Setting up a hedge fund in Spain: which licence do you need?

The case, in five lines

What is brought

Application to the CNMV (Comisión Nacional del Mercado de Valores, Spain's securities regulator) to authorise the management company (an SGIIC for a fondo de inversión libre; an SGEIC if the vehicle is closed-ended) and the fund, both of which must be registered before they operate. Against a refusal: reconsideration or judicial review; against a penalty under the LIIC (the Collective Investment Schemes Act): a prior administrative appeal to the Minister for the Economy (article 94.1 LIIC).

Before which court

The CNMV authorises management companies, funds, investment firms and crypto-asset service providers; the Banco de España (Spain's central bank and banking supervisor) authorises payment and e-money institutions. Challenges go to the Contentious-Administrative Chamber of the Audiencia Nacional, Spain's National High Court (fourth additional provision of the LJCA, the Judicial Review Act), with no mandatory pre-action negotiation (article 3.2 of Organic Law 1/2025); that step is, however, required for an investor's civil claim against the manager, brought before the civil section of the Tribunal de Instancia, the first-instance court (article 5 of Organic Law 1/2025).

Deadline

Manager: three months from the date the documentation is complete, extendable by a further three, with deemed approval (article 41.4 LIIC and article 46 of Law 22/2014). Fund: two months, with deemed approval after five (article 10.3 LIIC). Against a refusal, one month for reconsideration (article 124 LPAC, the Administrative Procedure Act) or two for judicial review (article 46.1 LJCA), from the day after notification: these are strict time bars.

Who can bring it

The application is made by the promoters of the management company, whether Spanish or foreign, who must evidence capital, good repute and resources, and, for the fund, by the manager that will run it. Anyone who will manage collective investment schemes or provide investment services on a professional basis must apply (article 14 LIIC and article 129 LMVSI, the Securities Markets and Investment Services Act). The entity has standing to challenge the decision, as do its directors where the penalty extends to them.

Financial risk

If authorisation is refused, the time and cost of the application are lost. Once authorised, the manager must maintain 125,000 euros of capital, plus 0.02% of assets under management above 250 million, professional liability cover and own funds of at least 25% of its fixed overheads (article 100 RIIC, the Collective Investment Schemes Regulation). Operating without a licence means periodic penalty payments of up to 300,000 or 500,000 euros for each order ignored and, in investment services, fines of at least 600,000 euros. In judicial review, costs follow the event, up to one third of the value of the claim (article 139 LJCA).

What a hedge fund is under Spanish law, and which vehicle suits you

In Spain, a hedge fund is an institución de inversión colectiva de inversión libre, a 'free investment' collective investment scheme: a fund (FIL) or a company (SIL) under article 33 bis of Law 35/2003 (LIIC), governed by article 73 of its implementing Regulation (RIIC). Exempt from the diversification rules that apply to ordinary funds, it may borrow up to five times its net assets, use financially settled derivatives on any underlying, invest in loans and receivables, and originate loans. It is also an alternative investment fund (AIF) within the meaning of Directive 2011/61/EU (AIFMD).

A FIL needs at least 25 unitholders and three million euros in assets (articles 73 and 76 RIIC). It calculates NAV at least quarterly and may set notice periods, redemption gates with pro rata allocation and, with CNMV approval, lock-ups, but it must pay redemptions within nine months of notice. If it originates loans it may not borrow, and in exceptional circumstances assets that can no longer be valued may be ring-fenced in a special purpose fund, the Spanish side pocket (article 75 RIIC).

If the strategy is to invest in unlisted companies or private debt and investors exit together, the vehicle is closed-ended: a private equity fund or company (FCR, SCR) or a closed-ended entity (FICC, SICC) under Law 22/2014, which the CNMV does not authorise but registers once its documentation is complete (article 8), or a European long-term investment fund (ELTIF) to sell to retail investors across the Union. A family office investing only one family's wealth is not, in principle, an AIF; it may become one if it accepts outside money.

What the CNMV authorises and what the Banco de España authorises

What matters is the reserved activity, not what the business calls itself. Managing collective investment is reserved to schemes and managers registered with the CNMV (article 14 LIIC and article 42 of Law 22/2014); receiving and transmitting orders, managing portfolios or advising through personal recommendations, to investment firms and credit institutions (articles 125 and 129 LMVSI); and taking repayable funds from the public, to credit institutions (article 3 of Law 10/2014). The Registro Mercantil (the Companies Registry) will not register companies whose corporate object or name encroaches on those reserved activities (article 14.2 LIIC).

The CNMV authorises management companies (SGIIC and SGEIC) and funds; investment firms, within six months with deemed refusal (article 131 LMVSI); and crypto-asset service providers (CASPs) under MiCA (article 251 LMVSI), which we cover separately. The Banco de España authorises payment institutions, within three months with deemed refusal (article 11 of Royal Decree-Law 19/2018), and e-money institutions, on the same timetable and with 350,000 euros of capital (articles 4 and 6 of Law 21/2011), and supervises specialised lenders, the establecimientos financieros de crédito (article 6 of Law 5/2015).

A banking licence is decided by the European Central Bank on a proposal from the Banco de España, whose powers operate without prejudice to the ECB's (article 4 of Law 10/2014), and it is reviewed by the EU courts, not by the Audiencia Nacional. Many fintech projects combine licences; that is why we first map the flow of money and assets, client by client.

Your own management company or a hosting platform: capital, fit and proper requirements and substance

The fast route is to launch the fund on a hosting platform, a third-party management company that is already authorised, which takes on portfolio and risk management while your team acts as delegate manager or adviser, roles that require their own licence because personal investment advice is a reserved investment service (article 125.1.g LMVSI). The other route is your own SGIIC: a company whose exclusive corporate object is that activity, with its registered office and effective management in Spain, incorporated by simultaneous formation with no special benefits reserved to its founders, and a board of at least three members of good repute, most with experience suited to the fund (article 43 LIIC).

Minimum capital is 125,000 euros, plus 0.02% of assets under management above 250 million (capped at 10 million in total) and, for non-UCITS funds such as a FIL, 0.01% or professional indemnity insurance. Own funds may never fall below 25% of fixed overheads (article 100 RIIC), and the CNMV may require more from hedge fund managers (article 73.4 RIIC). An SGEIC needs the same 125,000 euros (article 48 of Law 22/2014).

Substance is where most foreign projects stumble. A FIL manager needs its own risk control and investment selection capabilities (article 73.3 RIIC), and delegation cannot hollow it out into a letter-box entity (article 98 RIIC). The AIFMD already required at least two fit and proper senior managers and a head office in the home State (article 8.1); Directive (EU) 2024/927 (AIFMD II), whose transposition deadline expired on 16 April 2026, adds that they must work full time and be domiciled in the Union. The Spanish draft bill went to public consultation in March 2026: design to that standard now.

CNMV deadlines, administrative silence and the lapse dates nobody tracks

The CNMV decides on the manager within three months of the application or, if it was incomplete, of the date it is completed, extendable by a further three (article 41.4 LIIC); an SGEIC follows the same pattern (article 46 of Law 22/2014). The fund is authorised within two months and registered with its prospectus within one more, or in a single two-month decision (article 10 LIIC and article 8 RIIC). Each request for information may suspend the clock (article 22.1.a LPAC), and failing to answer one within ten days may lead to the application being treated as withdrawn (article 68 LPAC).

What almost nobody explains is the effect of administrative silence: deemed approval for the manager and the fund (articles 41.4 and 10.3 LIIC), deemed refusal for investment firms and payment or e-money institutions. But deemed approval does not let you operate: the manager cannot start until it is entered in the Registro Mercantil and in the CNMV register (article 41.1 LIIC), and a deemed act is void if essential requirements are missing (article 47.1.f LPAC). It serves to obtain a certificate of silence (article 24 LPAC), not to sidestep the regulator's review.

Authorisations lapse through sheer oversight. An SGIIC's authorisation lapses if registration is not requested within a year (article 41.6 LIIC) and may be revoked if within twelve months it manages no scheme (article 49.1.a LIIC); an SGEIC's lapses if it does not start business within twelve months (article 54 of Law 22/2014). The fund's registration must be requested within six months of authorisation, and a FIL that has not reached three million euros six months after registration is wound up (articles 8 and 76 RIIC). The fundraising timetable is settled before the file goes in.

Who you can sell to: professional clients, retail investors and foreign managers

A FIL may be marketed to professional clients without thresholds (articles 193 and 194 LMVSI). To any other investor, only if they commit at least 100,000 euros and declare in writing, in a separate document, that they are aware of the risks, or if they invest on the personal recommendation of their adviser; in that case, if their financial assets do not exceed 500,000 euros, they must invest at least 10,000 euros and no more than 10% of those assets (article 73.7 RIIC). The rule applies even where the retail investor asks to come in on their own initiative, what the market calls reverse solicitation (article 73.8), and it exempts only the manager's staff and investors experienced in similar funds (article 73.9).

A manager authorised in another Member State under the AIFMD has a passport: it notifies its home regulator of each fund it wants to sell to professional investors in Spain, the regulator transmits the file within twenty working days at most, and marketing may start from then (article 32 AIFMD); the passport does not extend to retail investors. An American, British or Swiss manager has no passport: it needs the CNMV's express authorisation, which may be refused on prudential or reciprocity grounds (article 15 quáter LIIC and article 78 of Law 22/2014). Spain's national private placement regime requires an authorisation; a mere filing is not enough.

Pre-marketing (sounding out professional investors without offering subscriptions) may only be carried out by an authorised manager, which must inform the CNMV within two weeks, and any subscription in the following eighteen months counts as marketing (article 2 bis LIIC). A website giving Spanish residents the information to subscribe is presumed to be aimed at them (article 2.1 LIIC), and marketing an unregistered fund is a very serious infringement (article 80.m LIIC). The reservation form on your website amounts to unauthorised fundraising.

If the CNMV refuses, issues an order or imposes a penalty: how and where to challenge it

CNMV decisions on authorisations exhaust administrative remedies (article 10.5 LIIC, article 46.2 of Law 22/2014 and article 23 LMVSI). A refusal may be challenged by an optional request for reconsideration within one month (article 124 LPAC) or by judicial review within two months from the day after notification (article 46.1 LJCA), before the Contentious-Administrative Chamber of the Audiencia Nacional as the court of sole instance (fourth additional provision of the LJCA), with a cassation appeal to the Tribunal Supremo (the Supreme Court). Against deemed refusal no time limit runs: the Tribunal Constitucional (the Constitutional Court) and the Tribunal Supremo have held that the six-month limit in article 46.1 LJCA cannot be relied on against a party challenging a deemed refusal.

If the CNMV orders you to cease a reserved activity, time runs against you: periodic penalty payments are repeated for each order ignored (article 14.4 LIIC and article 129.4 LMVSI), and a very serious infringement is only time-barred five years after the activity stops (article 83 LIIC and article 311 LMVSI). Penalties under the LIIC are first appealed to the Minister for the Economy and are not enforced until administrative remedies are exhausted (article 94.1 LIIC); those under the LMVSI exhaust administrative remedies directly. Interim suspension is sought from the court (articles 129 and 130 LJCA).

Before the Audiencia Nacional, cases are won on the file submitted to the CNMV: the courts respect the supervisor's technical discretion and correct it only for error of fact, lack of reasons, disproportion or arbitrariness. No mandatory pre-action negotiation is required, because Organic Law 1/2025 excludes matters involving the public sector (article 3.2). It is required, however, in civil litigation arising from the project, such as a unitholder's claim against the manager for breach of its obligations (article 46.4 LIIC) or a dispute with the platform or between partners, before the civil or commercial section of the Tribunal de Instancia (the first-instance court) (article 5 of Organic Law 1/2025).

How we run the case, step by step

1. 1

   We identify the activity and the vehicle

   The strategy, the investors and the flow of money decide between a FIL, a closed-ended vehicle, an ELTIF or another licence, and between your own manager and a third-party one. Until then, no third-party money is raised or managed.

2. 2

   We design the manager and the team

   Shareholders, capital, a three-member board, two senior managers working full time within the Union and what is delegated, with each person's experience tested against the strategy.

3. 3

   We file a complete application

   Programme of operations, business plan, articles of association with the certificate of name availability, risk, liquidity and anti-money laundering manuals, remuneration, delegation and fund documentation: the clock only starts once the file is complete.

4. 4

   We answer requests and track the silence deadline

   We answer each request in time, track extensions and, when the deadline passes, request a certificate of silence or prepare the challenge, depending on the licence.

5. 5

   We incorporate and register before anything lapses

   Deed of incorporation and entry of the manager in the Registro Mercantil and the CNMV register; registration of the fund with its prospectus; a depositary that is a bank or a broker-dealer or broker established in Spain (article 58 LIIC); and raising the three million euros and the 25 unitholders on time.

6. 6

   We market the fund or challenge the decision

   Marketing within the rules, using the passport where available and with controls on retail investors. If the CNMV refuses or imposes a penalty, we challenge in time and seek interim suspension if enforcement could deprive the challenge of its purpose.

The law that applies

• Arts. 14, 41 y 43 LIIC. Reserves collective investment to entities registered with the CNMV, which decides on an SGIIC within three months of complete documentation, extendable by three, with deemed approval; the authorisation lapses if registration is not requested within a year. It requires effective management in Spain. BOE-A-2003-20331
• Arts. 73 y 100 RIIC (RD 1082/2012). A fondo de inversión libre (hedge fund) has at least 25 unitholders and may borrow up to five times its net assets; it is sold to non-professionals with 100,000 euros and a risk statement or with advice. An SGIIC needs 125,000 euros of capital. BOE-A-2012-9716
• Arts. 46, 72 y 75 Ley 22/2014. The CNMV decides on an SGEIC within three months of complete documentation, extendable by three, with deemed approval. Managers below the 100 or 500 million thresholds are exempt from part of the regime and have no passport unless they opt in. BOE-A-2014-11714
• Arts. 6, 8 y 32 Directiva 2011/61/UE (AIFMD). No one manages AIFs without authorisation, which requires sufficient capital, at least two senior managers of good repute and experience, suitable shareholders and a head office in the home State, and is decided within three months, extendable by three; it allows selling to professional investors in other Member States after notification. 02011L0061-20210802
• Arts. 1, 2 y 3 Directiva (UE) 2024/927 (AIFMD II). Regulates loan origination by AIFs, delegation and information on the manager's senior staff, and requires UCITS management companies to be directed by two persons working full time and domiciled in the Union. Transposition: 16 April 2026. 32024L0927
• Arts. 129, 131 y 312 LMVSI (Ley 6/2023). Reserves investment services to authorised entities, with periodic penalty payments of up to 500,000 euros; the CNMV decides on investment firms within six months with deemed refusal, and carrying on a reserved activity without authorisation is fined at least 600,000 euros. BOE-A-2023-7053
• Art. 11 RDL 19/2018. The Banco de España, after a report from Sepblac (Spain's anti-money laundering supervisor), authorises payment institutions within three months of complete documentation; if no decision is notified, the application is deemed refused. BOE-A-2018-16036
• Art. 46 y disposición adicional cuarta LJCA. Judicial review is sought within two months from the day after notification of the act exhausting administrative remedies; acts of the CNMV and the Banco de España are challenged in sole instance before the Audiencia Nacional. BOE-A-1998-16718

Each article checked against the consolidated text published in the BOE (the Spanish official gazette).

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