Coronavirus COVID-19

Special Information Briefing COVID-19 (No. 29): Order PCM/679/2020 which establishes the operation of the solvency support Fund for strategically important companies

27/07/2020

This Special Information Briefing analyses the operation, mobilisation and liquidation of the Fund, the conditions applicable to transactions financed using the Fund, as well as the composition and functions of the Management Board.

On 24 July 2020, Order PCM/679/2020, of 23 July, publishing the Agreement of the Council of Ministers of 21 July 2020, which establishes the operation of the solvency support Fund for strategically important companies (“Order PCM 679/2020”) was published in the Official State Bulletin. Order PCM 679/2020 establishes the set of requirements to be met by beneficiaries of transactions providing temporary public solvency support, which are financed using the Solvency Support Fund for Strategically Important Companies (the “Fund”).

The Fund was originally created via Royal Decree-law 25/2020, of 3 July, on urgent measures to support economic recovery and employment (“Royal Decree-law 25/2020”). Our briefing from 7 July 2020, in which we analysed the main aspects of the creation of the Fund, among other matters, is available here.

In turn, both the Fund and the recent Order PCM 679/2020 must be considered in the context of the approval by the European Commission, on 8 May, of the Amendment to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, approved by the European Commission’s Communication of 19 March 2020 (the “Temporary Framework”). The main development included in this amendment of the Temporary Framework is that it established the criteria that the European Commission will apply to allow Member States to provide public support in the form of equity and/or hybrid capital instruments to companies facing financial difficulties due to the COVID-19 outbreak. Our Special Information Briefing on the Temporary Framework can be found here.

The entire content of the Information Briefing can be found in the PDF.

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