PORTUGAL Law and Practice Contributed by: Manuel Magalhães, Mafalda Ferreira Santos, Francisco Boavida Salavessa and Maria José Lourenço, Sérvulo & Associados
tion in a shareholders’ meeting, so that they can take the measures deemed appropriate. 7.2 Personal Liability of Directors Under Portuguese law, two different liability regimes may apply in an insolvency context. Company Law Liability Under the company law regime, directors are person - ally and jointly liable vis-à-vis creditors if the company becomes insolvent as a consequence of a breach of provisions aimed at protecting creditors’ interests. Insolvency Law Liability According to the regime set out by the CIRE, the insolvency of a company can be qualified as culpable or fortuitous. An insolvency is considered fortuitous where it was triggered by the debtor’s distressed financial situation that arose in the normal course of business. On the other hand, as a general rule, an insolvency is qualified as culpable where the situation was created or aggravated as a result of the conduct, by action or omission, involving wilful misconduct or gross negligence, of the company or of its directors, in the three years preceding the beginning of the insol - vency proceedings. Moreover, the CIRE establishes presumptions juris et de jure, whereby insolvency is always qualified as culpable. This is the case when the directors of the company have: • destroyed, damaged, rendered unusable, hidden or made disappear, in whole or in substantial part, the company’s assets; • artificially created or aggravated damages or liabili - ties, or reduced profits, causing, in particular, the execution by the company of ruinous contracts for the benefit of the company’s directors or people specially related to them; • purchased goods on credit, reselling them or deliv - ering them in payment for substantially less than the current price before satisfying the obligation towards the credit lender; • used the company’s assets for personal benefit or for the benefit of third parties; • exercised under the guise of the legal personality of the company an activity for personal benefit or
for the benefit of third parties, and to the detriment of the company; • used the credit or assets of the company for per - sonal benefit or for the benefit of third parties and to the detriment of the company – namely, to pro - mote another company in which they have direct or indirect interests; • pursued loss-making management, for personal benefit or for the benefit of third parties, despite knowing or having ought to have known that this would likely lead to the insolvency of the company; • failed to comply with the obligation of keeping organised accounting, maintained fictitious or double accounting of the company, or committed a fault that hindered the understanding of the finan - cial situation of the company; or • repeatedly violated their obligations to be at court when duly summoned and to co-operate with the insolvency proceedings. The insolvency administrator has exclusive legal standing to bring and enforce: • legal actions for liability that is owed by legal and de facto directors to the debtor; and • legal actions seeking compensation for damages caused to the generality of insolvency creditors due to the reduction of the debtor’s assets forming part of the insolvent estate, whether such reduction occurred before or after the declaration of insol - vency. 7.3 Duties and Personal Liability of Officers Besides directors (legal or de facto), only chartered accountants and statutory auditors are expressly mentioned by the relevant legal provision as persons that may be affected by the qualification of the insol - vency as culpable, although the indication of the per - sons is not supposed to be exhaustive (even where insolvency is qualified as culpable when the situation was created or aggravated as a result of the conduct, by action or omission, of the company or of its direc - tors). Members of the supervisory board are also subject to care and loyalty duties, and to company law liabil - ity under the same terms as directors, as described in 7.2 Personal Liability of Directors . More specifi -
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