In the dynamic environment of financial markets, private share purchase agreements are an effective alternative for trading securities in the secondary market, particularly on platforms such as BME Growth (*). While this mechanism offers flexibility and discretion, it is subject to a strict regulatory framework to ensure transparency, market integrity, and investor protection.
Below, we explore the key aspects of these transactions and the accompanying notification obligations, framed within Regulation (EU) No. 596/2014 on market abuse, Law 6/2023, of March 17, on Securities Markets and Investment Services, and Circular 3/2020 of the BME Growth segment of BME MTF Equity, as well as Articles 44, 56, and 57 of Royal Decree 814/2023.
The Private Share Purchase Agreement: A Specialised Legal Instrument
The private share purchase agreement is a bilateral contract between a buyer and a seller formalised outside official trading systems. This legal instrument establishes the essential transaction conditions, such as the price, the number of shares traded, the settlement date, and other relevant clauses. Unlike transactions executed on a stock exchange, this type of agreement does not require the intermediation of an organised market, granting the parties greater autonomy in defining the terms.
However, the traded shares must be listed on a supervised market such as BME Growth, and the transaction must comply with current regulations. Circular 3/2020 of the BME Growth segment of BME MTF Equity, along with Articles 44, 56, and 57 of Royal Decree 814/2023, outlines the specific requirements for registering these transfers, ensuring transparency and process integrity.
Notification Obligations: Transparency and Regulatory Compliance
One of the fundamental pillars of private share purchases is compliance with market notification obligations. These obligations, established to uphold transparency and prevent insider trading, apply to the parties involved and, where applicable, to the securities issuing company.
Notification by Directors and Significant Shareholders
When the parties involved in the transaction are company directors or shareholders with significant holdings (typically exceeding 5% of share capital), they must report the transaction to the market. This notification must include detailed information such as the number of shares transferred, the agreed price, the transaction date, and the resulting shareholding percentage.
Notification by the Issuing Company
The company whose shares are traded must notify the market if the transaction entails a significant change in its shareholder structure. This requirement is particularly relevant when acquisitions or disposals affect corporate control or capital distribution.
Conclusion
The private share purchase agreement in BME Growth is a valuable tool for investors seeking agility and discretion in their transactions. However, executing these transactions demands strict compliance with notification obligations and a deep understanding of the applicable regulatory framework. In this context, obtaining legal advice from professionals in commercial law and capital markets is crucial for ensuring compliance and minimising risks associated with these transactions.
(*) BME Growth is a Spanish stock market managed by Bolsas y Mercados Españoles (BME) for growing companies seeking financing through the stock exchange. This market is designed for companies that do not meet the requirements of Spain’s main stock exchange, such as the IBEX 35, but require access to capital to drive their growth.
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