International Consolidated Airlines Group SA, the company to be created through the merger of British Airways PLC (BAY.LN) and Iberia Lineas Aereas de Espana SA (IBLA.MC), will limit non-European Union stock ownership to 40%, according to a prospectus filed with Spanish regulators last week.

The foreign-ownership cap seeks to comply with operating licenses and bilateral agreements for transatlantic flights granted to flagship carriers of specific countries.

Iberia's strength lies in routes between Europe and South America, while BA has a broader global network from its base at London Heathrow, the world's largest airport by international passenger numbers.

IAG, as the new company is also known, will be incorporated in Madrid and have its operational and financial center in London. It will be listed on the London and Madrid stock exchanges.

Madrid-based Iberia, Spain's largest airline by revenue, will own 44% of IAG, with BA controlling the remaining 56%.

Shareholders of both companies are expected to vote on the merger later this month, with IAG's shares expected to start trading in January.

-By Ana Garcia, EFE Dow Jones; 34 91 395 8120; djmadrid@dowjones.com