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Legal alert no. 48

Legal Alert no. 48 - forty-fifth amendment to the Portuguese Legal Framework of the Credit Institutions and Financial Companies

On November 24th, 2017, it was published in the Portuguese Official Gazette, Law no. 109/2017, which amends, for the forty-fifth time, the Legal Framework of Credit Institutions and Financial Companies (hereinafter “RGICSF”), approved by Decree-Law no. 298/92, of December 31st.

This new law introduces small changes to RGICSF in order to ensure the avoidance of potential conflicts of interest and to reinforce the evaluation criteria used for assessing the suitability of the members of the management and supervisory bodies of credit institutions.

Firstly, the new Law amends article 30-D (3) of RGICSF, by adding a new criterion to the group of objective circumstances based on which, and depending on its seriousness, the suitability of the members of corporate bodies is assessed.  Thus, with the new wording of article 30-D(3) the professional curriculum and any potential conflicts of interest are to be taken into consideration, if part of the person’s professional career has spent in an entity that is related, directly or indirectly, via holdings of share capital or business relations, with the financial institution in question.

Secondly, an amendment is made to (2) of article 79 (“Exemptions to the duty of professional secrecy”) of RGICSF by adding the Portuguese Insurance and Pension Funds Supervisory Authority to the group of entities, to whom the facts and the elements covered by the secrecy duty might be revealed.

Thirdly, (1) of article 81 (“Cooperation with other authorities”) of RGICSF is amended by adding the National Council of Financial Supervisors to the group of entities with whom the Bank of Portugal might cooperate and exchange information that is protected by banking secrecy.

Lastly, and in what concerns the prevention and management of conflicts of interests,   Law no. 109/2017revokes article 85 (5) of RGICSF. With the elimination of this provision, certain persons cease to be exempt from the rules for granting credit to members of corporate bodies and holders of qualified holdings of credit institutions, namely:

(i) the members of the general and supervisory board that are not part of the financial affairs committee,

(ii) the non-executive members of the management body that are not part of the auditing committee; and

(iii) the companies or other collective bodies controlled by them.

Consequently, articles 85 (1), (6) and (8), and 109 (6) are also amended, in order to remove all the references to the revoked provision.

Law no. 109/2017, dated from November 24th, has entered into force on November 25th 2017.

To access to the full version of this law (in Portuguese), please go to: https://dre.pt/application/conteudo/114248651

 

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