Companies. They also provide managerial expertise to the companies with which they work.
  
• Collective Investment Scheme Management Companies, regulated by Law 45/1984 of December 26, can also manage Venture Capital Funds and handle the assets of Venture Capital Companies.
  
• The minimum initial share capital is 300,506.05 €, and this must be wholly paid in.
  
• The share capital can be represented by registered securities or book entries represented.

Authorization

Venture Capital Entities must comply with the following conditions before staring activity:

• The draft articles of incorporation must have been previously authorized by the Minister of Economy and Finance at the suggestion of National Securities Exchange.
• They must be established by means of a deed of public record and be included in the Register of Companies.
• They must be included in the administrative register of the National Securities Exchange, which includes the following public Registers:
  • Register for Venture Capital Management Companies
  • Register for Venture Capital Companies
  • Register for Venture Capital Funds
  • Register for Significant Shareholdings
  • Register for Leaflets and Annual Reports
• The payments to set up the share capital or equity capital can be made in cash or, in the case of a Venture Capital Company, in kind, in accordance with the legally established criteria.

Investment Scheme

• The mandatory investment coefficient

  Venture Capital Companies and Funds must maintain 60% of their assets in stocks and shares issued by the companies with which they work. Out of this amount, 30% of their total assets or equity loans can be dedicated to companies with which they work, regardless of whether the Venture Capital Company holds an interest in these or not.

• The free investment coefficient

  The rest of their assets that are not subject to the mandatory investment coefficient can be kept in:

  • Fixed income securities in regulated secondary markets.
  • Shareholdings in the capital of companies that do not meet the necessary requirements (non-financial and not listed).
  • Cash, as its liquidity ratio, or other very liquid assets required by law, in those cases where periodic payments are expected by virtue of the law or the articles of association.
  • Equity loans.
  • Any type of financing given to companies in which they hold an interest.
  • In the case of Venture Capital Companies, up to 20% of their share capital can be dedicated to the fixed assets necessary to conduct business.
    
• Group limitations
  • No more than 25% of their assets can be invested in the same company, and no more than 35% in companies belonging to the same group, as per the definition provided in article 4 of Law 24/1998 of July 28 of the National Securities Exchange.
  • They cannot invest in companies belonging to the same group, as stipulated in the abovementioned article 4.
• Other limits to investments

  Through regulations, it is possible to limit investments in specific types of asset, and establish a minimum liquidity ratio to be maintained in the case of Venture Capital Funds.

  A List of Venture Capital Entities [es]