Articles and codes

Code of investments

Code of investments

Law 6/2023 of 17 March on Securities Markets and Investment Services, in its Fourth Additional Provision (Restrictions on temporary financial investments by non-profit entities), provides: ‘1. The CNMV and the Banco de España, each within the scope of its supervision, shall approve codes of conduct containing the specific rules to which temporary financial investments made by foundations, establishments, institutions and non-profit associations, professional associations, employment promotion funds, mutual funds that collaborate with Social Security and, where appropriate, other entities subject to reduced corporate income tax rates that do not have a specific investment diversification scheme in order to optimise the return on the funds available to themand which they may use to obtain returns in accordance with their operating rules.

The wording of this item (previously included in the Fifth Additional Provision of Royal Legislative Decree 4/2015 of 23 October, approving the revised text of the Securities Market Law) comes from Law 44/2002 of 22 November, on Financial System Reform Measures, on the basis of which the National Securities Market Commission (hereinafter, the ‘CNMV’, the Spanish abbreviation) approved a code of conduct for non-profit entities for the making of temporary financial investments through a resolution on 20 November 2003. For its part, the Banco de España, through the resolution of the Governing Board of 19 December 2003, stipulated that this code should apply in the same terms to the temporary financial investments of non-profit institutions in the form of deposits, loans, temporary assignment of financial assets or other similar types of investment that entail the obligation of restitution, and that are not subject to rules on the regulation and discipline of the securities market.

The CNMV Board, at its meeting on 20 February 2019, approved a new code of conduct relating to temporary investments by non-profit entities (BOE no. 55 of 5 March 2019), which replaces that approved by the Board itself on 20 November 2003.

The code of conduct of the Amancio Ortega Gaona Foundation (hereinafter, the ‘Foundation’) for making temporary financial investments expresses the Foundation's commitment to the suitable selection of its temporary financial investments, assessing the security, liquidity and profitability offered by various investment possibilities. This commitment is also a requirement of article 15.2 of Law 12/2006, of 1 December, on foundations with an interest in Galicia, which states that ‘It is the responsibility of the board of trustees to fulfil the foundational purposes and diligently administer the assets and rights that make up the patrimony of the foundation, maintaining their performance and usefulness’.

In order to comply with the aforementioned rules and to regulate the financial investment policy, the Foundation’s Board of Trustees has decided to approve the following code of conduct (hereinafter referred to as the ‘Code’).

1.- Scope of application

The Foundation has been endowed by its founder with a sum of money in cash (hereinafter, the ‘Foundational Endowment’), in addition to receiving donations to cover the projects it carries out; it obtains the income that allows it to carry out its foundational activity by investing the funds in various financial assets.

This Code is applicable to temporary financial investments made by the Foundation both from the endowment and from donations received, as long as they are not applied to the projects for which they are intended

For the purposes of this Code, any investment in financial instruments shall be considered to be a temporary financial investment, with the exception of the following:

  • Investments that are subject to restrictions on free disposition by virtue of the founding title, the Foundation's articles of association, or applicable regulations.
  • The part of the Foundation's assets that comes from contributions made by the founder, by donors or by associates subject to non-disposition requirements, or with a permanent nature.

For the same purposes, the instruments listed in Article 2 of Law 6/2023 of 17 March on Securities Markets and Investment Services are considered to be financial instruments.

2.- Resources and organisation

The Foundation shall have human and material resources and systems for the selection and management of its investments in financial instruments that are suitable and proportionate to the volume and nature of the investments it makes or intends to make.

The Board of Trustees shall appoint one of its members, for a period of three years, renewable for successive periods of the same duration, to be responsible for the Foundation’s financial investments, for the purpose of supervising the selection of investments, ensuring compliance with this Code and drawing up a report to be submitted annually to the Protectorate on such compliance. The person responsible for financial investments shall have sufficient technical knowledge and experience for the performance of their duties; if they do not have such knowledge and experience, or if they consider it appropriate, they may propose to the Board of Trustees the contracting of external professional advice from third parties who offer guarantees of professional competence and independence, and who are not affected by conflicts of interest.

Provided that the investment portfolio is worth more than ten million euros, an Investment Committee shall be set up, consisting of at least three members, and at least two of whom shall have sufficient expertise and experience for the role performed, which shall meet regularly, at least four times a year, and whose task shall be to assist the person responsible for financial investments in the selection of suitable investments in accordance with the provisions of this Code. The person responsible for financial investments shall be a member of this Committee and shall be its chairperson.

To the extent that the portfolio is significant, there shall additionally be an internal control function, which shall have sufficient authority and independence, and be carried out by personnel with the suitable expertise or delegated to specialised entities, to verify compliance with the investment policy and to ensure that the Foundation has at all times an adequate system for recording and documenting transactions and safekeeping of investments.

3.- Investment policy and selection: principles, types of investments and limits


3.1.- Principles

For the selection of the Foundation's investments in financial instruments, the security, liquidity and profitability offered by the various investment possibilities shall be assessed, ensuring that there is the necessary balance between these three objectives, and taking into account the market conditions at the time of contracting, for which the following principles shall be considered:

  • Coherence Principle: The investment strategy shall be consistent with the profile and duration of the liabilities assumed by the institution and with liquid asset forecasts.
  • Liquidity Principle: As a general rule, investments shall be made in sufficiently liquid financial instruments. All of the Foundation’s financial investments shall be made in organised secondary markets in European Union member countries or the United States of America, which guarantee the liquidity of investments. The depth of the market for the securities or financial instruments being invested in should be taken into account by considering the usual trading volume. The Foundation shall at all times maintain a liquidity ratio, in current accounts or demand deposits, of 0.5% of total financial investments.
  • Diversification Principle: The Foundation shall diversify the risks associated with its investments by selecting a portfolio composed of a plurality of uncorrelated assets from different issuers and with different risk characteristics.
  • Capital Preservation Principle: Investment policy shall give priority to capital preservation. The Foundation's investment policy shall not be speculative and, consequently, operations shall not be designed to make capital gains from short- term market fluctuations, nor shall they be carried out with indebtedness. The financial products contracted by the Foundation must have as a counterparty issuers belonging to OECD countries and with a credit risk rating never lower than BBB- or Baa3, except for Spanish State issues, which may be contracted in any case.

3.2.- Types of investments

The Foundation may carry out its investments in the following products:

  • Public debt, which includes government bonds, government obligations, treasury bills, treasury notes, treasury bills and any issue of fixed-income securities whose issuer is a government.
  • Bank deposits and reverse repurchase agreements, including deposits and reverse repurchase agreements with financial institutions.
  • Holdings in Money Market and Fixed Income Investment Funds (those with at least 70% of their investments in money market assets and the remainder in fixed income) and Mutual Funds. No shares shall be taken in investment funds that invest part of their portfolio in equities.
  • Fixed Income Assets, including any issuance of bonds and securitisations by companies of any kind.

All financial products contracted by the Foundation shall be denominated in euro as a general rule. Products denominated in other currencies of OECD member countries may be contracted when the Foundation is required to make payments in those currencies. However, the contracting of this type of operation must not exceed 10% of the total amount invested or the amount of the firm commitment, whichever is greater.

The Foundation shall not invest in equity or derivative products (options, futures, SWAPS, FRAS, IRS or similar), except for those which are intended to reduce the Foundation's exchange rate risk in certain transactions and are expressly authorised by the Board of Trustees.

Any other instrument not mentioned above may not be contracted without the express authorisation of the Board of Trustees.

3.3.- Limits

The investment of the Foundation's liquid resources shall be subject to the following limits:

Type of instrument
MAXIMUM LIMIT FOR INVESTMENT IN THE PORTFOLIO
MAXIMUM LIMIT PER ISSUER FOR THE PORTFOLIO
Public debt 100% 40%
Bank deposits and reverse repurchase agreements
Shares in mutual funds 100% 25%
Fixed income assets 100% 15%
Equity products 0%
Derivative products

An amount equivalent to the Foundation Endowment must be invested in government bonds, bank deposits or reverse repurchase agreements.