PORTUGAL Law and Practice Contributed by: Bernardo Abreu Mota, David Oliveira Festas and Francisco Albuquerque Reis, CS’Associados
Compliance Levels Similarly, great emphasis is placed on the analysis and assessment of compliance levels under material business agreements or other arrangements deemed critical to the activity of the target company (eg, con - cession agreements or arrangements with key clients). Labour matters are also a traditional concern in terms of assessing the legal framework applicable to the workforce allocated to the business, as well as the potential for employee restructuring and cost-saving measures in a post-transaction scenario. ESG matters have increasingly gained attention among investors when reviewing potential business opportunities, justifying detailed legal and technical due diligence. An example of this is the new chapter on sustainability added to the IPCG Corporate Gov - ernance Code in 2023. In addition, following the approval of the European General Data Protection Regulation (GDPR) in 2016, and particularly the material revision of the potential sanctions in case of infringement, due diligence on GDPR compliance has become one of the most criti - cal and key sections in any target review. Other Areas of Focus Legal due diligence also traditionally centres on: • corporate matters, regarding the adequate incor - poration and registration status of the target com - pany and ownership of its share capital; • real estate, mostly regarding the ownership and licensing of relevant real estate assets and any existing encumbrances; • financing matters, with particular attention paid to compliance levels and cross-default and accelera - tion clauses under financing arrangements; • insurance, assessing the existence of adequate insurance coverage under the applicable legal provisions; • information technology matters, with a focus on software licensing; and • compliance and criminal matters, including internal policies on AML, anti-bribery and whistle-blowing.
mation. The Portuguese Securities Commission has published detailed guidance relating to the disclosure of inside information and the extent to which withhold - ing the disclosure of negotiations may be an accept - able market practice. In light of the above, although the law is not clear, in certain cases (although not as a rule) market disclo - sure may only occur once a binding letter or defini - tive agreement has been signed, notwithstanding the need to disclose such information to the Portuguese Securities Commission on a strictly confidential basis. In the event of a takeover offer, the Portuguese Secu - rities Code obliges all parties involved (including the target, if applicable) not to disclose any information until the preliminary announcement of the offer has been published. 5.2 Market Practice on Timing Market practice is substantially aligned with legal requirements, as the Portuguese Securities Commis - sion may suspend trading of the relevant securities until the relevant information has been duly disclosed if it considers that material price-sensitive information relating thereto is being unreasonably withheld, or if it believes that such withholding is not compliant with the applicable legal requirements or is likely to impair Negotiated business combinations are normally pre - ceded by due diligence, mostly focused on legal, tax and financial aspects. With regard to legal due dili - gence specifically, the primary concern is to identify any contingencies or negative consequences that may be triggered by the business combination, particularly any change of control or ownership provisions that could motivate the termination of key agreements or the acceleration of debt due under credit facilities or loans. Legal due diligence also focuses on regulatory and licensing matters, particularly those regarding tar - get businesses operating in highly regulated sectors (utilities, banking, insurance, etc), and on intellectual property issues, if the relevant businesses are tech - nologically driven. the market’s regular functioning. 5.3 Scope of Due Diligence Negotiated Business Combinations
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