PORTUGAL Law and Practice Contributed by: Bernardo Abreu Mota, David Oliveira Festas and Francisco Albuquerque Reis, CS’Associados
ment of qualified shareholdings or that are designed to affect the outcome of a takeover offer should be notified within three days of their execution to the Por - tuguese Securities Commission, which is entitled to determine full or partial public disclosure thereof.
may significantly jeopardise the objectives announced by the offeror. Such prohibition extends to resolutions taken prior to the decision to launch the offer that have not yet been implemented, either partially or totally. The issuance of shares or the entering into of agreements regard - ing the transfer of relevant assets, for example, are considered relevant changes to the financial standing of the target. In other types of business combination, such as a merger, the directors of the merging companies are required to prepare and submit a merger project for registration and publication, providing information on the type, motives, purposes and conditions of the merger, among other matters, to which the creditors may be opposed. The merger will generally be subject to the approval of the shareholders of the merging companies. The Neutrality Rule The neutrality rule contains exceptions – for instance, it can be avoided by a resolution of the sharehold - ers’ meeting (approved with at least two thirds of the votes cast) and it does not prevent the target’s board of directors from seeking a “white knight” (ie, alterna - tive offers). The directors of the target company are also subject to other duties, such as the dissemina - tion of information. For instance, they must submit a report describing the opportunities and conditions of the offer to the offeror and the Portuguese Securities Commission, and disclose said report to the public. 8.2 Special or Ad Hoc Committees There is neither a legal obligation nor a significant tra - dition of establishing ad hoc or special committees for the purposes of preparing business combinations. In practice, transitional steering committees may be agreed and set up by the participating companies. 8.3 Business Judgement Rule The fundamental duties of directors in Portugal are set out in Article 64 of the Portuguese Companies Code, pursuant to which, and as part of the general duty of care, directors must demonstrate that they have adequate availability, technical competence and knowledge of the company’s activity to enable them
8. Duties of Directors 8.1 Principal Directors’ Duties
Directors are subject to a generic duty of diligence, which includes duties of care and fiduciary and loyalty duties, and requires that, further to the best interests of the company considering the long-term interests of the shareholders, directors must also take into consideration the interests of other stakeholders that are relevant to the company’s sustainability, such as employees, clients and creditors. Following the publication of the preliminary announce - ment of a public offer, and until the results of the offer are determined, the management of the target com - pany must: • provide certain information to the Portuguese Securities Commission (eg, daily reports on the transactions carried out by its members concern - ing securities issued by the target); • inform the workers of the content of the offer docu - ments and its report; and • act with loyalty and in good faith, particularly with regard to the accuracy of the information. In the case of a public offer, the Portuguese Securi - ties Code also subjects the directors of the offeror to a duty of secrecy in respect of the preparation of the offer until the preliminary announcement is made. The Portuguese Securities Code also determines that, upon becoming aware of a decision to launch a takeo - ver offer for more than one third of the securities of the respective category (or upon receiving the relevant preliminary announcement), and until either the offer result is determined or the offer lapses (whichever occurs first), the target company’s board of direc - tors cannot perform any actions outside the ordinary course of business that are likely to have a material effect on the financial standing of the target and that
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