Primary Securities Market: Key Aspects and Obligations for Issuers in Spain

What is the Primary Securities Market?

The primary securities market is where securities are issued and sold for the first time. In this market, issuers obtain financing directly from investors. The securities issued can be shares, bonds, promissory notes, or other financial instruments.

Below, we leave you the collaboration in video format, in case it is of interest to you:

Freedom of Issuance and Issuer Requirements

In Spain, the issuance of securities is free, meaning it does not require prior administrative authorization. However, the issuer must comply with several requirements:

• First Requirement: Valid Constitution. The issuer must be validly constituted according to the legislation of its country of origin.
• Second Requirement: Operation in Accordance with Bylaws. The issuer must operate in conformity with its articles of association and bylaws.
• Third Requirement: Legal Regime. The securities must comply with the legal regime to which they are subject.
• Fourth Requirement: Information Prospectus. In some cases, the issuer is obligated to prepare an information prospectus.

Obligation to Publish an Information Prospectus

The publication of an information prospectus is mandatory when securities are offered to the public or admitted to trading on a regulated market. However, there are some exceptions:

• Promissory notes with a maturity of less than 365 days.
• Offers of securities of less than 8 million euros in the European Union.
• Offers by credit institutions of less than 5 million euros in the European Union.

Obligations Related to the Placement of Certain Issuances

When the issuance is not subject to the obligation to publish a prospectus but is directed to the public through advertising, an authorized entity must intervene to provide investment services. This entity will validate the information and supervise the marketing process.

Information Requirements for Admission to Trading on a Regulated Market

The admission of securities to trading on a regulated market is subject to the following requirements:

• First: Submission and registration of documents proving the legal regime of the issuer and the securities.
• Second: Submission and registration of the issuer’s financial statements.
• Third, where applicable, submission, approval, and registration of an information prospectus.

Prospectus Liability

The responsibility for the information contained in the prospectus falls on the issuer, the offeror, the directors, and other parties involved in its preparation.

Issuances of Bonds or Other Debt Securities

Issuances of bonds or other debt securities are subject to specific requirements, especially when admitted to trading on regulated markets or trading systems.

Conclusion

The primary securities market is a fundamental element of the financial system. Its proper regulation is essential to ensure investor confidence and the smooth functioning of the market.