After many years of warnings about important changes in the regulation, the new regulation on SICAVs (Investment Companies with Variable Capital) is now a reality. Last January 1 entered into force in Spain and this type of vehicle had until yesterday monday january 31 as a limit to communicate their intentions to continue under that regime or transform into companies. Who can be the winners and losers of this situation for some 2,300 investment vehicles? At the moment, around a third of them have already informed the CNMV of their intention not to continue under their current status and will be dissolved.
The final drawing is in line with what was expected after the first news: more demanding requirements in terms of capital distribution, the existence of a sufficient number of shareholders who do not have a testimonial participation (at least 100 partners, with a minimum investment of 2,500 euros each, held for three quarters of the year) and a transitory mechanism to prevent capital gains from appearing in the event of dissolution of the Sicavs.
To adapt to changes in the new regulations, the 2,300 Spanish Sicavs must inform the CNMV about how they will design their future. The main advantage is that, through the regimen transient, those who decide not to keep the Sicav have an open road without tax toll. In practice, they do not lose too much compared to the previous situation, since the ability of the owners to influence investment decisions was increasingly complicated”, he comments. Rafael Juan and Seva, managing partner of Wealth Solutions and president of Finletic.
who maintain andThese variable capital investment companies must ensure that they can comfortably meet with the capital diversification requirements. However, there are cases where it is not possible. “For these reasons, we think that a large majority of SICAVs will decide to dissolve since its degree of shareholder concentration is high”, assures Juan y Seva. In any case, it is a decision that has had to be considered based on the shareholder composition, autonomous community of residence and future approach regarding investments.
According Victor Alvargonzalez, founding partner and chief strategy officer of Nextep Finance, in a country like Spain, where the transfer between funds is not taxed, the only ones who had a solid reason to set up a SICAV for the financial assets of large investors were the banks. “Because, furthermore, It’s been a long time since investment funds have been used to invest in any type of asset, sector or country“, bill.
But SICAVs are companies and therefore generate all kinds of expenses and commissions, whether they are for operation, maintenance, management, deposit, brokerage, etc. And the banks are the ones that charge most of those commissions. the alternative, a portfolio of investment funds, only had management fees. And also very low, because there have been shares in specific funds for private banking for a long time, the famous “clean classes”. “The management of financial assets through a portfolio of funds it was and is much cheaper than using a SICAV and on top of that, corporate and regulatory expenses were avoided”, says Alvargonzález.
benefited and harmed
The Sicavs will have a transitory period to dissolve or liquidate without tax cost until December 31st. With the dissolution of these companies, the investment funds will be the great beneficiaries.
They will be the main recipients of the assets of the SICAVs since the transitional regime requires it. On the other hand, the characteristics of the funds are unbeatable, as stated by Juan and Seva. “They have advantageous taxation, diversification capacity, adjusted costs, access to any type of financial asset, and combinations that allow having a totally personalized portfolio”, they add.
Therefore, having this alternative in the funds, we do not believe that there is a clear incentive to seek options in structures domiciled in third countries. From a collection point of view, neither could this have any effect, as has been established in the transitional regime. “On the other hand, if we analyze the volume that exists in the SICAVs, even assuming that there was a tightening of their taxation, the effect would be more cosmetic than anything else”, describes the managing partner of Wealth Solutions.
However, there are also figures affected by the dissolution of the Sicavs. The most prominent could be the old Mercado Alternativo Bursátil in Spain. “In my opinion, one of the main victims will be the Mercado Alternativo Bursátil, now called BME Growth, where this type of instrument was listed”, begins exposing Juan and Seva. BME obtains a millionaire recurring flow from the stock market listing of these vehicles and with the reduction of these companies it will no longer receive them.
Another interesting point will be to see that of the professionals who were dedicated to managing this type of instrument and who, normally, constituted a specialized team within the managers. “I do not believe that they are in danger at work, since, according to my perception, they are professionals who combine, in many cases, technical knowledge and customer relationship skills, and that is, precisely, a highly demanded combination in the market”, concludes Juan and Seva in their analysis.