PORTUGAL Law and Practice Contributed by: Benedita Aires and Orlando Vogler Guiné, VdA
2.7 Bond/Note Trustees Bondholders’ Common Representative Portuguese law does not recognise the concept of a common law trustee, but it does have the concept of the bondholders’ common represent - ative, who performs a similar role of represent - ing the interests of the noteholders. Even though the common representative legally enjoys less discretion and more limited powers than a trus - tee, in practice the difference is mitigated, given that trustees under English law usually tend to avoid taking material action without a noteholder direction. The common representative’s role is document - ed in the terms and conditions of the notes and in a common representative appointment agree - ment, which follows the structure and contents applicable to trustees under English law, to the extent possible. The role of the common representative can be performed by, inter alia, credit institutions and entities specifically set up for the trustee busi - ness. In any case, it is advisable for trustees to obtain Portuguese law advice on their role and responsibilities, particularly trustees entering into this business in Portugal for the first time. According to Article 65 of the Securitisation Law and Article 359 of the Portuguese Commercial Companies Code, the common representative is generally entitled to perform all the necessary acts and operations in order to ensure the pro - tection of the interests and rights of the note - holders in the context of the issuance of the notes, acting as a representative of the note - holders, as follows: • to represent the noteholders in respect of all matters arising from the issuance of the notes and to exercise their legal or contractual enti -
The mandated servicer is expected to act with a degree of diligence as a prudent lender of the specific type of assets, and the law expressly sets out that the servicer will carry out all the acts necessary or adequate to the proper man - agement of the assets and their respective guar - antees, on behalf of the assigning entity, includ - ing collection services, administrative services and ensuring all relationships with the debtors. In the NPL segment, and also for deconsolidation purposes, the servicers tend to be independent specialised third parties instead of the originator. A project Decree-Law on the activity of servicing companies has been discussed in Portugal but the content of its actual final draft is not pub - licly known and submission for approval has not yet occurred, so its contents are not taken into account herein. The new law is also expected to make certain additional changes to the Securiti - sation Law not related to the servicing. 2.6 Investors Investors in securitisations can be regulated or non-regulated investors. Typically, there is a wholesale denomination of the securitisation notes (EUR100,000), and no Key Investor Infor - mation Document (KIID) under Regulation (EU) 1286/2014 of 26 November 2014 (the PRIIPs Regulation) is expected to be produced, so the target market of the securitisation notes does not include retail investors. Regulated investors will need to ensure that they properly perform diligence for the transaction, including by con - firming that the originator (or another eligible entity) has agreed to retain a relevant economic net exposure (under the applicable EU, US or other laws).
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