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Practical Handbook for Companies 2021

Documentation obligations

Article 18.1 of LIS requires transactions between related persons or entities to be valued at market value.

Market value shall be understood as the value that would have been agreed by independent persons or entities under conditions that respect the principle of free competition..

Article 18.2 of the LIS establishes that the following shall be considered persons or related entities:

  1. A company and its partners or shareholders.

  2. A company and its board members or managers, except regarding remuneration for the performance of their duties.

  3. A company and spouses or others linked to partners or shareholders, advisers or managers by kinship, in a direct or collateral line, by consanguinity or affinity, up to the third degree.

  4. Two entities that belong to a group.

  5. A company and the advisers or managers of another company, when both companies belong to a group.

  6. An entity and another entity in which the former holds indirectly at least 25 per cent of the share capital or equity.

  7. Two entities in which the same partners, participants or their spouses, or persons related by blood or marriage up to the third degree, directly or indirectly, directly or indirectly, hold at least 25 per cent of the share capital or equity.

  8. An entity resident in Spanish territory and its permanent establishments abroad.

In cases where the link is defined according to the relationship of the partners or participants with the entity, the participation must be equal to or greater than 25 percent.Managers will be understood to include both de facto and de jure managers.

A group exists when an entity has or may have control over one or more other entities in accordance with the criteria established in Article 42 of the Commercial Code, regardless of their residence and regardless of the obligation to prepare consolidated annual accounts.