A portfolio management company, or SGC (sociedad gestora de carteras), is the investment firm that can only manage portfolios on behalf of clients and provide investment advice, without executing orders or holding assets in custody. Capital: €75,000. We help you with regulatory fit, the CNMV application and compliance.
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Six building blocks that make up a coherent, defensible CNMV application to authorize an SGC: the investment firm specialized in portfolio management and advice, without custody or order execution.
We analyze whether your model fits as a portfolio management company (management and advice, €75,000), as an EAF/EAFN (advice only) or as a securities broker or broker-dealer (agencia or sociedad de valores), depending on the investment services you will provide.
We prepare the application file: program of activities, the directors’ fitness and good repute, corporate structure, capital, internal policies and responses to requests for information.
We design a proportionate organization: fit and proper directors, plus compliance, risk management and internal audit functions tailored to the SGC’s limited scope.
In discretionary management and advice, the suitability test is at the heart of the relationship. We implement client classification, suitability, information and conflict-of-interest management in line with MiFID II.
As a financial obliged entity, an SGC must implement the AML/CFT framework: risk assessment, KYC, monitoring, SEPBLAC representative and training.
We organize outsourcing, SLAs, business continuity and DORA compliance, which applies to investment firms authorized in the EU.
Wealth managers, discretionary management teams or advisers who want to take the step to managing portfolios on behalf of clients: the SGC has a very specific scope that is worth understanding before you start.
“An SGC manages portfolios and advises, but it does not execute orders or hold assets in custody. If you only want to advise, an EAF is enough; if you need to execute orders or hold custody, you need a securities broker.”
“Authorization is not won with polished paperwork: you need consistency between the business, governance, the directors’ good repute, policies and conduct.”
“In discretionary management, the client delegates the decisions; in advice, the client decides after the recommendation. The suitability test underpins both.”
“Authorization is not the end. An investment firm needs operational AML/CFT, internal control, reporting to the CNMV and constant monitoring from day one.”
Providing investment services without authorization, filing an inconsistent application or neglecting MiFID II suitability can halt your business and expose you to penalties.
The most common mistake: offering portfolio management on behalf of clients without first determining whether the activity requires authorization as an investment firm, and of what type. The confusion surfaces when there are already clients and signed mandates.
The CNMV reviews consistency, not just documents: if the business model, the directors’ good repute, policies, MiFID II conduct and outsourcing do not fit together, the application loses strength and requests for information multiply.
The SGC’s scope is narrow: it cannot execute orders or hold assets in custody. If the model needs those functions, the right firm type is a different one (a securities broker or a broker-dealer), and it is worth knowing this before you apply.
Managing third-party portfolios without CNMV authorization can lead to the activity being halted and to sanctioning proceedings.
The LMV classifies the unauthorized performance of reserved activities as a very serious infringement, with liability for directors.
The name “Sociedad Gestora de Carteras” and the abbreviation “S.G.C.” are reserved: only firms authorized by and registered with the CNMV may use them.
Before opening the application, it is worth validating the scope of investment services, confirming that portfolio management and advice are enough for your model (with no need to execute orders or hold custody) and checking whether the structure can meet the requirements for authorization, MiFID II conduct, AML/CFT and ongoing control.
A portfolio management company (SGC) is an investment firm (ESI) that may provide only two investment services: discretionary, client-by-client portfolio management on behalf of clients and investment advice. It may also provide certain limited ancillary services.
It is subject to authorization, registration and supervision by the CNMV and, as a financial institution, it is an obliged entity for anti-money laundering purposes.
The SGC’s scope is narrow. It cannot:
If the model needs those functions, the right firm type is a securities broker or a broker-dealer (agencia or sociedad de valores).
The initial capital of a portfolio management company is €75,000, under the current implementing regulations (Royal Decree 813/2023). It is the same threshold as for an EAF and higher than for an EAFN (€50,000 or professional liability insurance).
The difference lies in discretionary management:
That is why the SGC is an intermediate step between the EAF and securities brokers/broker-dealers.
It is the service in which the client delegates the investment decisions on their portfolio to the firm, within an agreed mandate and limits. The SGC buys and sells on the client’s behalf based on its professional judgment, without asking for approval for each transaction.
It differs from advice, where the firm recommends but the client makes the final decision.
The current framework is Law 6/2023 on Securities Markets and Investment Services (LMV)—which defines the SGC in Article 128—and its implementing regulation, Royal Decree 813/2023. On top of this come the MiFID II conduct rules and anti-money laundering legislation.
Authorization, registration and supervision are the responsibility of the CNMV.
In practice, very few SGCs remain in operation: many projects opt for an EAF (if they only advise) or a securities broker (if they want a broader scope). Even so, it is still a valid, current firm type for anyone looking for exactly discretionary management and advice without taking on the structure of a securities broker.
It is worth analyzing case by case whether it is the most efficient option for your model.
Yes. Investment firms are financial obliged entities under Law 10/2010. They must implement a full AML/CFT system: risk assessment, due diligence (KYC), monitoring, SEPBLAC representative, training and, where applicable, an external expert review.
It depends on the complexity of the project and the quality of the application. What usually drags it out is not drafting it but fixing it: clarifying inconsistencies, completing the directors’ fit and proper and good repute documentation or answering CNMV requests for information.
A coherent, complete application from the start is the best way to shorten timelines.
Yes. Every authorized investment firm is entered in the CNMV official register, which is public and searchable. Registration is a condition for operating and allows clients and counterparties to verify that the firm is authorized and to see the scope of its services.
Portfolio management companies are subject to the Investment Guarantee Fund (FOGAIN) regime, which compensates investors in certain cases of insolvency or default by the firm, within the limits set by law.
Yes. The LMV’s reserved name rule requires these firms to include “Sociedad Gestora de Carteras” or its abbreviation “S.G.C.” in their corporate name. Only authorized and registered firms may use those terms.
Yes, through the MiFID II EU passport: an investment firm authorized in Spain can provide services in the rest of the EEA under the free provision of services or through a branch, by notifying the CNMV, without a new authorization in each State.
Because both discretionary management and advice require an assessment of the client’s suitability: their knowledge, experience, financial situation and objectives. Without well-documented suitability, the service cannot be provided in line with MiFID II.
No: managing collective investment schemes (funds, SICAVs) is the role of SGIICs (collective investment scheme management companies), a different firm type. An SGC manages individual portfolios of specific clients, not collective vehicles. They are different regimes and authorizations.
There is no single fee: the cost depends on the regulatory capital required and the complexity of the application. We help you size it before you start.
The total cost of setting up a portfolio management company combines two blocks: the regulatory capital required by law and the structuring cost of the project and the application.
Before committing to fees, we settle the regulatory fit and the real scope of the project. That way you avoid paying for work you do not need and get a realistic estimate of effort and timelines.
| Firm type (ESI) | Initial capital | Portfolio management? | Executes orders / holds custody? | Key feature |
|---|---|---|---|---|
| Broker-dealer (sociedad de valores) | €750,000 | Yes | Yes (own account and on behalf of third parties) | The most complete investment firm |
| Securities broker (agencia de valores) | €150,000 | Yes | Executes; custody if authorized | Only on behalf of third parties |
| Simplified securities broker (agencia de valores simplificada) | €75,000 | Yes | No custody | On behalf of third parties, without custody |
| Portfolio management company (SGC) | €75,000 | Yes (discretionary) | No | Portfolio management and advice only |
| EAF (financial advisory firm) | €75,000 | No | No | Investment advice only |
| EAFN (national) | €50,000 or liability insurance | No | No | National-scope advice |
Initial capital figures under Royal Decree 813/2023. An EAFN may replace capital with professional liability insurance (minimum cover of €1,000,000 per claim and €1,500,000 per year) or an equivalent guarantee. An SGC differs from an EAF in that it can manage portfolios on a discretionary basis, not just advise. The exact fit and solvency requirements depend on the specific services to be provided; it is advisable to validate them case by case before starting the application.
Authorization is not just a formality: it is a system that must demonstrate consistency between business model, governance, MiFID II conduct and suitability. The key is to build, from the outset, a firm that can withstand real supervision.
Not just the business idea. It analyzes whether the structure can support it: fit and proper directors of proven good repute, key functions, consistent policies and MiFID II conduct tailored to the management and advice service.
In discretionary management and advice, the suitability test is the core of the service. The procedure for assessing, recording and updating suitability must be designed before the application, not improvised afterwards.
MiFID II conduct, operational AML/CFT, DORA, reporting to the CNMV, audits and handling of requests for information must be designed to last over time, not just to get through the initial application.
If you want to structure your application from scratch or review the current status of your project, see our securities market regulation services or our corporate compliance practice.
An effective portfolio management company is not a dossier: it is a set of coherent decisions (regulatory fit, MiFID II suitability, management mandates, AML/CFT, governance and outsourcing) demonstrated through traceability. Here is a visual panel to understand how it works in practice.
1) FitThe goal is not to “get the license faster”: it is to make sure the model fits within the SGC’s scope (management and advice) and does not need to execute orders or hold custody.
2) ApplicationThe CNMV reviews consistency. The program of activities, the directors’ good repute, policies, technology and outsourcing must fit together without internal contradictions.
3) Suitability and mandatesAssessment of client suitability, discretionary management mandates with limits and a profile, information and conflicts of interest. When designed late, they undermine the authorization.
4) ComplianceMiFID II conduct, operational AML/CFT, DORA, audits and reporting turn the SGC into a real firm: monitoring, corrections and living evidence from day one.
Quick decisionEAF or EAFN: you recommend, but the client decides and places the order. Capital of €75,000 (EAF) or €50,000/insurance (EAFN).
SGC: discretionary management and advice, without executing orders or holding custody. Capital of €75,000.
Securities broker or broker-dealer: if you need to execute orders or hold assets in custody. From €150,000.
A reasoned analysis showing that the activity fits within the SGC’s scope (portfolio management and advice), without order execution or custody.
Regulatory fit report, service description and comparison of investment firm types.
A coherent description of the business, clients, channels, technology and management and advice services that supports the CNMV’s review.
Detailed business report, projections, third-party contracts and functional organizational chart.
Client classification, suitability assessment, information and conflict-of-interest management in portfolio management and advice.
Conduct procedures, suitability test templates and conflicts register.
Discretionary management agreements with a risk profile, limits, investment policy and periodic client reporting.
Standard management agreement, risk profiles and portfolio monitoring reports.
Fit and proper directors of proven good repute, key functions, segregation of duties and internal control.
Minutes, appointments, conflicts policy, risk map and annual audit plan.
Spot them before filing the application to avoid costly requests for information.
If you are structuring a portfolio management company, these terms come up in the application, in internal policies and in dealings with the CNMV. Understanding them well helps you build a coherent project.
A firm authorized by the CNMV to provide investment services: broker-dealers, securities brokers, portfolio management companies and financial advisory firms.
An investment firm that may only manage portfolios on a discretionary basis and provide investment advice, with limited ancillary services. It does not execute orders or hold assets in custody. Capital of €75,000.
A service in which the client delegates the investment decisions on their portfolio to the firm, within an agreed mandate and limits. The SGC acts on its professional judgment, without asking for approval for each transaction.
Personalized recommendations on financial instruments. The firm proposes, but the client makes the final decision and places the order. It is one of the two services an SGC may provide.
An assessment of the client’s knowledge, experience, financial situation and objectives. It is mandatory and central in discretionary management and advice: without it, the service cannot be provided.
The LMV reserves the names and abbreviations of investment firms. “Sociedad Gestora de Carteras” and “S.G.C.” may only be used by authorized firms, which must include them in their corporate name.
Investor compensation scheme for certain cases of insolvency or default by an investment firm. SGCs are subject to its contribution regime.
An SGIIC manages collective investment schemes (funds, SICAVs). It is a different firm type from the SGC, which manages individual portfolios of specific clients, not collective vehicles.
EU regulation requiring an ICT risk management framework, business continuity, incident reporting and oversight of critical providers.
Tell us about your project and we will explain how to structure your portfolio management company so it works in practice, with the shortest possible authorization timeline.
Investment firms, including portfolio management companies, are regulated by Law 6/2023 on Securities Markets and Investment Services and its implementing regulation, Royal Decree 813/2023. Authorization, registration and supervision are the responsibility of the CNMV, which assesses the suitability of the project, the directors’ good repute and the soundness of the application.
The defining feature of a portfolio management company is its limited scope: under Article 128 of the LMV, it may only provide discretionary, client-by-client portfolio management and investment advice, plus limited ancillary services. It cannot execute orders or hold clients’ financial instruments in custody, which distinguishes it from securities brokers and broker-dealers.
Royal Decree 813/2023 sets the initial capital for each investment firm: broker-dealer €750,000; securities broker €150,000 (€75,000 for the type without custody); portfolio management company €75,000; EAF €75,000; and EAFN €50,000, which can be replaced by professional liability insurance with minimum cover of €1,000,000 per claim and €1,500,000 per year.
The SGC sits as an intermediate step between the EAF—which can only advise—and securities brokers and broker-dealers. The essential difference from an EAF is that an SGC can manage portfolios on a discretionary basis, that is, make investment decisions on behalf of a client who has delegated that power to it. As a financial institution, it is also an obliged entity for anti-money laundering purposes under Law 10/2010.
Key legislation, linked to the official text:
Legislation and links reviewed in .