PORTUGAL Law and Practice Contributed by: Marta Pontes, Hélder Frias and José António Reymão Nogueira, Uría Menéndez
determined by an evaluation made after the relevant debt is enforced, provided that, on the relevant pledge agreement (which should be made in writing and with the signatures certified by a notary or a lawyer), the parties have agreed to such a possibility and the type of evaluation and its criteria. • Financial pledges governed by Decree-Law No 105/2004, of 8 May 2004, enable the pledgee, among other matters, to appropriate the pledged assets or rights upon accelera- tion, provided that, on the relevant pledge agreement (which should in writing and signatures certified by a notary or lawyer), the parties have agreed to such a possibil- ity and the type of evaluation and its criteria. Alternatively, the pledgee is entitled to sell the pledged assets to obtain payment without resorting to court proceedings. The enforcement of security interests may be made through (judicial) declaratory or enforce- ment proceedings. 6. Guarantees 6.1 Types of Guarantees There are two main categories of special guar- antees: • personal guarantees ( garantias pessoais ); and • in rem security ( garantias reais ). Personal guarantees involve the allocation of a third party′s assets, as a whole, as a guarantee for compliance with obligations under a facil- ity agreement. The lenders can, therefore, have their credit rights guaranteed by an additional set of assets different from the debtor′s assets.
In rem guarantees are normally provided by both the debtor and a third party and entitle the ben- eficiary to be paid from the proceeds generated by the sale of the encumbered asset. The most common in rem guarantees are mortgages over real estate property and pledges over assets such as shares or receivables, as detailed in 5.1 Types of Security Commonly Used . There are different types of security/guarantee, with different formal requirements and execution processes depending on the assets to which they relate, as explained in 6.2 Restrictions . 6.2 Restrictions For restrictions applicable to in rem security, see 5.4 Restrictions on Upstream Security , 5.5 Financial Assistance and 5.6 Other Security . 6.3 Requirement for Guarantee Fees Portuguese law does not require the payment of guarantee fees. However, the granting of guar- antees to secure the debts of other companies should not be deemed “for no consideration” in order to comply with the requirement of a justifi- able corporate benefit for the company granting the guarantee. 7. Lender Liability 7.1 Equitable Subordination Rules Before an acquisition, the lender should con- firm that the borrower has no outstanding debts to social security or the tax authorities. This is a serious risk, considering that the lender will become jointly and severally liable with the bor- rower for these debts. The lender can become liable for any damages incurred by the borrower due to a failure to pro- vide funds to finance the acquisition (providing it
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