PORTUGAL Law and Practice Contributed by: Duarte Schmidt Lino, Raquel Azevedo, Alexander Ehlert and Leonor Melo Bento, PLMJ
cumulative fulfilment of certain specific require- ments) was also introduced in 2024. 2.5 Venture Capital Documentation In contrast with the UK and USA, which have standard model legal documents for venture capital funding established by the BVCA and NVCA, Portugal does not have such guidelines. Even so, Portuguese market practices closely follow international market standards and devel - opments, from seed to late stage. 2.6 Change of Corporate Form or Migration A new start-up company is usually incorporat- ed in Portugal as an LLCQ, as described in 2.1 Establishing a New Company and 2.2 Type of Entity . As the start-up grows and attracts more investors, the LLCQ generally transforms into an LLC, which will: • be able to issue different types of securities (including warrants convertible into shares); • have a more sophisticated governance struc- ture; and • have the possibility of an initial public offering (IPO), which is not possible with LLCQs. There are instances where a holding company may be incorporated in a foreign country (such as the USA or UK) for fundraising purposes while keeping the operational/subsidiary company in Portugal. 3. Initial Public Offering (IPO) as a Liquidity Event 3.1 IPO v Sale Portuguese capital markets have not been very active in terms of IPOs of Portuguese start- ups, so investors should expect a sale process
instead of an IPO. As for dual-track processes, and although this is something that the Portu- guese market and its players are aware of as a possible option, the choice between a sale and an IPO is usually made at the outset. 3.2 Choice of Listing A company’s decision to list in a particular coun- try will depend on its characteristics. A company with a global profile and market may choose a country with an internationally recognised mar- ket. Other companies may still prefer to list in Portugal. In any case, considering the Portu- guese regulated market is Euronext Lisbon, a listing in Portugal provides access to other Euronext markets. 3.3 Impact of the Choice of Listing on Future M&A Transactions If a company chooses to list on a foreign exchange, this could bring more complexity to future transactions, as two legal frameworks will apply to the same company. As an example, this may complicate a future sale, since some jurisdictions apply a squeeze-out mechanism based on the country in which the company is listed and others based on where its registered office is located. As a result, sometimes nei- ther regime applies. In a past transaction that involved a takeover of a Portuguese company listed in Spain, neither of the squeeze-out mech- anisms was expressly applicable, and an ad hoc mechanism had to be agreed between the two regulators to allow minorities to exit the com- pany, should the takeover be successful (which did not occur).
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