Legal alert no. 44
Legal alert no. 44 – Decree-Law no. 123/2017, dated from September 25th, which foresees the required provisions to the enforcement of the Law no. 15/2017, dated from May 3rd, for the conversion of the bearer securities in a registered form regime
It was published yesterday in the Portuguese Official Gazette, the Decree-Law no. 123/2017, dated from September, 25th, which establishes the necessary provisions to the enforcement of the Law no. 15/2017, dated from May, 3rd (which prohibited the issuance of bearer securities and established a transitory regime for the conversion, in a registered form, of the bearer securities, that existed at the date of the relevant entry into force, and amended the Securities Code, approved by the Decree-Law no. 486/99, dated from November 13th and the Companies Code, approved by the Decree-Law no. 262/86, dated from September, 2nd). The referred decree-law (“Decree-Law no. 123/2017”) establishes the transitory regime for the conversion, in a registered form, of the bearer securities.
In this regard, this Decree-Law, further to the provisions of the Law no. 15/2017, dated from May, 3rd, confirms the need to comply with the 6 months period, qualified as “transitory period”, for the issuers of the bearer securities to proceed with the conversion process of these securities, as from the date of the entry into force of that Law, that is to say, as from May, 4th of 2017.
On the other hand, and with the purpose of simplifying the foreseen procedure, it is established that the amendments to the by-laws and to the other documents related to the issuance conditions of the necessary securities for the conversion of the bearer securities in a registered form, may be held by a resolution of the board of directors of the issuers, without being necessary its approval by the general meeting.
In what regards to the procedure for the conversion of the bearer securities in a registered form, the issuers of the bearer securities shall publish, during the transitory period, an announcement that informs their respective holders about the process of their conversion in a registered form, that require to be mandatorily published in the issuer’s web site, if it exists, and in the Ministry of Justice website in the online publications of Companies Acts (http://publicacoes.mj.pt/). It is further added that, in case the issuers of the securities are admitted to trading under a regulated market or a multilateral negotiation system or in the case of issuers opened to public investment, the referred publication shall be performed in the Diffusion System of Information of the Securities and Exchange Commission.
The content of this announcement will be different, depending on: (i) the conversion of certified bearer securities non-integrated in a centralized system; or, (ii) the conversion of certified bearer securities integrated in a centralized system.
In the latter case, the issuers of the bearer securities shall indicate in the announcement the due date for the conversion to occur under the referred system, apart from the general references that the mentioned announcement shall contain, as per follows: i) the identification of the securities in question; ii) the legal source on which the decision is based; iii) the date of the resolutions of the amendments to the by-laws and the other documents related to the conversion of the securities; iv) the planned date to the submission of the request for application of the amendments to the by-laws and the other acts, subject to a commercial registration, as well as the planned date to the conversion to occur under the centralize system; v) the consequences of the non-conversion of the securities during the transitory period.
However, in case of conversion of the certificated bearer securities non-integrated in the central system, apart from the general mentions referred to in the previous paragraph, the announcement in question shall also indicate that the securities are presented to the issuer or to the financial intermediary appointed by him, by the holders or by means of their instructions and on their behalf, by the depositaries entities (according to article 99th of the Securities Code) or by the entities that hold the securities in their possession.
The financial intermediaries shall communicate to each client, in a sustainable support, the need of the securities being presented to the issuers, to be converted, as well as the legal consequences of their non-convertion.
It should also be stressed that in the case of bearer securities integrated in a centralized system that have not been converted in a registered form, at the initiative of the issuer, those securities shall be converted by the management entity of the centralized system, on the last day of the transitory period referred above. The same applies to the bearer securities registered in a single financial intermediary, that have not been converted in a registered form, at the initiative of the issuer, which are converted by that financial intermediary until the last day of the transitory period. The financial intermediary shall then communicate that fact to the issuer.
Regarding the ways of converting bearer securities in a registered form, the Decree-Law no. 123/2017, establishes that this conversion may operate, at the expenses of the issuer, in two ways: (i) through the record in the individualized record account of the bearer securities or the certified bearer securities integrated in a centralized system; or, (ii) by the replacement of the securities or by the amendment of their content, performed by the issuer. In this last case, the destruction of the old securities shall be performed by the management entity of that system.
The management entity of the centralized system, the recording entities and the issuers shall also update their relevant records, in accordance with article 6.º of the Decree-Law no. 123/2017. The performed commercial register acts and the relevant publications are exempted from the applicable fees.
It should also be noted that the present decree-law also foresees the consequences of the non-conversion of the bear securities in a registered form, once the transitory period is over. In this case, the bear securities “solely” confer legitimacy for the record request in favor of the relevant holders. Moreover, in the case of certified bearer securities, the respective securities should also be presented to the issuer for the replacement or amendment of its relevant content so that the conversion may occur.
Finally, it is important to highlight that the Decree-Law no. 123/2017 reestablishes, during the transitory period, article 101 and paragraph 1 of article 104 of the Securities Code, related to the transmission of the certified bearer securities and to the exercise of the rights inherent to those securities, respectively.
This decree-law enters into force on September 26th.
To access the full version of the Decree-Law no. 123/2017, dated from September 25th, please go to: https://dre.pt/web/guest/home/-/dre/108205178/details/maximized