Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices

CHAPTER 63

CORPORATE GOVERNANCE: SPAIN

Anthony Tarantino, PhD

63.1 INTRODUCTION

63.2 CURRENT STATE OF CORPORATE GOVERNANCE

63.3 THE ALDAMA REPORT, TRANSPARENCY ACT, AND CNMV REGULATIONS

63.4 BOARD OF DIRECTORS AND BOARD COMMITTEES

63.5 AUDIT REGULATIONS

63.6 CORPORATE GOVERNANCE DISCLOSURE

63.7 THE BANKING SECTOR

63.8 CONCLUSION

NOTES

63.1 INTRODUCTION

Spain has enjoyed one of the hottest stock markets in the past year as wealthy Spanish investors have driven up the value of blue-chip stocks. Spain's 2006 IBEX-35 index growth rate of 32 percent was twice that of France's CAC-40 and two and one half times that of London's FTSE-100. This heated growth may be dampened in 2007 by pending changes to takeover law in which stockholders are required to bid for the remainder of a company once their portion exceeds 30 percent—down from 50 percent under the current rules.1

Spain has emerged as a major player in new markets with companies such as Telefónica SA, Ferrovial SA, and Abertis SA leading the way with aggressive acquisition and merger strategies. With its high growth rates, job creation, and financial and political stability, Spain joins Britain, France, and Germany as a major EU economic power.2

Spain has also progressed ahead of many other EU members by deregulating telecommunications, banking, and energy industries while gaining valuable expertise by its reconquista expansion into Latin America over the past decade. Spanish tax laws give breaks to foreign-acquired goodwill, which ...