PORTUGAL Law and Practice Contributed by: Manuel Magalhães, Mafalda Ferreira Santos, Francisco Boavida Salavessa and Maria José Lourenço, Sérvulo & Associados
After recognition, the decisions rendered within a for - eign insolvency proceeding may be enforced in Por - tugal. 6.5 Co-Ordination in Cross-Border Cases As per the information available, no protocols or oth - er arrangements have been entered into with foreign courts to co-ordinate cross-border proceedings. However, within the EU, Regulation (EU) 2015/848 establishes some co-ordination mechanisms – name - ly, concerning cases where main and secondary insol - vency proceedings in relation to the same debtor co-exist, which may occur when the debtor has an establishment within the territory of a member state other than the one where the insolvency proceeding was initiated. 6.6 Foreign Creditors Under insolvency or restructuring proceedings, for - eign creditors are dealt with in the same way as Por - tuguese creditors, except for specific matters. The most relevant difference concerns the rules regarding creditors’ notification. 7. Duties and Liability of Directors and Officers 7.1 Duties of Directors General Statutory Duties Directors of companies have the following general statutory duties. Duty of care The director shall: • be available; • have the skills and knowledge of the activity of the company adequate to their duties; and • use the diligence of a cautious, thorough and organised businessperson in the performance of
holders (persons relevant for the sustainability of the company, such as its employees, clients and, last but not least, creditors). Shift in Directors’ Loyalty and Fiduciary Duties It is generally understood that an insolvency or a potential insolvency situation should shift the direc - tors’ loyalty and fiduciary duties more towards the creditors’ interests and the interests of other stake - holders, which should outweigh, for instance, the interests of the shareholders of the company. There is no exact determination of when this shift in the interests the director must take into account occurs. However, the following apply. • An insolvent company has a legal obligation to file for insolvency within 30 days of the date it becomes (or should reasonably have become) aware of its situation of insolvency as a result of the cash-flow test (being unable to perform its obligations as they fall due). The initiative for filing for insolvency is the responsibility of the governing body in charge of the company’s administration (eg, the board of directors) or, if such body does not exist, of any of its directors. If the company fails to timely submit the insolvency request, there is a presumption (which can be refuted) of the existence of serious wilful misconduct by the legal or de facto directors, which can lead to the qualifi - cation of the insolvency as culpable. • According to the CIRE, relevant hints of insolvency include failure to pay tax debts, contributions to social security, debts arising from employment contracts, rental of any type, or instalments of the purchase price or mortgage loan concerning the premises where the debtor has its activity or regis - tered office. However, other events can have simi - lar effects, such as the failure of the company to maintain certain permits or authorisations required for the pursuit of its activity, failure to pay an insur - ance premium required for an activity, etc. • From a corporate law point of view, certain events related to the deterioration of the financial situation of the company may require the board of directors to take certain actions. For instance, where half of the share capital has been lost, the directors must immediately inform the shareholders of the situa-
their functions. Duty of loyalty
The director shall act in the interest of the company, giving heed to the long-term interests of partners and considering the interests of the other company stake -
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