The purpose of this article is to provide an answer to the legal uncertainty that many foreign businessmen have when establishing commercial relations with Spanish companies, as well as the lack of knowledge of current bankruptcy legislation.
Banking and Finance law addresses the legal footing for the structuring and formalization of structured finance, refinancing and capital market operations. It ranges from asset financing through loans or lines of credit, with or without collateral, to consumer credit or leasing agreement operations.
In Spain, article 143 of the Capital Companies Act regulates financial assistance to limited companies and article 150 to public limited companies. The current prohibition prevents a company from contributing financially to the acquisition of its own shares or stocks by a third party.
Personal guarantees include personal securities, which can be characterized as an ancillary obligation, since it depends on the main obligation, and as a subsidiary obligation as well, in that only if the principal debtor fails to comply is it possible to demand payment of the debt from the guarantor.
Among enforceable personal contractual guarantees, the bank guarantee payable on first demand stands out. With this type of guarantee, a banking institution commits to respond to the fulfilment of an obligation, automatically and immediately, and without the ability to demand clear evidence of noncompliance.
Contract guarantees are types of contracts that provide greater security to the settlement of a debt. In Spain there are different types of guarantees: personal guarantees, security rights, financial guarantees or constitutional guarantees.
Recent judgments on abusive clauses oblige institutions and professionals who offer personal loans to consumers residing in Spain to review and adapt the clauses to legal constraints. Find here practical advice to implement.
Consumer loans in Spain are monitored by government regulatory agencies for their compliance with consumer protection regulation. The Bank of Spain (together with the Spanish National Securities Exchange Commission) is the government body that exercises general supervisory powers over domestic credit institutions.
Fintech is on the rise and competing with financial institutions. Fintech firms offer consumers benefits such as more and easier options for funding. However, there is a catch. While offering benefits to consumers who would be unable to receive such benefits via traditional financial institutions, these fintech services also create risks for consumers.
The incorporation of a new company in Spain to undertake consumer credit activities does not require a specific regulatory license given that the new company will not be incorporated as a credit institution.
When considering whether an exemption applies to a consumer credit agreement (which would take the agreement outside the scope of regulation of the CCA), care must be taken to consider the precise terms of the relevant exemption.