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Structured similarly to the US & Great Britain, M&A transactions in Portugal involve four basic steps, such as:

  • buying assets of companies in Portugal;
  • conducting transactions with shares;
  • conducting M&A transactions in Portugal.
  • transferring a business as a going concern;

Legal Framework

Those planning on conducting an M&A transaction in Portugal should keep in mind that they will have to comply with a quite a few laws & regulations. In particular, they’ll be required to meet the Securities Code’s requirements that are applicable to activities of Portuguese public companies. 

It should be kept in mind that signatories to commercial or civil contracts are entitled to choose governing laws, provided that they meet binding provisions set forth in respective legislation.

Portugal: Obtaining Ownership of a Company’s Shares

Under Portuguese legislation, ownership is defined similarly to European legal systems which are based on civil law. Its definition of ownership covers its use, ownership rights & disposal. 

Under Portugal’s Civil Code, purchasers are required to ask sellers for additional protection, including a warranty with respect to ownership of shares or assets & non-imposition of additional fees.

Multiple Sellers

When it comes to buying private companies in Portugal, purchasers normally buy all their equity capital. Acquiring minority stakes in private companies in Portugal may be accomplished by invoking a drag-along right contained in the said companies’ AoA or SHA

The said right can be invoked after purchasers acquire ninety percent of a target company’s shares. Within half a year after the receipt of an acquisition notification, purchasers may buy shares held by minority stakeholders.

Acquiring Assets & Liabilities

Portuguese law provides purchasers with a right to select assets or liabilities they wish to acquire. To transfer assets or liabilities, they may need to seek authorization of 3rd parties, particularly when it comes to transferring licenses in regulated sectors of Portuguese economy. To be able to do that, purchasers will have to get approval from the Portuguese government or its agencies (e.g. municipal bodies). Hence, identifying all 3rd parties whose authorization is required involves conducting comprehensive DD.

Securing 3rd Parties’ Consent 

When it comes to JSCs, their shareholders can transfer rights to whoever they deem necessary. Sometimes, transferring companies’ shares in Portugal may be restricted & depend on specific provisions contained in the AoA.

Those planning on registering an LTD in Portugal should keep in mind that transferring participation can only be done after securing the consent of a target company. 

Regulations

Purchasing companies in regulated sectors of Portuguese economy requires registration with relevant authorities. It also involves taking into consideration a specific transaction’s volume & structure. When it comes to deals involving registered shares & their transfer, purchasers must also inform target companies of upcoming transfers. Deals involving the purchase of Portuguese real estate must be registered with properly authorized land register offices.

If a deal’s volume exceeds certain regulatory limitations, purchases can be requested to submit relevant documentation to antitrust regulators & other relevant bodies.

Conclusion

Looking to buy a business in Portugal? Need legal advice on M&A regulation in Portugal? Why not contact IQ Decision UK? Our legal assistants have what it takes to handle any legal matters, including the most challenging ones. They will be happy to give you a hand with any legal issues you’re facing.