Beyond Borders: Eversheds Sutherland's ICR insights series

Country specific – Portugal

This country specific outline contains further information regarding the implementation of the provisions of the EU Mobility Directive into Portuguese law and provides further local insight.

Cross-border mergers, divisions and conversions

Status of implementation

On 4 January 2024, Decree-Law 114-D/2023 (the “Decree-Law”) has entered into force. This Decree-Law transposed into Portuguese law the Directive (EU) 2019/2121 of the European Parliament and of the Council, of 27 November 2019, which, in turn, amends the Directive (EU) 2017/1132, of 14 June 2017, as regards cross-border conversions, mergers and divisions (the “Directive”).

Summary of Portuguese current and future legal landscape

Prior to the entry into force of the Decree-Law, Portuguese commercial law governed solely domestic conversions, mergers and divisions, as well as cross-border mergers. The transposition of the Directive has therefore made it necessary to amend Portuguese commercial law, regarding, most notably, modifications to the domestic and cross-border merger regimes and the creation of a regime for cross-border conversions and divisions.

The modifications implemented by the Decree-Law entail several amendments to Portuguese commercial law, most notably to the Portuguese Commercial Companies Code and to the Portuguese Commercial Registry Code.

Permitted companies and geographic scope

Following the entry into force of the Decree-Law, cross-border conversions, mergers and divisions may take place in relation to Portuguese companies incorporated under the corporate types of public limited liability companies (sociedade anónima), private limited liability companies (sociedade por quotas) and private partnerships with a share capital (sociedade em comandita por ações). We note that these corporate types represent the vast majority of the companies incorporated in Portugal.

On the contrary, these cross-border transactions cannot take place with regards to (i) collective investment undertaking with transferable securities under a corporate form (organismos de investimento colectivo com valores mobiliários sob forma societária), (ii) companies under liquidation procedures that have started distributing assets to their shareholders, (iii) companies that are subject to the resolution instruments, powers and mechanisms provided for in Title IV of Directive 2014/59/EU of the European Parliament and of the Council of May 15, 2014, or the corresponding national laws, or in Title V of Regulation EU 2021/23 of the European Parliament and of the Council, of December 16, 2020, as well as (iv) companies under insolvency proceedings or under preventive restructuring regimes (this last exception applies only to cross-border transformations).

Timing

Each type of cross-border transaction entails a specific procedure to be undertaken by the participating companies. This notwithstanding, such procedures contain several common features, and comprise, generally speaking, the following steps:

1. Preparation of a transaction draft, describing the key terms and conditions of the transaction (which are expressly foreseen in the law), to be registered with the local Commercial Registry and subsequently published;
2. Preparation of a report for the participating companies’ shareholders and employees, explaining the legal and economic justifications of the transaction as well as its impacts on them;
3. Obtainment of reports on the transaction draft issued by the companies’ statutory auditor (except in case of cross-border transformations) and by a statutory auditor or an audit firm;
4. 3 (three) months deadline for the creditors of the participating companies to:
   • In the case of cross-border mergers, file a judicial opposition to the merger (which prevents the definitive registration of the merger); and
   • In the case of cross-border divisions and transformations, file a judicial request for the participating companies to provide adequate security to guarantee prior credits (which shall be conditional upon the final registration of the division or the transformation);
5. Approval of the transaction draft by the shareholders of the participating companies;
6. Prior legality check with the Commercial Registry and obtainment of the pre-transaction certificate; and
7. Definitive registration of the transaction with the relevant Commercial Registry.

Considering the foregoing, in terms of timing, in case of a simplified cross-border transaction, i.e., involving companies in which the reports referred in paragraphs ii) and iii) above are effectively waived, it may be expected for a cross-border transaction to take around 6 months (assuming the Commercial Registry complies with the deadline for the legality check, as referred below).

Competent authority and pre-transaction certificate

In Portugal, the competent authority in the supervision of cross-border transactions, as regards Portuguese companies, is the Commercial Registry. This role has been performed by the Commercial Registry since the introduction of cross-border mergers in Portuguese law and is now expanded to cross-border conversions and divisions.

This supervisory competence of the Commercial Registry consists, most notably, in a prior legality check, which includes verifying (i) the fulfilment of the legally required prior acts and formalities by the participating Portuguese companies and (ii) that envisaged transaction does not pursue abusive, fraudulent or criminal purposes.

The general deadline for the completion of this prior legality check is 3 (three) months counted from the moment the Commercial Registry is provided with all the legally required documents. If, within the context its assessment, the Commercial Registry deems necessary to obtain additional information or to perform further investigations, the 3 (three) months deadline may be extended, for an additional period of 3 (three) months.

If successful, the completion of the prior legality check shall result in the issuance of a pre-transaction certificate, which is required for the final registration and completion of the cross-border transaction.

Effective date, method and manner of inbound cross-border transactions

In Portugal, cross-border transactions shall produce their effects with the definitive registration with the relevant Commercial Registry.

The definitive registration of an inbound cross-border transaction is notified by the Portuguese Commercial Registry, on its own initiative, to the registry services of the EU countries of the companies participating in the transaction, via the EU interconnected registry system.

Key local contacts

Should you have any questions or in case you require any assistance in this regard, please do not hesitate to contact us.