PORTUGAL Law and Practice Contributed by: Domingos Cruz, Joana Bugia and Constança Morão, CCA Law Firm
cash deals, exclusion of the VC investors from the operational representations and warranties are the most common requirements for the VC investors to be dragged. Tag-Along Rights Tag-along rights give minority shareholders the option to join a sale initiated by the majority shareholders and are “must have” in the share- holders’ agreement. However, transfers of shares made by VC investors are usually excluded from the applicability of the tag-along rights. Mandate to Sell As funds, the VC investors have a limited dura - tion and usually foresee a divestment/exit strat - egy, which will be triggered if the company’s shareholders do not obtain access to liquidity within a specific deadline, directly related to the fund’s divestment period. VC investors will be granted the right to choose an investment bank/ consulting firm to sell 100% of the company’s share capital. VC investors usually do not see their shares sub - ject to any transfer restrictions, but the transfer of their shares – other than permitted transfers to affiliates of such fund – will be subject to the right of first refusal from the other shareholders and, where applicable, the drag- and tag-along rights. 6.2 IPO Exits When Portuguese start-ups are preparing them - selves for an IPO, there is usually a jurisdiction flip to a more favourable jurisdiction (in terms of regulation, type of players and financial condi - tions perspectives). 6.3 Pre-IPO Liquidity In Portugal, it is not possible to talk about pre- IPO liquidity because Portuguese capital mar -
kets are not active in terms of IPOs. Investors, employees and founders shall expect to obtain liquidity through a trade sale. As a result, it is not common for tender offers to occur in the Portuguese capital markets.
7. Regulation 7.1 Securities Offerings
In a securities offering, the immediately applica - ble regimes – irrespective of the sector of activity of the company – are: • the Securities Code ( Código dos Valores Mobiliários ); • the Portuguese Companies Code ( Código das Sociedades Comerciais ); • Law No 83/2017 of 18 August, which estab - lishes the measures to combat money laun - dering and terrorist financing; and • the Portuguese Competition Act (Law No Portuguese legal and regulatory frameworks encourage the investment of a foreign VC inves - tor in a Portuguese start-up since there are no restrictions on the entry of foreign capital in Por - tugal. Since the Portuguese framework is in line with EU regulations, a non-discriminatory envi - ronment is followed, so the foreign VC inves - tor will face the exact same challenges/restric - tions that a Portuguese VC investor would when investing in regulated sectors (such as telecom - munications, energy and insurance). 19/2012 of 8 May). 7.2 Restrictions However, a couple of restrictions may apply to VC transactions (including on foreign invest - ment) in Portugal, as set out below.
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