3 minute read
A messy start
subject to a high level of corporate compliance obligations (i.e. special subject to AML obligations; need of DPO in personal data protection; and others). Therefore, the validation of the fulfilment of all the necessary obligations under Spanish law shall be of the essence
• Specific gambling regulatory validation: Check if there is any fining procedure in process. Fines in the Spanish gambling sector can be very high, going up to €50m ($57.7m), although we have never seen fines above €1m. Two serious breaches within a period of two years entail a very serious violation of Spanish law, and can therefore entail an economic sanction from €1m to €50m, as well as the potential loss of the gambling licence, the existence of previous fines from the gambling regulator also has to be carefully checked.
STEP 5 – SIGNING AND CLOSING OF THE SALE AND PURCHASE AGREEMENT (“SPA”):
The clauses of the SPA that will have to be more vigilantly negotiated will be: • Representations and warranties of the seller: The findings of the due diligence process will have to be duly analysed and included in the representations and warranties of the SPA. • Limitations of responsibility: taking into account the buyer will be assuming any contingency or liability that may arise in the future, the limitations of the liability for the R&W made by the seller will play a key issue in the negotiation of the SPA. • Price and payment structure: the operation may be structured in a wide variety of ways. The acquisition may be total (100% of the shares of the company) or partial (51% of the shares of the company or less). Additionally, in both cases, the parties may be interested in deferring or conditioning the payment of the price to the obtainment of specific results (i.e. partially conditioning the payment of the agreed price to the maintaining or increasing of the company’s results or certain KPI’s, and/or performance of key personnel). Likewise, the potential granting of stock options or vesting plans for key employees, the establishment of call options for the investor to buy the shares not acquired in the initial equity investment, and any other mechanisms, shall be duly established in the SPA.
Xavi Muñoz Bellvehí
STEP 6 – NOTIFICATION TO THE DIRECTORATE GENERAL FOR THE REGULATION OF GAMBLING (“DGOJ”):
The transfer of shares will have to be notified to the Spanish gambling regulator (DGOJ) once executed, together with all the relevant information on the new owner of such gambling licence (related parties; ultimate beneficial owner; etc.). Finally, it shall be noted that corporate restructuring operations such as mergers, splits or spin-offs of branches of activity are subject to the obtainment of a previous authorisation by the DGOJ, which will depend on the following factors: • That the company fulfils all necessary requirements to hold a gaming licence under Spanish law (this is in accordance to article 13 of the Law 13/2011) • That the corporate restructuring operation is duly executed in accordance to corporate applicable laws and regulations • Then, the DGOJ shall grant a “pre-approval” of such corporate operation, which will be valid for three months • That the new company acquiring the gaming licence shall assume any responsibility for any issue regarding the gambling activities developed by the gaming operator.
In these cases, the execution of the operation gets more complicated as the authorisation is compulsory and has to be obtained previously to its execution, and therefore slowing down the procedure. Each M&A operation will be different and we consider essential to both, buyers and sellers, to plan well ahead the transaction. Some of these transactions may also have an added level of complexity as the selling company may be a gambling operator located in Malta, Gibraltar or Ceuta.
