More details of the emergency program of Spanish Government.

More details of the emergency program of Spanish Government.

April 1, 2020

Source: Internet

The Spanish Government has approved a €200 billion emergency program to fund efforts to contain COVID-19 epidemic.

This new regulation Royal Decree 463/2020 declaring the lockdown of the country as of 14 March 2020. The purpose of this regulation is to limit the spread of the coronavirus while giving absolute priority in economic matters, protecting and giving support to the productive and social sphere.

The intention of the Spanish policymakers with these stimulus measures is to minimize the deterioration of the Spanish economy (learning from the 2008-2009 lesson), as well as guarantee that these negative effects are transitory and prevent a more permanent impact occurs.

Specifically, the measures are aimed at a triple objective. First, strengthen the protection of workers, families and vulnerable groups; second, to support the continuity in the productive activity and the maintenance of employment; and third, to strengthen the fight against the disease.

Among those that may be of interest to investors or corporates with interests in Spain are the following:

Employees’ Restructuring and Lay-off Payments

Support companies and self-employees covering their renewal of loans or new financing, mitigate the economic effects of COVID-19 and maintenance of employment. Support payments for individuals affected by COVID-19, and social security payment reliefs for employers are also approved.

Employment contracts suspension and short-term work allowances during the coronavirus-related disruption are now permitted. The regulation entitles employers, where the circumstances recommend, to apply force majeure clauses. Adopts extraordinary measures related to the extension of the unemployment benefit and the annual declaration of income.

Suspends Public Contracts and Concessions

Contracts entered into by companies and Spanish public entities that becomes imposible to complete with or which obligations cannot be performed as a result of the COVID-19 disruption will be automatically suspended until said provision can be resumed or may even allow the company to seek a compensation from such public counterparty. 

Regards to the public works and service concession contracts affected by the factual situation created by COVID-19 and the measures adopted by the State, the concessionaire may be given the right to reestablish the economic balance of the contract by, as appropriate in each case, the extension of its initial duration to a maximum of 15% of the original term or an amendment of the economic terms and conditions of the concession to cover the decrease in revenues and increase in costs. It is worth mentioning that the term to make such claims is only five days.

Mortgage Payment

RD 8/2020 adopt an urgent measures aimed at ensuring protection to mortgage debtors in a “vulnerability situation” that may have their income cut as a consequence of the COVID-19 outbreak, so that they can access a relief program consisting in a repayment moratorium or payment breakup for those first home mortgage loans debtors deemed vulnerable (e.g. unemployed, low income families, etc.). Also, it provides a loan scheme where late payment interest rates will not accumulate.

Liquidity guarantee to sustain the economic activity in the face of transitory difficulties resulting from the situation.

The Ministry of Economic Affairs and Digital Transformation may grant guarantees for a maximum amount of 100,000 million euros.

The net debt limit established for the Official Credit Institute in the State Budget Law is increased by 10,000 million euros, in order to provide additional liquidity to companies, especially SMEs and the self-employed.

With extraordinary character and with a duration of 6 months from the entry into force of this royal decree law, the creation of an insurance coverage line of up to 2,000 million euros is authorized from the Reserve Fund for the Risks of Internationalization:

a) The working capital credits necessary for the exporting company will be eligible, without its direct relationship with one or more international contracts being necessary, provided that they respond to new financing needs and not to situations prior to the current crisis.

b) Beneficiaries: Spanish companies considered as Small and Medium-sized Companies according to the definition in Annex I of Commission Regulation EU 651/2014, as well as other larger companies, provided they are unlisted entities.

Insolvency Rules

The two-month period to request the opening of insolvency proceedings provided for in the Spanish Insolvency Law (Ley 22/2003, de 9 de julio, Concursal) is suspended.

Foreign Investments

In response to the impact of COVID-19 in the markets and the Spanish Stock Market (IBEX 35) hitting its historic low, RDL 8/2020 had included a number of restrictions to the acquisition of certain assets and stakes in Spain. These apply to foreign investors and to businesses or companies operating in strategic areas or interests.

FDI made by investors outside the European Union and the European Association of Free Commerce, as well as investments made by foreign investor hold a 10% of share capital of the Spanish company, or legal act or business is taken control over the governing body of Spanish society, are suspended.

Likewise, those investments that come from public companies or public control or from sovereign funds of third countries are suspended.

Other

Other measures have also been approved by RDL 8/2020, as well as in other pieces of regulation to boost the Spanish economy. These include cash injections by the Government in different formats, suspension of the terms to make administrative filings (including court filings) and restrictions in the short selling activities.

Copyright © 2019 — All rights reserved