The Treasury is going to give the finishing touch to variable capital investment companies (sicav). The regulatory changes that are being prepared are causing the closure and conversion of dozens of these vehicles, commonly used by large fortunes to manage their financial assets. Their number has dropped to 2,434, a level not seen in 20 years.
At its peak, in November 2015, there were 3,427 sicavs, accumulating a net worth of 35,428 euros. Since then, about a thousand have disappeared and accumulated assets have fallen by 23%, to 27.6 billion euros at the end of 2020, according to data provided by Inverco, the association of fund managers.
What is the legislative change that is causing this wave of closures? Since 2016 there have been several rumors about greater control of this type of vehicle, but now it seems that they are going to materialize. Specifically, the Government wants to establish that the minimum investment per partner in a sicav is 2,500 euros.
In addition, the control and supervision of the sicav will pass from the National Securities Market Commission (CNMV) to the Tax Agency, which will ultimately decide whether the Sicav can apply the 1% rate or, by the Otherwise, you must pay the general rate of Corporation Tax of 25%
In addition, it is likely that a minimum or maximum participation percentage will also be imposed in them to prevent a single member or a group of family members from holding practically all of the shares.
Until now, it is very common for this to happen: an individual or a family controls the vast majority of the shares, and the rest, up to the one hundred partners required to pay 1% tax, have minimum stakes. They are known in the jargon as “mariachis”.
In the absence of the final details being known, the Treasury has advanced that it will leave a transitional period so that the owners of these vehicles can adapt to the new regulation. In any case, the general perception in the private banking sector is that the new regulation will leave this figure mortally wounded, and that little by little they will close all of them.
Really, dissolution is not the only way out for these vehicles. Some have been converted into investment funds, others have started the procedures to become sicavs under Luxembourg law, and the possibility of transforming them into a limited company or limited company is also being considered.
“It depends on several factors: the volume of equity, the number of shareholders, the dispersion and, especially, the level of accumulated capital gains or losses,” explains Marta Nimo, director of Atl Capital’s legal department.
Another alternative that the large management companies are considering is to encourage that between the sicavs they manage they can have cross participations, to achieve the goal of 100 partners with more than 2,500 euros. However, only seven large firms manage more than 100 fund managers and could have the capacity to encourage these cross-holdings.
From Inverco it is recalled that with these operations, a delocalisation of investments may eventually occur. When the sicav becomes a Luxembourg sicav, it means that there are many taxes that it stops paying here and that it is more likely that it will not invest as much equity in Spanish companies.
The great beneficiaries of this reconversion are specialized firms and audit firms. Many of them have created specific teams to advise clients and management companies on what is the ideal solution, to initiate procedures with the relevant authorities and to request all permits for conversion or dissolution.