Law of Science, the missed opportunity for spin-off creation

The new Law on Science, Technology and Innovation (Law 17/2022) does not remove the obligation for public institutions to participate in a spin-off if they want to lift the incompatibilities of researchers.

Finally, there was “fumata bianca” and, after many months of drafting and debate, we can now say that we have the new Science Law with us.
There was a lot of expectation about many of the issues that were going to be included in this new Law. In this brief note we are going to comment on one of those that most affect researchers in public institutions who want to create spin-offs. We are referring to incompatibilities.

In the last draft that was circulated before the last procedure in the Congress of Deputies, the situation we had with the previous LCTI 14/2011 was significantly improved, in which, as you all know, there were two conditions for lifting the incompatibilities of researchers:

Conditions for lifting the incompatibilities of researchers

By fulfilling these two conditions, the researcher overcame his or her incompatibilities and could, among other things, hold more than 10% of the company’s shares, and at the same time be a member of the Board of Directors or even hold a position in the company.

As we said before, in the last draft before the approval of the new Law, although the second condition was maintained (unfortunately, we have to say), the first condition was eliminated, i.e., it was not mandatory for the public institution to participate in the shareholding, in exchange for having a technology licensing agreement that included an economic return to that institution. Given that most, if not all, licensing agreements include such a return, in practice it was considered that this condition was definitively overcome, and that institutions were therefore not obliged to participate in the shareholding.

But, unfortunately, our politicians have not taken this into account, and the article of the LCTI that regulates this aspect has been left as follows:

Article 18.3. The limitations established in articles twelve.1.b) and d) and sixteen of Law 53/1984, of 26 December, on incompatibilities of personnel in the service of the Public Administrations, shall not apply to research personnel who provide their services in the companies and other entities with legal personality that create or in which the entities referred to in paragraph 1 participate, provided that this exception has been authorised by the public universities, the Ministry of Finance and Public Function or the competent authorities of the Public Administrations, as appropriate.

In addition that the wording could be improved because it may give rise to ambiguities, it seems that the obligation to become a shareholder of spin-offs has been maintained.

It is a pity that we have missed this great opportunity to improve something that has never worked in our country: lifting the incompatibilities for researchers from public institutions who, having the spirit and desire to undertake, often see their aspirations frustrated and have to settle for a minority role in the company that develops the technology that they have spent years and years researching and investing energy and resources in.

An Opinion Piece by Josep Lluís Falcó – Managing Partner and CEO at GENESIS Biomed.