The essentials
- The participating loan is never what the investor buys: it is not a transferable security and cannot be registered. It always sits in the internal layer.
- No instrument requires a vehicle in itself. Two conditions call for one: a need for quasi-equity treatment, or a portfolio of destinations.
- If there is a vehicle, have it issue debt and not equity. Issuing shares and paying dividends costs the investor around two points of return.
- An S.L.'s limit is twice its own funds, not capital plus reserves. That difference decides whether a vehicle is needed at all.
What can be tokenised and what cannot
The most frequent mistake shows up before vehicles are even discussed. It consists of assuming that any financing contract can be represented through distributed ledger technology.
It cannot. Only the financial instruments in the Law 6/2023 catalogue can be represented through DLT and therefore registered with an authorised entity. This has three consequences that shape everything else.
- A participating loan cannot be tokenised. It is a loan agreement, not a transferable security. When a structure includes one, that loan always sits in the internal layer of the transaction, between a vehicle and the financed company, never in the layer the investor sees.
- Nor can the shares of an S.L. The Spanish Companies Act prohibits them from being represented by securities or called shares. Tokenising share capital requires a sociedad anónima.
- A collective loan subscribed by dozens of retail investors falls within the crowdlending perimeter, which requires a crowdfunding service provider licence and limits each project to five million euros over twelve months.
The five ways to structure it
Route 1. Direct issuance from a sociedad anónima. The operating company issues tokenised bonds or debentures in its own name. The investor is a direct creditor of the company whose business they are financing. Law 5/2015 removed the quantitative limit the Companies Act imposed on public limited companies, so there is no cap tied to own funds. It is the simplest structure, the cheapest and the easiest to explain.
Route 2. Direct issuance from a sociedad limitada. Same structure, different limit: an S.L. cannot issue bonds for an amount above twice its own funds per the last approved balance sheet. This is worth underlining because a lot of out-of-date documentation is in circulation: the wording before Law 5/2015 set the cap at capital plus reserves, and the current one gives roughly double the capacity. Before ruling out a transaction on this ground, check the real figure in the filed accounts.
Route 3. Direct issuance with security. The same article exempts from the limit issuances secured by a mortgage, a pledge of securities, a public guarantee or a joint and several guarantee from a credit institution. It is the least explored route and the one that makes most sense when the company has real estate: it lifts the limit, improves the investor's position and allows the coupon to be reduced. In exchange it adds valuation costs and ties up an asset for the whole life of the issuance.
Route 4. A special purpose vehicle that issues and finances. A newly incorporated sociedad anónima issues the securities, raises the amount and channels it to the operating company through a loan, usually a participating one. The investor is a creditor of the vehicle; the vehicle, of the operating company. This is where the design mistakes concentrate.
| The vehicle issues bonds | The vehicle issues shares | |
|---|---|---|
| What the investor receives | A coupon, an enforceable claim | A dividend, subject to profit and a shareholders' resolution |
| Can a return be committed? | Yes | No |
| Taxation in the vehicle | The finance cost offsets the income, spread close to zero | The interest income is taxed with no deductible cost to offset it |
| Tax cost for the investor | Withholding on the coupon | Corporate income tax in the vehicle plus withholding on the dividend |
Route 5. A multi-asset vehicle. A single vehicle raises one issuance and finances several destinations. It is the only route that solves a problem no other one solves, and also the one that comes closest to the definition of an alternative investment fund, with the management company obligation that would entail. A single-asset vehicle, with no discretionary investment policy, is defensible as a financing conduit. One that selects among several destinations is considerably less so.
Comparison
| Criterion | S.A. direct | S.L. direct | With security | Vehicle |
|---|---|---|---|---|
| Amount limit | No cap | 2x own funds | No cap | No cap |
| Layers of risk for the investor | 1 | 1 | 1, with collateral | 2 |
| Additional capital tied up | 0 | 0 | 0 | €60,000 in the vehicle |
| Additional recurring cost | 0 | 0 | 0 | The vehicle's accounts, taxes and filings |
| Additional weeks | 0 | 0 | 2 to 4 | 2 to 4 |
| Balance sheet treatment | Debt | Debt | Secured debt | Quasi-equity, if it is participating |
| Complexity of the story for the investor | Low | Low | Low | Medium |
The practical reading: the monetary cost rarely decides. In a one million euro issuance, the difference between the cheapest and the most expensive structure moves between eight and fifteen thousand euros over five years, between 0.15 and 0.3 per cent a year. What decides is legal viability, tax leakage and where the regulatory risk ends up.
What the investor actually buys
| Instrument | Tokenisable | Effect on the issuer's balance sheet |
|---|---|---|
| Shares | Yes, S.A. only | Equity |
| Plain bonds | Yes | Debt |
| Subordinated bonds | Yes | Debt |
| Floating-coupon bonds | Yes | Debt |
| Convertible bonds | Yes, S.A. only | Debt and then equity |
| Participating loan | No | Net equity for the purposes of capital reductions and winding-up |
On the participating loan, two things are worth stating precisely that market documentation tends to treat as settled. First: its net equity effect for the purposes of capital reductions and liquidation is the real reason a company prefers it to a bond, because it stops the financing worsening its solvency ratio right before a round or a bank renewal.
Second: its ranking in insolvency has stopped being settled. After the reform introduced by Law 16/2022, the Provincial Court of Madrid concluded in September 2025 that participating loans are not automatically subordinated, and that subordination requires an express agreement. It is not consolidated case law, it is one court's ruling, but it turns subordination into a structuring decision instead of an assumed effect.
When a vehicle is justified
| Case | Why it justifies the vehicle | Alternative if it does not apply |
|---|---|---|
| The issuer needs quasi-equity treatment | Only the participating loan produces that effect. A direct bond does not | Issue debt directly and take it as such |
| The prospectus threshold calculation has to be separated | The exemption is calculated per issuer over twelve months. A different issuer opens a different calculation | Order the transactions in time |
| A single offer finances several destinations | Without a vehicle there is no way to give exposure to a portfolio | Separate issuances per destination |
One of them is enough. Outside those three cases, let the company itself issue: fewer layers, less cost, a better position for the investor and a story that can be explained in one sentence.
On separating the calculation, an important caveat: the supervisor may look at the economic substance when the separation between issuers is artificial. It is not a technique to be used lightly.
Five expensive mistakes
- Promising a coupon to someone who is a shareholder. If the investor subscribes shares in the vehicle, what they receive is a dividend. No fixed return is enforceable. It gets picked up in the validation of the offering document and forces the structure to be redone with the transaction already sold to the community.
- Ruling out direct issuance on a badly calculated limit. The cap is twice own funds, not capital plus reserves. The difference decides between setting up a vehicle and not needing one.
- Ignoring the aggregate calculation of the prospectus threshold. An equity round and a debt issuance in the same twelve months add up. Exceeding it forces a prospectus approved by the CNMV: between twenty-five and thirty-five thousand euros and four or five months more.
- Leaving the coordinator's name on the vehicle. If the platform coordinating the deal is not a regulated entity, its brand should not appear in the corporate name of the issuing vehicle.
- Selling liquidity. A secondary market for tokenised securities in Spain is announced, not operating.
What to check before deciding
- The issuer's corporate form and own funds per the last financial year filed.
- Whether there are owned assets that could secure the issuance.
- Whether there are other offers planned in the next twelve months.
- Whether the balance sheet tolerates the transaction as ordinary debt or needs quasi-equity.
- Whether the company is going to need to be a sociedad anónima anyway for other reasons.
With those five answers the route is determined almost always with no further analysis. The order matters: structure first, then the instrument, then the economic terms. The other way round you pay for the law firm's hours twice.
Frequently asked questions
Can I tokenise a participating loan directly?
No. A participating loan is a contract, not a transferable security, and it is not in the catalogue of instruments that can be represented through distributed ledger technology. It can only exist in the internal layer, between a vehicle and the financed company.
How much can a sociedad limitada issue in bonds?
Up to twice its own funds per the last approved balance sheet, unless the issuance is secured by a mortgage, a pledge of securities, a public guarantee or a joint and several guarantee from a credit institution, in which case the limit does not apply.
Is it better for the vehicle to issue shares or debt?
Debt, in almost every case. If the vehicle issues shares, what the investor receives is a dividend rather than an enforceable return, and the flow bears corporate income tax in the vehicle before reaching them. With bonds, the finance cost offsets the income and the taxable spread is close to zero.
Is a vehicle useful for staying below the prospectus threshold?
The calculation is per issuer, so technically a different issuer opens a different calculation. But the supervisor may look at the economic substance when the separation is artificial, so it requires a written view from a law firm and is not a solution to be used lightly.
Legislation and sources cited
- Royal Legislative Decree 1/2010, the Spanish Companies Act. Arts. 92.2 (representation of S.L. shares) and 401 (limit on bond issuance by an S.L.).
- Law 5/2015 of 27 April on the promotion of business financing.
- Royal Decree-Law 7/1996 of 7 June. Art. 20 (participating loans).
- Royal Legislative Decree 1/2020, the consolidated Insolvency Act. Art. 281 (subordinated claims).
- CNMV questions and answers on financial instruments based on DLT.
Updated 16 Sep 2026. This article is for general information and does not constitute legal or financial advice. The specific terms of each transaction depend on its structure and should be reviewed with professional advice.
