Analysis of Royal Decree Law 5/2021 (III): New fund for the recapitalization of companies affected by COVID.

New fund to recapitalize companies affected by COVID

One billion euros are allocated to a company recapitalization fund that will be managed through the Spanish Development Finance Company (Cofides), which is under the Ministry of Industry, Trade and Tourism.

The funds will be granted in the form of financial instruments, such as ordinary loans, participating loans, capital or others that have previously requested it and that are going through temporary difficulties as a result of the COVID-19 pandemic.

1. Requirements

• Dividends: Beneficiary companies will not be able to distribute dividends during 2021 and 2022.
• Dividends, share buybacks and remuneration: until the State has fully exited the capital, beneficiaries will be subject to prohibitions on dividend distribution and share buybacks.

Furthermore, until at least 75% of the recapitalization has been redeemed, the remuneration of managers will be limited, including a ban on the payment of bonuses.

• Maintenance of the activity until June 30, 2022
• Do not increase senior management compensation for two years
• Not to be ceased from activity at the time of application
• not have filed for bankruptcy.
• cannot be involved in bankruptcy proceedings (unless they are in the process of fulfilling an agreement)
• Not disqualified in bankruptcy proceedings (unless the disqualification period has ended).
• cannot have been declared insolvent in any proceedings
• not be subject to judicial intervention
• Not having been convicted by final judgment to the penalty of loss of the possibility of obtaining subsidies or public aid or for crimes of prevarication, bribery, embezzlement of public funds, influence peddling, fraud and illegal exactions or urban planning crimes.
• Not having given rise, for a cause for which he/she had been declared guilty, to the final termination of any contract entered into with the Administration
• Be up to date with tax and social security payments

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Sonia Fernández Álvarez

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