RD 571/2003 regulates two clearly differentiated aspects:

(i) declarations to the Investment Register of both foreign investments in Spain and Spanish investments abroad (Chapters II and III of RD 571/2023); and

(ii) the so-called suspension of the general liberalisation regime for certain foreign investments (Chapter IV of RD 571/2023).

While the first block is aimed at investment declarations with an eminently administrative or statistical purpose, the second block regulates relevant aspects of the procedure for screening and authorizing foreign investments prior to completing the investment.

In our opinion, it is the second block that has the most significant impact on the Spanish mergers and acquisitions market. RD 571/2023 develops the regulation of foreign investment in Spain. However, by its very nature, it is not intended to modify or replace the existing legal regime.

The most relevant legal provision in this subject is contained in article 7bis of Law 19/2003 and, to a lesser extent, the Single Transitory Provision of Royal Decree-Law 34/2020, of 17 November, on urgent measures to support business solvency and the energy sector, and in tax matters. They regulate the so-called foreign direct investment (FDI) regime. This analysis focuses on the main novelties of the last of the aforementioned blocks (that is, the regime of prior authorization of foreign investments in Spain). RD 571/2023 does not differ significantly from what was already foreseen in the draft text of the Royal Decree that was published in November 2021 and, on many cases, it contains the criteria that the Public Administration has been applying in practice since the FDI regime was approved in Spain.

Along with the development of the general FDI regime, the Chapter IV of RD 571/2023 also regulates the prior authorization regime in other types of foreign investments in Spain: foreign investments directly related to National Defense; those related to weapons, cartridges, pyrotechnic and explosive articles for civilian use or other material used by the State Forces and Security Corps.; and those made to acquire real estate for diplomatic purposes of States not members of the European Union3. In addition, this Chapter also develops the possibility for the Council of Ministers to establish the need for prior authorization for other foreign investments in sectors and activities that may be related, even if only occasionally, to the exercise of public power, or activities directly related to national defense, or to activities that affect or may affect public order, public safety and public health.

Next, this analysis will focus on (i) the main developments that apply to all foreign investment regimes subject to prior authorization; (ii) the main developments in the FDI regime, in particular; and, finally, (iii) other relevant developments.