PORTUGAL Law and Practice Contributed by: Bernardo Abreu Mota, David Oliveira Festas and Francisco Albuquerque Reis, CS’Associados
Furthermore, under the Portuguese Companies Code, shareholders’ agreements may not regulate the con - duct or actions of members of the corporate bodies when performing their office; moreover, agreements will be invalid if they establish inadmissible limitations to shareholders’ voting rights (such as the exercise of voting rights pursuant to instructions issued by the company or against the awarding of specific benefits or advantages). Finally, it should also be noted that, under the Portu- guese Securities Code applicable to listed compa - nies, shareholders’ agreements are able to determine the allocation of the voting rights of all contracting shareholders to their counterparties, which may as a consequence precipitate mandatory disclosure of shareholdings or even the duty to launch a takeover offer if the relevant thresholds are met. Amending Articles of Association Apart from shareholders’ agreements, a bidder may also seek to secure additional governance rights via the amendment of the articles of association of the target company. The most common such amend - ment is the establishment of voting rights limitations – eg, trying to limit the votes awarded to a number of shares (provided that at least one vote is awarded to each EUR1,000 of share capital) or determining that votes issued by a single shareholder (either on their own behalf or in representation of other shareholders) above a certain number will not be considered. Share Classes A final reference should also be made to the possibil - ity of bidders subscribing to a specific class of shares that entitles them to special governance rights insofar as permitted by the Portuguese Companies Code (eg, the appointment of a number not exceeding one third of the members of the board of directors may require approval by the majority of the votes awarded to cer - tain shares). 6.9 Voting by Proxy Shareholders are entitled to be represented in general meetings of a company by proxy. In SA companies (share companies or sociedades anónimas ), the arti- cles of association may not set forth any constraints to this right. However, in Lda companies (quota com -
panies or sociedades por quotas ), representation by proxy is permitted only if the proxy holder is the spouse or a relative in the ascending or descend - ing line of the shareholder or is another shareholder, unless the articles of association permit otherwise. 6.10 Squeeze-Out Mechanisms Squeeze-Out Under the Portuguese Securities Code, with regard to Portuguese listed companies, it is possible to initi - ate a squeeze-out of minority shareholders within the three months following the determination of the results of the offer. This mechanism is available to those shareholders who, as a result of a general takeover offer, reach or exceed 90% of the voting rights cor - responding to the target’s share capital, either directly or according to voting aggregation rules. The con - sideration must be paid in cash, and the minimum consideration is the consideration provided in the offer or, if higher, the highest price paid by the offeror, or by any person whose votes are attributable to it, for the acquisition of securities of the same class, or that the offeror or any of said persons undertook to pay, between the determination of the results of the offer and the registration of the compulsory acquisition by the Portuguese Securities Commission. The Portuguese Companies Code provides for a simi - lar remedy in respect of non-public companies (with - out the intervention of the Portuguese Securities Com - mission), featuring a threshold of 90% of the share capital, but with an extended deadline for triggering a squeeze-out of minority shareholders of six months after notice is served on the target company that the 90% share capital threshold has been crossed. The consideration may be in cash or in own shares or bonds, and shall be substantiated by a report of an independent official chartered accountant. Sell-Out A sell-out is also provided for in the Portuguese Securities Code, and is construed as a minority shareholder-driven remedy, under which a minority shareholder may, within the three months following determination of the results of the offer, present a proposal for the sale of their shares to the target’s controlling shareholder following a takeover offer that allows for a squeeze-out right (as mentioned above),
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