New Regulation for Access to the Activities of Electronic Money Entities – EME

1 April 2008

On March 4, 2008, the new Royal Decree 322/2008 of February 29 came into force, concerning the legal system for electronic money entities (EMEs). This new regulation is based on Directive 2000/46/CE concerning access to the activities of electronic money entities and its role as the precautionary supervision of these entities. Previously, EMEs were only vaguely regulated in article 21 of Law 22/2201 on reform measures of the financial system.

From a practical point of view, electronic money is simply the equivalent of coins and notes that are stored in electronic form on payment cards that we use on a daily basis to make small payments, for example for things like a bus ticket. From a legal point of view we can define electronic money as a monetary value in the form of a right against its issuing entity, which is recorded in a database. The business aim of the EMEs is generally the issuing of electronic money and the rendering of related services such as the technical management of the payments. Since EMEs are not classed as banks they are forbidden to bring in public funds and to create deposits. Royal Decree 322/2008 introduces a neutral legal framework from a technological point of view.

The new electronic money entity which carries the denomination EME assumes the form of a public limited company, and is required to have minimum share capitol of one million euros available, fully subscribed and paid up in cash. The new Royal Decree contains rules on the upkeep of capital, as well as demands in relation to the composition of the board of directors and as well as the experience and professional reputation of its members. The volume of electronic money created as to be assured via specific low risk activities. Following the timely authorization by the Treasury, these societies will be entered in a specific register kept by the Bank of Spain, authority that hereinafter will execute supervising functions related to the EMEs.

The application for authorization for EMEs should be directed to the Director General of the Treasury and Financial Policy, who forms part of the Treasury. Together with this application a range of other documentation is also needed, such as the articles of association, the program of activities, the list of the members that will make up the association, and supporting documentation of having already made the required deposit equivalent to 20% of the minimum social capital to the Bank of Spain.

The Royal Decree states for cases of creation and management of Spanish or foreign EMEs by investors covered by Spanish law, and hence the regulations of Royal Decree 322/2008, the authorization of an EME granted outside Spain is not sufficient for it to develop business in Spain. In the case where the control of the Spanish EME would be carried out by a financial or banking entity authorized in another member state of the EU, the Bank of Spain, within the framework of its intervention in the authorization process, would consult the supervising authorities of the said entity. For such cases it is not planned to create a guarantee, a method of assurance that we believe would conflict with the community law, whilst for cases concerning foreign investors and EMEs residing outside of the EU who plan to develop this business in Spain a guarantee would be required, which would cover all of the activities of said business.

For further information, please contact Sönke Schlaich or Belén Arribas Sánchez: sschlaich@mmmm.es
barribas@mmmm.es