The National Securities Market Commission (CNMV) has initiated a public consultation process to complete the review of the Code of Governance for Listed Companies, which will replace the 2015 version, revised in 2020. The deadline for submissions is 15 December, and the entry into force will generally be set for the annual corporate governance reports corresponding to financial years ending from 31 December 2028.
The project simplifies the structure of the code, reducing the current 25 principles and 64 recommendations to 18 principles and 52 recommendations. It removes recommendations that have been adopted by the Companies Act (LSC) and those applied by the vast majority of the market, and organises the text into three blocks: board of directors, general meeting, and stakeholder groups.
The project begins by introducing an interesting conceptual reformulation of the social interest in principle 1 and recommendation 1. In contrast to the current formula of "profitable and sustainable business in the long term", the new text establishes that the board must orient its functions towards "a resilient business with an adequate and sustainable positive performance in the long term, which promotes the continuity and maximisation of the economic value of the company".
Recommendation 1 clarifies the approach towards stakeholder groups (employees, creditors, etc). Instead of "reconciling" their interests with the social interest, it proposes "taking them into consideration". The goal is to articulate a model of shared value creation that recognises environmental and social impacts in the company's strategic decisions.
Another important modification is the rebalancing of powers intended in the board of directors. Thus, recommendation 20 establishes the desirability of separating the roles of chair of the board and chief executive officer in companies belonging to the IBEX 35 index, unlike the current code, which maintained neutrality between unified and dual models. The chief executive officer is considered to be the executive director to whom the powers of the board and the executive management of the company are primarily delegated.
If an IBEX 35 listed company maintains an executive chair, it must justify this with reasons in its Annual Corporate Governance Report (IAGC). For companies that currently hold both positions, a transition timeline is established, with the approval of a separation plan before 30 June 2028 and effective execution before 30 June 2030.
At the same time, recommendations 15 and 22 strengthen the role of the lead independent director. His appointment is required whenever the chair is not independent. He is authorised to convene at least one annual meeting of non-executive directors without the presence of the chair or executives. It is also recommended that the chair hold an annual meeting with non-executives without the executive management present.
Regarding the criteria for independence and protection of the director, there are also significant new developments, modifying the quotas of independents in recommendation 4: For IBEX 35 companies or those with a controlling shareholder (>30% of the capital), independents must represent at least 50% of the board; for others, the one-third (33%) quota remains.
In principle 3 and recommendations 5 and 6, additional circumstances are incorporated beyond those of the Companies Act that the nominations committee must evaluate with justification for the qualification of independent, so that those who have held the position for more than 9 years, those who own 1.5% or more of the share capital, those who have been employees of the group in the last 5 years, and those who have been secretary of the board, executive or senior manager in another entity coinciding with the chair or executives of the listed company in the last 3 years will no longer be considered independent.
Lastly, but no less importantly, independence is lost if the director has received from the group, in the last 36 months, more than 35% of their total annual income (excluding remuneration as a director of the listed company). This requires the director to disclose their private income to the nominations and remuneration committee.
These circumstances do not automatically disqualify, but require justification in the IAGC. For directors in office when the code is approved, they will be evaluated from the 2029 financial year. Regarding termination (recommendations 7 and 11), it is required that the existence of just cause be assessed beforehand by the nominations committee and that termination at the meeting requires prior inclusion of the matter on the agenda. Undoubtedly, to avoid cases like that of Indra.
The project formally incorporates emerging technologies and environmental risks into the board's agenda (recommendations 44 to 46) and calls for the implementation of a governance model for AI that ensures responsible use, ensuring that AI does not replace the decision or intervention of the director. It recommends periodically assessing technological risks in internal control and promoting a culture of cybersecurity within the group. It suggests considering the creation of a technology committee or assigning its competencies to existing committees, and including competencies in sustainability and digital transformation in the board's diversity matrix.
In ESG matters, recommendation 33 assigns the audit committee the supervision of sustainability information and the external verifier. Additionally, the risk control policy replaces the notion of "acceptable" risk with that of "tolerable" risk, encompassing tax, climate, and decarbonisation risks.
In the remuneration block (recommendations 35 to 42), the aim is to orient executive remuneration towards resilience and long-term risk management with:
- "Malus" clauses: These are now expressly recommended (no longer merely an option for analysis) and are extended to variable components accrued whose payment is pending.
- Climate metrics and hedges: The variable must include measurable indicators of climate transition and resilience. Financial hedges on shares from remuneration plans are prohibited.
- Holding of shares: The 3-year holding period also applies to non-executives and is counted from the delivery or granting of the plan (whichever occurs first). If independents receive shares, the remuneration committee will verify annually that their accumulation does not alter independence.
- Severance payments: The limit of two years of total annual accrued remuneration is extended to termination in executive functions and includes consolidated social security and post-contractual non-compete agreements.
Regarding accountability, general meeting, and corporate control, recommendation 48 sets a new standard for accountability: when a proposal receives more than 20% of votes against at the general meeting, the board must analyse the causes, address the objections of minority shareholders, and publish a report detailing the consultations made and the measures adopted or planned.
At the general meeting, it is required to enable remote voting and delegation for all listed companies, and remote attendance and intervention for those in the IBEX 35. In terms of corporate control (recommendation 51), statutory anti-takeover barriers and equivalent non-statutory measures are discouraged, extending transparency to relationships with individuals with dominant control.
The CNMV project establishes a progressive timeline for adapting the governance of listed companies: 15 December 2026, deadline for submitting comments. 30 June 2028, deadline for approving the separation plan in the IBEX 35. 31 December 2028, general application of the new Code to IAGCs for financial years closed from this date. 1 January 2029, application of the new independence criteria to previously serving directors. 30 June 2030, effective execution of the separation of the roles of chair and chief executive officer in the IBEX 35.