Legal alert no. 33

It was published, in the Portuguese Official Gazette, on June 30th, 2017, Decree-Law n. 79/2017, which amends the Portuguese Commercial Companies Code (“CSC”) and the Portuguese Insolvency and Corporate Recovery Code (“CIRE”) (hereinafter the “Decree-Law”).

This Decree-Law, and other recently approved legislation, is part of a package of reforms, the so-called “Programa Capitalizar”, approved by the Council of Ministers’ Resolution n. 42/2016, of 18th of August.

The aforementioned reform package has been adopted  following an analysis on the national economy and on the local business environment carried out by “Estrutura de Missão para a Capitalização”, under which five intervention strategic axes have been defined: Administrative Simplification and Systemic Framework, Tax, Corporate Restructuring, Investment Leverage and Revitalisation of the Capital Markets.

In this context, the Decree-Law introduces certain amendments to the CSC and to CIRE, among which we would highlight the following:

• The creation of a simplified mechanism to increase the share capital of a company by conversion of “suprimentos” (loans granted by shareholders to the company), subject to the non-opposition of other shareholders; 
• The creation of conditions for the implementation of Measure #157 of Simplex+ program, corresponding to the electronic minutes book;
• The Design of a PER (especial revitalisation process) reserved to companies, without abandoning the format for natural persons who do not hold companies or traders.

Considering, in particular, the amendments to the CSC, and regarding the share capital increase by conversion of “suprimentos”, it is now foreseen that the shareholder of a limited liability company (sociedade por quotas) who, singly or jointly with others, achieves the majority of votes necessary to approve an amendment to the articles of association, may communicate to the directors the increase of the share capital by conversion of “suprimentos” registered in the last approved balance sheet.

Subsequently, the management shall communicate, in writing, to the shareholders who have not participated in the increase, within a maximum of 10 days, warning them that the increase will only come into effect if none of them objects to the increase, in writing and within 20 days from the communication of the conversion.

Additionally, it is foreseen that, for purposes of verification of the shareholder contributions to the company in a scenario of conversion of “suprimentos” and whenever the auditing of accounts is legally required, a statement from the accountant or from the public certified accountant, stating that the amount is included in the accounting records, as well as its respective origin and date will suffice.

This statement is subject to the filling and information disclosure requirements established in the CSC, whereas it shall be sufficient to publish the reference to the respective deposit in the commercial registry.

It should also be noted that, before this amendment, the share capital increase by conversion of “suprimentos” required that, for purposes of verification of the contributions, the credits were subject to a report drafted by an independent public certified accountant. This requirement to draft a report was based on the fact that “suprimentos” were considered contributions in kind, since the same are credit rights.

In relation to the creation of conditions to implement an electronic minutes book, the present Decree-Law amends article 4.-A of the CSC, establishing that the requirement of written form for all legal acts set forth in the CSC can also be met by replacing written or signed documents with other support or identification means, such as electronic signature, which ensure equal levels of comprehensibility and durability.

Finally, and in what respects to the amendments to the Portuguese Insolvency and Corporate Recovery Code, which will be subject to an autonomous and more elaborated legal alert, the following measures should be highlighted:

1. As referred above, the design of a PER (especial revitalisation process) addressed to companies, without abandoning the format for natural persons who do not hold companies or traders;
2. Harmonisation with the Portuguese Code of Civil Procedure and adaptation to Regulation (EU) 2015/848 of the European Parliament and of the Council, of May 2015, on the insolvency proceedings;
3. Implementation of the recommendations that resulted from  on-site evaluations  to the operation of different legal institutes and insolvency proceedings, which interfere with certain key areas, such as: the creditors’ meeting in the insolvency proceedings of natural persons, the time limit for filing in the application for the incident qualifying an insolvency, the appointment of directors in case of companies in a control or group relationship, with high complexity or in which the insolvency mass involves an operating establishment, as well as the judicial decision  on the credits verification and graduation/ranking of creditors and the winding up phase;
4. Lastly, a fully electronic handling of all the proceedings that are laid down in the Portuguese Insolvency and Corporate Recovery Code is also being prepared, as a complement to other technological measures that are being developed such as the online judicial certificate/proof that corresponds to Measure #73 of the Simplex+ Program.

The present Decree-Law enters into force on July 1st, 2017, except for some legal provisions related to the CIRE expressly pointed out in article 6. of the Decree-Law.

To access the full version of Decree-Law no. 75/2017, please click here.