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aware<br />

Newsletter 32<br />

May | 2010<br />

<strong>Corporate</strong> <strong>and</strong> <strong>Commercial</strong> <strong>Law</strong><br />

CORPORATE, MERGERS AND ACQUISITIONS GROUP<br />

Liability of parent-companies (with registered office<br />

outside Portugal) in relation to its Portuguese<br />

daughter companies | 2/3<br />

Abusive dismissal of Directors<br />

- Reality or fiction? | 7/8<br />

Directors’ remuneration disclosure<br />

– The New Rules | 4-6<br />

State Budget for 2010:<br />

Changes to corporate acts | 8/9<br />

EDITORIAL<br />

Welcome to the second edition of the <strong>Corporate</strong>, Mergers <strong>and</strong><br />

Acquisitions Group (CMAG) <strong>Aware</strong>, for 2010. This Newsletter<br />

is composed of four articles, which we hope will be<br />

useful information to retain.<br />

On the first article, we refer to the responsibilities<br />

regime of foreign parent companies for the liabilities of the<br />

affiliated companies, analysing if a totally dominant<br />

company having its registered office outside Portugal will<br />

be or not subject to the duties <strong>and</strong> charges implemented<br />

by the norms regarding affiliate companies, specifically<br />

concerning its relation with a Portuguese daughter company.<br />

On the third article, we refer to the abusive dismissal of<br />

directors, mentioning recent jurisprudence about this matter.<br />

Finally, we give knowledge of the stamp duty abolishment<br />

on certain corporate acts, as foreseen on the 2010 National<br />

Budget, now published.<br />

Enjoy your reading.<br />

The CMAG Team<br />

Following, we discuss the new rules regarding the director’s<br />

remuneration disclosure, by means of <strong>Law</strong> 28/2009, whose<br />

effects, on this matter, only now are beginning to surface,<br />

with the approval of the annual accounts regarding 2009.


aware<br />

Liability of parent-companies (with registered office outside<br />

Portugal) in relation to its Portuguese daughter companies<br />

António Juzarte Rolo (<strong>Law</strong>yer)<br />

Foreign investment in Portugal often involves a<br />

vehicle company created under Portuguese law<br />

which would have its capital fully <strong>and</strong> ab initio<br />

held by a foreign company, <strong>and</strong> through which investments<br />

made in Portugal would be channelled.<br />

In this sense, <strong>and</strong> from the foreign investor’s point of<br />

view, the issue of the liability of the totally dominant<br />

company before third parties is of crucial importance.<br />

We will therefore analyse, in a succinct form, the regime<br />

of affiliated companies, which is regulated by the<br />

provisions of the Portuguese <strong>Commercial</strong> Company<br />

Code (the “CCC”), focusing on the territorial application<br />

of these rules to totally dominant foreign companies 2 .<br />

Liability of a parent company for the obligations of<br />

its daughter companies<br />

The liability regime of a parent company for the<br />

obligations of fully controlled daughter companies<br />

is regulated by reference, in the CCC, by article<br />

501 (Liability to the subordinate company’s<br />

creditors) of this text, which covers the aspect of<br />

liability to the subordinate company’s creditors 3 .<br />

created before or after the celebration of a subordination<br />

contract, <strong>and</strong> until the end if its term.<br />

Following the above, article 501 should be adapted<br />

to the reality of companies which have total control<br />

over others. It should therefore be read that<br />

a totally controlling company: (i) is responsible,<br />

as of the time of total control, for obligations incurred<br />

when there is no group relationship; (ii) is<br />

responsible for all obligations incurred during the<br />

total control; (iii) <strong>and</strong> that such liability will end<br />

with the termination of the group relationship;<br />

• The liability of the controlling company<br />

cannot be invoked sooner than 30 days<br />

after the subordinate company’s default;<br />

• It is not possible to initiate a procedure against<br />

the controlling company for execution of an<br />

enforceable right against the subordinate company.<br />

Despite the fact that a subordination contract is<br />

a rarely used instrument, when we compare it to<br />

groups that operate in total ownership of their affiliates,<br />

the truth is that what we are discussing was directly<br />

provided for in a subordination contract, which<br />

therefore applies to companies related to a group<br />

operating in total ownership, by legal reference. 4<br />

According to the terms of the above referred<br />

statute:<br />

• A dominant company is responsible 5 for the<br />

obligations of a subordinate company, whether<br />

(continuation on page 3)<br />

1. The company which directly or indirectly controls another which has no other shareholders forms a group with it (cf. article<br />

489.1 of the Portuguese <strong>Commercial</strong> Company Code).<br />

2. This article will not focus on other areas of the law, nor on the provisions of Chapter VI of the CCC (e.g. other norms included<br />

in the CCC, norms regarding groups of companies regulated by the Portuguese Securities Code, in the General Regime of<br />

Credit Institutions <strong>and</strong> Financial Companies, in the Insolvency <strong>and</strong> <strong>Corporate</strong> Recovery Code, in the Income Tax for <strong>Corporate</strong><br />

Entities, or in the Labour Code).<br />

3. Cf. article 493.1 of the CCC, which defines a subordinate company as a company which, by contract, subordinates the<br />

management of its activity to the direction of another company, whether it controls it or not.<br />

4. Cf. article 491.º of the CCC.<br />

5. Indirect Solidary responsibility (covering the obligation for the dominant company to be responsible for the dominated<br />

one), limited <strong>and</strong> objective (cf. Ana Rita Gomes de Andrade, in “A Responsabilidade da Sociedade Totalmente Dominante”,<br />

1st Edition, December 2009, Almedina, pages 81, 83, 88 <strong>and</strong> 91).<br />

www.abreuadvogados.com<br />

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aware<br />

Liability of parent-companies (with registered office outside<br />

Portugal) in relation to its Portuguese daughter companies<br />

(continuaTION)<br />

The rule set forth in article 502 concerning liability<br />

for the losses of the subordinate company, similarly<br />

to article 501, is also directly applicable to companies<br />

of a group by way of a subordination contract,<br />

but also, by legal reference, to companies<br />

of a group whose relationship is by total control.<br />

Under the terms of article 502 (Liability for losses<br />

of the subordinate company), the subordinate<br />

company has a right to impose that the controlling<br />

company compensates for annual losses that, for<br />

any reason, are incurred during the subordination<br />

contract period, as long as they are not covered by<br />

the reserves comprised during the same period.<br />

The mentioned liability can only be invoked after<br />

the term of the subordination contract, but is however<br />

invoked during the time period of the contract<br />

if the subordinate company is declared bankrupt.<br />

registered office outside Portugal will not be subject<br />

to the duties <strong>and</strong> charges implemented by the<br />

norms regarding affiliate companies, specifically<br />

concerning its relation with a Portuguese daughter<br />

company, as provided by the previously mentioned<br />

articles 501 <strong>and</strong> 502 of the CCC in terms<br />

of liability to the subordinate company’s creditors<br />

<strong>and</strong> for the losses of the subordinate company.<br />

Territorial limitation<br />

Turning back to the topic in discussion, the rules<br />

contained in the referred articles 501 <strong>and</strong> 502 of<br />

the CCC, in our opinion, only apply to companies<br />

which have their registered offices in Portugal.<br />

In fact, <strong>and</strong> in accordance with article 481 of the<br />

CCC which regulates the scope of application of the<br />

chapter on affiliate companies (that includes companies<br />

which have a relation of total control), the<br />

chapter in question only applies to companies<br />

which have their registered offices in Portugal,<br />

except, <strong>and</strong> this being relevant to the issue<br />

under discussion, in event of the incorporation of a<br />

limited liability company, under the terms of numbers<br />

1 <strong>and</strong> 2 of article 488 of the CCC, by a company<br />

having its registered office outside Portugal 6 .<br />

On the other h<strong>and</strong>, article 489.4(a) of the CCC provides<br />

that the group relationship will terminate if<br />

the dominant company or the controlled company<br />

ceases to have its registered office in Portugal.<br />

From the literal <strong>and</strong> systematic interpretation of<br />

the above mentioned provisions, <strong>and</strong> disregarding<br />

the criticisms made to the Portuguese system<br />

referred to hereunder, the truth is that in our<br />

opinion, a totally dominant company having its<br />

It should however be noted that, in relation to this<br />

matter, there are legal opinions <strong>and</strong> commentaries<br />

which find that the regime established by Portuguese<br />

law confers a favourable treatment to foreign<br />

groups 7 , threatening the communitarian principle<br />

of non-discrimination on grounds of nationality,<br />

<strong>and</strong> the constitutional principles of equal treatment<br />

<strong>and</strong> fair competition between companies.<br />

It should finally be clarified that the wording of<br />

article 481 of the CCC 8 , which was added with<br />

the 2006 revision of the CCC, cannot, in our<br />

opinion, mean that in these cases the regime of<br />

norms concerning affiliated companies is applicable<br />

to a group constituted under these terms.<br />

The 2006 revision merely allows for a foreign<br />

company to create a limited liability company<br />

in Portugal for which it would at first be the<br />

only shareholder, hence ratifying the practice,<br />

accepted by the majority of Portuguese notaries,<br />

of allowing the incorporation of a subsidiary<br />

which is fully controlled by a foreign company 9 .<br />

6.<br />

Cf. article 481.2(d).<br />

7. criticism with which we fully agree with.<br />

8. Cf. article 481.2(d): “(d) The incorporation of a limited liability company, under the terms of 1 <strong>and</strong> 2 of article 488, by a<br />

company who has its registered office outside Portugal”.<br />

9. This was, under the previous terms of the CCC, only allowed by a Portuguese company.<br />

www.abreuadvogados.com<br />

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aware<br />

DIRECTORS’ REMUNERATION DISCLOSURE – THE NEW RULES<br />

António Pina (<strong>Law</strong>yer)<br />

Notwithst<strong>and</strong>ing the fact that <strong>Law</strong> 28/2009 already<br />

entered into force in June of last year,<br />

the truth is that only now its practical effects<br />

are beginning to surface, with the approval of<br />

the annual accounts regarding 2009, which<br />

now include, for the very first time, the m<strong>and</strong>atory<br />

disclosure of the individual remuneration of<br />

each director of companies qualified as public<br />

interest entities. The impact of these new disclosure<br />

rules seems to have been quite significant,<br />

as it resulted in an intense public debate on<br />

the amounts earned by some directors of listed<br />

companies, especially on those where the Portuguese<br />

State holds shares. It is therefore worthwhile<br />

to revisit the rules established by this law.<br />

Previously to <strong>Law</strong> 28/2009, the disclosure of the<br />

remuneration of members of the board of directors<br />

of listed companies was only m<strong>and</strong>atory<br />

on a consolidated basis, without need of disclosing<br />

the individual remuneration earned by each<br />

director. Although CMVM (the Portuguese Securities<br />

Market Regulator) recommended companies<br />

to disclose remunerations on an individual<br />

basis, most of the companies did not follow such<br />

recommendation <strong>and</strong> opted to only disclose the total<br />

combined remuneration of the board of directors.<br />

<strong>Law</strong> 28/2009 established a whole new legal<br />

framework for the approval <strong>and</strong> disclosure of a<br />

remuneration policy for the board of directors<br />

<strong>and</strong> supervisory board. This new legal framework<br />

is applicable to all entities that are qualified<br />

as being of public interest, which include,<br />

among others 1 , the issuers of shares admitted<br />

to trading on a regulated market, credit institutions,<br />

investment funds, real estate investment<br />

funds, venture capital companies <strong>and</strong> funds,<br />

financial companies, <strong>and</strong> state owned companies<br />

which, during two consecutive years,<br />

exceed a business turnover of € 50,000,000<br />

or total net assets above € 300,000,000.<br />

The legal framework established by <strong>Law</strong> 28/2009<br />

can be divided in two main obligations: the<br />

duty to approve a remuneration policy <strong>and</strong> the<br />

duty to disclose the annual remuneration of<br />

the board of directors <strong>and</strong> supervisory board.<br />

The first obligation consists in a duty of<br />

public interest entities to submit, yearly, to the<br />

respective general meetings of stakeholders, the<br />

approval of a remuneration policy regarding<br />

its board of directors <strong>and</strong> supervisory board.<br />

(continuation on page 5)<br />

1.<br />

The complete list of entities qualified by <strong>Law</strong> 28/2008 as being public interest entities is the following: (i) issuers of shares<br />

admitted to trading on a regulated market; (ii) credit institutions subject to m<strong>and</strong>atory supervision of accounts; (iii) investment<br />

funds subject to the collective investment undertakings legal framework; (iv) real estate funds subject to the real estate investment<br />

funds legal framework; (v) venture capital companies <strong>and</strong> venture capital funds; (vi) securitization companies <strong>and</strong> securitization<br />

funds; (vii) insurance <strong>and</strong> reinsurance companies; (viii) holding companies, whenever such companies hold, directly<br />

or indirectly, shares corresponding to a majority of votes in a credit institution subject to m<strong>and</strong>atory supervision of accounts; (ix)<br />

holding companies in insurance undertakings <strong>and</strong> managing companies of mixed insurance participations; (x) pension funds;<br />

(xi) state owned companies which, during two consecutive years, exceed a business turnover of € 50.000.000 or total net assets<br />

higher than € 300.000.000; (xii) financial companies; <strong>and</strong> (xiii) managing companies of venture capital funds <strong>and</strong> pension funds.<br />

www.abreuadvogados.com<br />

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aware<br />

DIRECTORS’ REMUNERATION DISCLOSURE – THE NEW RULES (continuation)<br />

This remuneration policy must, at least, include<br />

information on: (i) the mechanisms established<br />

to allow a convergence between the board of<br />

directors interests <strong>and</strong> the company interests;<br />

(ii) the criteria for the definition of the variable<br />

components of the remuneration; (iii) shareallocation<br />

plans <strong>and</strong> stock option plans for the<br />

board of directors <strong>and</strong> supervisory board; (iv) the<br />

possibility of the payment of the variable component<br />

of the remuneration only take place, totally<br />

or partially, after the assessment of the accounts<br />

regarding the entire tenure; <strong>and</strong> (v) the mechanisms<br />

for the limitation of the variable component<br />

of the remuneration, in the case of a decline<br />

of the company performance in the last assessed<br />

financial year or whenever such decline becomes<br />

expected during the course of a financial year.<br />

The duties established by <strong>Law</strong> 28/2009 are supplemented<br />

by several regulations, namely by<br />

CMVM Regulation 1/2010, which is applicable<br />

to all issuers of shares admitted to trading in a<br />

regulated market <strong>and</strong> subject to the Portuguese<br />

law; by Bank of Portugal Notice 1/2010, applicable<br />

to credit institutions, financial companies<br />

<strong>and</strong> branches of financial companies or credit<br />

institutions with registered office in other countries;<br />

<strong>and</strong> by ISP Regulation 5/2010-R, applicable<br />

to all insurance or reinsurance undertakings<br />

<strong>and</strong> pension funds management companies<br />

subject to the supervision of the ISP (the Portuguese<br />

Insurance <strong>and</strong> Pension Funds Supervisory<br />

Authority) 2 . These regulations establish a<br />

set of additional information requirements both<br />

regarding the approval of the remuneration<br />

policy <strong>and</strong> the annual remuneration disclosure.<br />

The second obligation consists on a duty of public<br />

interest entities to disclose both the approved remuneration<br />

policy <strong>and</strong> the annual remuneration<br />

of the board of directors <strong>and</strong> supervisory board,<br />

on an aggregate basis <strong>and</strong> on an individual basis,<br />

i.e. indicating the remuneration earned by each<br />

director or member of the supervisory board. This<br />

disclosure must be made on the annual report<br />

<strong>and</strong> financial statements approved each year, or<br />

in the corporate governance report in the case of<br />

issuers of shares traded in a regulated market.<br />

In this respect, CMVM Regulation 1/2010 adds<br />

to the duties already imposed by <strong>Law</strong> 28/2008,<br />

a duty to disclose the fixed <strong>and</strong> variable remuneration,<br />

<strong>and</strong> as to the latter, its various components,<br />

the portion that has been deferred <strong>and</strong><br />

the portion that has already been paid. In addition,<br />

with effects from 1 January 2011 onwards,<br />

this regulation establishes a duty to disclose the<br />

remuneration received from other companies of<br />

the same group <strong>and</strong> any pension rights acquired.<br />

(continuation on page 6)<br />

2.<br />

The Bank of Portugal Notice 1/2010 <strong>and</strong> ISP Regulation 5/2010-R will only be applicable to the financial years starting<br />

in or after 1 January 2010.<br />

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aware<br />

DIRECTORS’ REMUNERATION DISCLOSURE – THE NEW RULES (continuation)<br />

Concerning the Bank of Portugal Notice 1/2010<br />

<strong>and</strong> the ISP Regulation 5/2010-R, they both<br />

establish additional <strong>and</strong> substantially more detailed<br />

information duties, namely regarding the<br />

criteria used for establishing the remunerations.<br />

These regulations also extend the information<br />

duties to the remuneration of employees that,<br />

even though are not members of the board of<br />

directors or supervisory board, are entitled to<br />

a variable remuneration <strong>and</strong> occupy key-functions<br />

or functions that may have a material impact<br />

on the risk profile of the respective entity.<br />

The violation of the duty to approve <strong>and</strong> disclose<br />

a remuneration policy <strong>and</strong> the duty to disclose<br />

the annual remuneration of the board of<br />

directors <strong>and</strong> supervisory board may trigger a<br />

penalty ranging from € 10,000 to € 5,000,000,<br />

depending on the type of entity at stake.<br />

This new legal framework of disclosure regarding<br />

the remuneration of directors was established under<br />

a setting strongly influenced by the financial<br />

crisis, in which the directors’ remuneration has repeatedly<br />

been pointed out as one of the issues that<br />

contributed to the crisis, based on the argument<br />

that many of the high risks assumed by directors<br />

may have been strongly motivated by the attempt<br />

to achieve objectives that would trigger the payment<br />

of a remuneration linked to performance.<br />

the public interest entities to assume a more<br />

thoughtful <strong>and</strong> careful posture when establishing<br />

remunerations, given that, especially in the<br />

case of the entities subject to the Bank of Portugal<br />

Notice <strong>and</strong> to the ISP Regulation, such<br />

entities will need to fully explain the criteria<br />

used for establishing the remuneration <strong>and</strong> its<br />

adequacy in relation to the company’s interests.<br />

If, on one h<strong>and</strong>, the disclosure of the individual<br />

remuneration of directors is likely to result<br />

in a certain social tension, leading to inevitable<br />

comparisons between the directors’ remuneration<br />

<strong>and</strong> the remaining employees’ remuneration,<br />

the truth is that, on the other h<strong>and</strong>, this<br />

new legal framework will have, at least, the virtue<br />

of allowing an higher transparency on this<br />

subject <strong>and</strong> of imposing a more thoughtful <strong>and</strong><br />

careful posture in the process for the definition<br />

of remunerations in public interest entities.<br />

The objectives of this new legal framework seem to<br />

be not only to create mechanisms that allow a higher<br />

degree of transparency, through a much more<br />

detailed disclosure of the directors’ remuneration,<br />

but also to create mechanisms that will compel<br />

www.abreuadvogados.com<br />

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aware<br />

Abusive dismissal of Directors - Reality or fiction?<br />

José Carlos Vasconcelos (<strong>Law</strong>yer)<br />

Article 403.º nº1 of the Portuguese Companies<br />

Code (PCC) establishes that “Any<br />

member of the board of directors may be<br />

dismissed at any time by means of a resolution<br />

adopted by the General Meeting”.<br />

This rule of the free dismissal is based on the<br />

fact that is essential that the majority of the<br />

shareholders has confidence in the Directors<br />

<strong>and</strong> that when this confidence is lost, whichever<br />

the reason, they may be substituted, without<br />

prejudice of the existence of a indemnity right<br />

when there is no just cause for the dismissal.<br />

Nevertheless, an issue that has been argued<br />

regarding this matter is to know whether the<br />

right of free dismissal finds a limit whenever such<br />

resolution is intended to grant special benefits for<br />

a shareholder resulting in a loss for the company<br />

or any other shareholder, or simply placing the<br />

company or other shareholders at risk. In such<br />

hypothesis, the resolution would be voidable, in<br />

the terms of paragraph b) nº 1 of the article 58º<br />

of the PCC. In other words, if the resolution is proven<br />

to be abusive does it affect its own validity?<br />

The answer to this question has a significant<br />

practical interest, as it results from some<br />

recent judgments, including some decided by High<br />

Courts, mainly in actions for provisional remedies<br />

destined to suspend the resolution of dismissal.<br />

A judgment of the Superior Court of Lisbon dated<br />

November 2009, available at www.dgsi.pt contributed<br />

in a positive way for this quarrel, helping<br />

to clarify some aspects of the application to these<br />

cases of the institute of the “abuse of right”.<br />

According to the referred judgment, being in theory<br />

admissible the possibility of the dismissal being<br />

abusive, it is necessary to prove facts that reveal<br />

the effectively abusive <strong>and</strong> harmful character<br />

of the exercise of the vote by the majority that<br />

approved the resolutions, being then filled article<br />

58º, nº 1, b), of the Portuguese Companies Code.<br />

For some authors, the answer cannot be other<br />

than negative, so that it may be guaranteed<br />

that the dismissal is in fact free <strong>and</strong> the decision<br />

of the shareholders is final. Moreover, there<br />

are mechanisms of reaction legally established in<br />

the case there is no just cause for the dismissal,<br />

corresponding to the indemnity right above<br />

referred, <strong>and</strong> therefore the injured party would<br />

not be unprotected in case the dismissal is abusive,<br />

regardless a just cause was invoked or not.<br />

For others, the exercise of the right of dismissal,<br />

similarly to any another right, will always have<br />

to be limited by good faith, as there is no special<br />

rule - namely in the PCC - that excludes from<br />

those limits the right of dismissal. On the contrary,<br />

an abusive resolution would fulfill the hypothesis<br />

of granting special benefits for a shareholder<br />

resulting in a loss for the company or other<br />

shareholder <strong>and</strong>, as such, would be voidable.<br />

However, for that purpose it is not enough<br />

to prove of the existence of unease<br />

between the shareholders of a company.<br />

According to the judgment: “the almost tangential<br />

balance of the respective shareholding, even<br />

though it may be, obviously, in the centre of the<br />

divergences generated in the life of the company,<br />

it is not, by itself, sufficient to conclude that the<br />

underlying reasons for the exercise of the right<br />

of vote had to do, exclusively or predominantly,<br />

with the purpose of penalizing the dismissed Director<br />

<strong>and</strong> benefit, personally <strong>and</strong> illegitimately,<br />

who voted in favor of the resolution of dismissal”.<br />

(continuation on page 8)<br />

www.abreuadvogados.com<br />

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Abusive dismissal of<br />

Directors - Reality or<br />

fiction? (continuaTION)<br />

State Budget for 2010:<br />

Changes to corporate acts<br />

Marta Romano de Castro (<strong>Law</strong>yer)<br />

In fact, being the company managed by different<br />

groups of shareholders - in the case, by two<br />

families - “it is inevitable that when a serious<br />

disagreement occurs in the conduction of the<br />

company destiny, each group sets its own position<br />

<strong>and</strong> interests. The Court recognizes that this<br />

“arises from the nature of life <strong>and</strong> results, basically,<br />

of the option that was underlying to the<br />

constitution of the company <strong>and</strong> to the composition<br />

of the respective shareholding”. The Court<br />

concludes that “it does not mean that the result<br />

of the voting - legitimate <strong>and</strong> according to the<br />

lack of balance of the sides - has necessarily to<br />

do with the attainment of special benefits for<br />

some <strong>and</strong> with iniquitous prejudice for others”,<br />

what would be translated in “motivations <strong>and</strong><br />

purposes beyond the scope of the company”.<br />

Therefore, it is certain that the hypothesis of<br />

an abusive dismissal is admitted whenever it<br />

is predominantly based in reasons beyond the<br />

scope of the company. However, as it occurred<br />

in the abovementioned judgment, it will be very<br />

difficult or even almost impossible to proof the<br />

motivation predominantly beyond the scope<br />

of the company <strong>and</strong> consequently abusive <strong>and</strong><br />

voidable, which will most probably relegate to<br />

the field of fiction such abusive dismissals.<br />

The 2010 National Budget - <strong>Law</strong> n.º 3-B/2010,<br />

published on April 28, 2010 - abolished the<br />

stamp duty (SD) on certain corporate acts.<br />

Some of these funds, which are currently<br />

a part of a company’s daily life, will<br />

disappear <strong>and</strong> allow for a debureaucratisation<br />

of day to day acts of individuals <strong>and</strong> companies.<br />

For example, the SD will no longer be charged<br />

on contracts for electricity, water, services,<br />

as well as on those for the transfer of participations<br />

or for the purchase <strong>and</strong> sale of<br />

shares, but also on employment contracts.<br />

One of the major changes concerns the abolishing<br />

of SD on capital contributions to a commercial<br />

company. Through this, the Government aims at<br />

extending exemptions to capital contributions<br />

made in kind, given that those made with cash<br />

were already not taxed. This modification put an<br />

end to a constant <strong>and</strong> long-lasting dispute between<br />

the major Portuguese business groups <strong>and</strong><br />

the Government regarding stamp duty charged<br />

on capital contributions for the incorporation<br />

of a company, as well as on capital increases.<br />

Stamp duty payment will also be abolished on<br />

notary acts, such as notarized documents,<br />

wills, powers of attorney, qualifications of heirs<br />

or any other particular contract. The provision<br />

extends also to acts made by conservatories,<br />

judicial secretaries, technical secretaries<br />

for justice, <strong>and</strong> entities or professionals<br />

which are competent to authenticate specific<br />

documents, such as lawyers of paralegals.<br />

Company books, m<strong>and</strong>atory under commercial<br />

law will also no longer be subject to stamp<br />

duty. The opening <strong>and</strong> closing of these books<br />

will therefore not be subject to any form of<br />

control, shifting the responsibility to ensure<br />

their legality <strong>and</strong> authenticity to the management<br />

or the company board of directors.<br />

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8<br />

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aware<br />

State Budget for 2010: Changes to corporate acts<br />

(continuation)<br />

From the general companies’ point of view, these<br />

changes are positive, even though they do not<br />

represent a significant reduction of their tax<br />

charges.<br />

In fact:<br />

In summary, we can conclude by saying<br />

that the objective of this long term<br />

goal is more a way to debureaucratise the<br />

relations between companies <strong>and</strong> the State<br />

than an effective reduction of fiscal costs.<br />

According to the budget execution for 2009, the<br />

SD produced 1,65 billion euros, which represents<br />

about 5,4% of the total fiscal income. Within<br />

these 5,4%, we assume that the operations which<br />

contributed most to the income (in terms of<br />

dimension <strong>and</strong> value that are usually involved)<br />

were banking operation, insurance premiums,<br />

purchase <strong>and</strong> sale of real estate <strong>and</strong> loans. Nevertheless,<br />

since the cutbacks proposed do not affect<br />

these operations, one can estimate that the impact<br />

on the total fiscal income will be very reduced.<br />

By these means, the Government, in the long<br />

term, wants to limit the charging of stamp duty<br />

to financial operation <strong>and</strong> patrimonial transfers,<br />

eliminating all other forms of such revenue.<br />

This <strong>Aware</strong> is not intended to be a comprehensive review of all developments in the law <strong>and</strong> practice, or to cover all aspects that are<br />

referred. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions.<br />

For more information please contact us at apdc.gsfa@abreuadvogados.com | Visit our website www.abreuadvogados.com<br />

© ABREU ADVOGADOS 2010<br />

2<br />

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