PORTUGAL Law and Practice Contributed by: Marta Pontes, Hélder Frias and José António Reymão Nogueira, Uría Menéndez
sary for the relevant company to obtain a poten- tial economic benefit/advantage or to avoid a loss. In this case, on the assumption that the liabilities to be secured by the security provided by the Portuguese entities are liabilities of a company within the same corporate group, the justifiable corporate interest of the security providers in granting such security should be established and sufficiently substantiated. This justifiable corporate interest is usually con- firmed in the relevant corporate resolutions of the Portuguese entities approving the participa- tion of an entity in a financing transaction. Directors’ Loyalty Duties The directors of commercial companies are bound to a duty of loyalty. They must act for the exclusive benefit of the company, taking into account the long-term interests of the share- holders and other stakeholders relevant to the company’s sustainability, such as employees, clients and creditors. This duty of loyalty notably comprises: • a duty to refrain from self-dealing; • a prohibition against receiving advantages from third parties in connection with dealings of those third parties with the company; and • a duty not to take advantage of corporate opportunities. 5.7 General Principles of Enforcement According to Portuguese law, the enforcement of security depends on the relevant contrac- tual arrangements. However, the secured party (beneficiary) must initiate a court procedure to enforce security in the event of default.
In order to avoid judicial procedures, it is com- mon for secured parties (beneficiaries) to estab- lish contractual arrangements, to the extent per- mitted by law, allowing them to sell the assets granted as security to a third party and offset the amount of debt with the proceeds of the sale. This sale to third parties requires the consent of the owner of the asset (which in certain cases may be previously established under the security agreement). If a debtor fails to comply with a payment obliga- tion, the creditor may declare an event of default and bring enforcement proceedings to recover the debt from the debtor’s assets. Moreover, the parties may agree to other default and accelera- tion events in the loan agreement. As a general rule, creditors need to hold an enforceable title ( título executivo ) to bring judi- cial enforcement proceedings against a debtor. In order to be granted enforceability before the court in the case of judicial enforcement pro- ceedings, loan agreements should be entered into in the form of a public deed or a private certified document ( documento particular aut- enticado ). When the relevant requirements are fulfilled, the sale of seized assets within a judicial enforce- ment proceeding may be performed through a private sale and purchase agreement. Further- more, a secured creditor is generally not entitled to appropriate the secured asset. Two exceptions should be highlighted, as set out below. • Commercial pledges governed by Decree- Law No 75/2017, of 26 June 2017, allow the parties to a commercial pledge to appropri- ate the pledged collateral by an amount
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