A New Spanish Corporate Governance Code For Listed Companies

The Spanish Corporate Governance Code for listed companies (the Code), in contrast to its predecessors, is influenced by two unique circumstances: on the one hand, it was preceded by a broad reform of the Spanish Companies Act (Ley de Sociedades de Capital), a reform that made mandatory many of the rules that in the previous code were considered to merely be recommendations; on the other hand, the severe economic crisis that has afflicted the companies markedly increased the awareness of the convenience of improving the control and degree of transparency in the management of companies, specifically in the largest companies.

The continuity of the Code in its orientation should be emphasized: (i) the voluntary character of its compliance, subject in any event to the principle of “comply or explain”; and (ii) the reference to the market (shareholders, investors, etc.) as a means of appraising the behaviour of the destined company. Meanwhile, the amendment of its subjective scope of application by express reference to the rules governing listed companies in general, even taking into account their different size and capitalisation, means that an unequal level of implementation is expected.

Formally, the Code presents a well-known systematic structure: the recommendations are assembled and organised into three blocks (general aspects, general shareholders’ meeting and board of directors), in accordance with traditional structures; but, this time, the detail of the recommendations is preceded by certain “principles” that synthetically anticipate their particular content, which undoubtedly provides a useful prior overview which might assist the understanding of the Code. Each principle is reiterated afterwards in the body of the Code, where the particular recommendations are analysed, always with a brief explanatory statement, precedents, scope, etc., of any of them.

The complete text of the Code published by the CNMV on 24 February is available here (English) and here (Spanish).

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