Since the flotation of Bankia, S.A. (now CaixaBank, S.A.) and the subsequent restatement of its accounts, the question of whether qualified investors have standing to bring an action for damages and seek liability for inaccuracies in the prospectus, or whether such an action is exclusively reserved for retail investors, has been a matter of considerable controversy and litigation.

To date, the Provincial Courts have handed down very different rulings: on the one hand, those that consider that institutional investors have the right to claim on the basis of the content of the prospectus of the public offer for subscription of shares; and, on the other hand, those that understand that standing to bring such an action is exclusively reserved for non-qualified investors.

In view of the heterogeneous nature of the rulings, the Supreme Court referred a question for a preliminary ruling in the case of Bankia, S.A. (now CaixaBank, S.A.) and Unión Mutua Asistencial de Seguros, which was resolved by the Court of Justice of the European Union in its judgment of 3 June 2021 (Case C-910/19).

In its preliminary ruling, the Supreme Court referred the following two questions to the Court of Justice of the European Union (hereinafter “CJEU”) for a preliminary ruling:

  • whether, when a public offer for subscription of shares is addressed to both retail investors and qualified investors (and a prospectus is issued for retail investors), the prospectus liability action covers both types of investors or only retail investors;
  • In the event that the action for liability for the information in the prospectus covers both types of investors, if it is brought by the qualified investor, the court can or should take into consideration that the qualified investor was or should have been aware of the economic situation of the issuer of the offer on the basis of his relations with the issuer and outside the prospectus.

With regard to the first question, and after considering that the publication of the prospectus contributes to the protection of investors’ interests, the Ruling considers that it is legitimate for investors who have participated in an offer of securities in which a prospectus has been published – which is understood to contain reliable and complete information – to invoke the information contained therein and that, consequently, they are entitled to bring an action for liability for this information regardless of whether or not they were recipients of the prospectus in question; this is not undermined by the distinction between retail and qualified investors. It would be contrary to the objectives pursued by the legislation governing the matter to exclude qualified investors from the exercise of the liability action by basing such exclusion on the non-requirement of publication of the prospectus when the offers are exclusively addressed to them; since the non-obligation to publish the prospectus in such cases is an exception and not a prohibition for the prospectus to be published and addressed to all investors. Therefore, the principle of civil liability prevails in the case of an inaccurate prospectus, regardless of the status of the aggrieved investor.

In relation to the second question, and after stressing the need for the principles of equivalence and effectiveness to be respected in all cases, the Ruling considers that, in the event that the action for liability for the information in the prospectus is brought by a qualified investor, the knowledge of the economic situation of the issuer that the qualified investor has (or should have) on the basis of his relations with the issuer can (or should have) be taken into account, if the national legislation in question so provides.

In conclusion, qualified investors can indeed bring an action for liability for the information in the prospectus and the judge must decide on this taking into consideration the knowledge that the qualified investor had or should have had of the issuer’s economic situation, which, although, as established by the CJEU, normally has access to other information that can inform his or her decision making, this will not always be the case.

The Supreme Court has not yet ruled on the appeals pending resolution, so at VENTURA GARCÉS we will closely follow the pronouncements that it issues, and from which we hope to obtain the greatest success for our clients.