Download Decree-Law No. 69/2004 of 25 March

This does not dispense with the need to consult the
original Portuguese version published in the Official
Gazette
Decree-Law No. 69/2004
of 25 March
(With the amendments introduced by Decree-Law No. 52/2006 of 15
March)
The legal requirements for short-term debt securities,
commonly known as «commercial paper», were established in
Decree-Law no. 181/92, of 22 August, having previously been
amended by Decree-Law no. 231/94, of 14 September, and by
Decree-Law no. 343/98, of 6 November and no. 26/2000, of 3 March.
Given the development of the capital and money markets, the time
has come to revise the legal framework for «commercial paper»,
creating the right conditions for to ensure that the respective market
functions more efficiently and more in line with the European reality.
Particular emphasis shall be placed on reinforcing the dynamism of
the Portuguese capital market.
This document fully substitutes the legal framework currently in
force, focusing only on the rules for securities with a term of less than
one year, for which the need for commercial registration is still
waived, and which may still be issued in a continuous manner or in
series. Securities with a term equal to or greater than one year do
not fall within the scope of application of this Decree-Law, but are
rather governed by the provisions of the Portuguese Securities Code.
One of the most significant amendments is that which provides that
neither rating nor provisions of guarantee are mandatory for issuers
with own capital or net assets worth not less than 5 million Euro, or
whenever the unit par value of the issue is equal to or greater than
50,000 Euro.
Also, in accompaniment of amendments introduced to the Portuguese
Securities Code, regulatory and supervisory powers are hereby
transferred to the Portuguese Securities Market Commission
(Comissão do Mercado de Valores Mobiliários). A simplified system for
disclosing information to the market shall be maintained with regard
to issues and public and private subscription offerings, providing the
possibility of registration in any of the central securities depositaries.
1
The benefit of the opinions of Banco de Portugal (the Portuguese
Central Bank), the Portuguese Securities Market Commission
(Comissão do Mercado de Valores Mobiliários - CMVM), the
Portuguese Banking Association (Associação Portuguesa de Bancos),
the Portuguese Association of Asset Management Companies and
Investment Funds (Associação Portuguesa das Sociedades Gestoras
de Patrimónios e de Fundos de Investimento), Euronext Lisbon Sociedade Gestora de Mercados Regulamentados, S. A., and OPEX Sociedade Gestora de Mercado de Valores Mobiliários não
Regulamentado, S. A., was sought.
Thus:
Pursuant to the terms of item a) of Article 198.1 of the Constitution,
the Government hereby decrees the following:
TITLE I
General Provisions
Article 1
Objective and Scope
1. This document regulates the discipline applicable to securities of a
monetary nature, called commercial paper.
2. Commercial paper refers to securities representing debt issued by
the entities referred to in paragraph 1 of the following article for a
term of less than one year.
Article 2
Capacity
1. Commercial paper may be issued by commercial companies or civil
companies operating as commercial companies, cooperatives, public
companies and other public or private law legal persons.
2. With the exception of credit institutions, financial companies,
insurance companies and pension fund management companies,
entities issuing commercial paper are not permitted to obtain,
through the issue of this type of security, financial resources worth
more than three times their equity capital, or, in the case of entities
not subject to the adoption of the official accounting scheme, more
than three times the value of their net assets.
Article 3
Equity capital, net assets and equity
For the effects of this document:
a) «Equity capital» shall be understood to mean the total paid-up
capital, minus own shares, with reserves, results brought forward and
adjustments to parts of the capital in daughter companies and
associates;
2
b) «Net assets» shall be understood to mean the difference between
the total net value of assets held and the total value of debts
assumed and not paid up.
c) «Equity» shall be understood to mean the sums indicated in Banco
de Portugal Notice no. 12/92, of 29 December, calculated in
accordance with the conditions established therein;
TITLE II
Issue
Article 4
Requirements for issuing commercial paper
1. Issuers must fulfil the following prerequisites for issues of
commercial paper:
a) They must show, in the last approved balance sheet and subject to
the legal certification of accounts or an audit carried out by an official
auditor, depending on the case, that they possess equity capital or
net assets worth not less than 5 million Euro, or the corresponding
value in Euro, should this capital or those assets be expressed in a
currency different to the Euro; or
b) They must present a risk rating of the issue programme referred to
in Article 7.1, or a short-term risk rating of the issuer, assigned by a
risk rating company registered with the Portuguese Securities Market
Commission (Comissão do Mercado de Valores Mobiliários); or
c) They must obtain, in favour of the holders, a first demand
guarantee ensuring compliance with the payment duties arising from
the issue or the programme referred to in Article 7.1.
2. The enforcement of the duties referred to in the previous
paragraph shall not apply to commercial paper, the par value per unit
of which is not equal to or higher than 50000 Euro, or the equivalent
value in Euro, should the price be expressed in a currency other than
the Euro.
Article 5
Guarantees
The guarantee referred to in paragraph 1 c) of the previous article
shall only be provided by a credit institution:
a) The company object of which includes the provision of guarantees;
and
b) The equity of which is not less than 5 million Euro, or the
equivalent value in Euro, if expressed in a different currency.
3
Article 6
Rule of law
Unless legal provisions to the contrary are set down, the issue of
securities of a monetary nature with a maturity of less than one year
which do not come within the scope of this document is prohibited.
Article 7
Types of issue
1. Commercial paper may be issued as a single issue, or, in
accordance with the programme for the issue, by means of
continuous issues or in series.
2. The provisions set down Article 169 of the Portuguese Securities
Code and Article 349 of the Commercial Company Act shall not apply
to the issue of commercial paper.
Article 8
Registration of the issue
1. The issue of commercial paper must be registered with the
relevant issuing company or in an account opened with the financial
intermediary representing the issuer for this purpose.
2. The notices referred to in Article 44 of the Portuguese Securities
Code shall apply to the registration of issues of commercial paper,
with the necessary adaptations.
3. The issuance of commercial paper is not subject to commercial
registration.
Article 9
Redemption
1. Commercial paper may be redeemed prior to the end of the issue
period, under the terms provided in the conditions for the issue or the
issue programme.
2 - The acquisition of commercial paper by the issuing company is
equivalent to redeeming it.
Article 10
Forms of representation
Commercial paper may be registered or registered to the bearer, and
must be in book-entry form.
Article 11
Registration of entitlement
The ownership of commercial paper is registered, under the terms of
Articles 61 et seq of the Portuguese Securities Code.
4
TITLE III
Offerings and admission to trading
Article 12
Modalities and simplified registration
1. The provisions set down in Articles 109 and 110 of the Portuguese
Securities Code shall apply, with the necessary adaptations, to the
qualification of offerings of commercial paper as public or private, and
offerings with a par value per unit equal to that provided for in Article
4.2 shall always be private.
2. The information memorandum of a public offer of commercial
paper specifically addressed to persons having their residence or an
establishment in Portugal shall be subject to approval by the
Securities Markets Commission (Comissão do Mercado de Valores
Mobiliários), and such approval may concern either the issue or the
offering programme referred to in Article 7.1.
3. Approval of the information memorandum or its refusal shall be
notified to the issuer within three working days.
4. The launch of pubic offerings for distribution of commercial paper
requires the issue of legal certification or an audit of the accounts of
the issuer by an official auditor or an auditing firm, at least with
regard to the financial year immediately preceding the offering, and
compliance with one of the prerequisites set down in sub-paragraphs
b) and c) of Article 4.1 is also required.
5. The provisions set down in Articles 121 and 122 of the Portuguese
Securities Code shall apply to advertising related to the offering, with
the necessary adaptations.
Article 13
Particulars supporting the request
The request for approval shall be supported by a copy of the
information memorandum to be produced in the terms of Article 17.
Article 14
Withdrawal of an offering
1. The Portuguese Securities Market Commission (CMVM) must order
the withdrawal of the offering if it is defective, due to an illegality or
irremediable violation of regulation.
2. The decision to withdraw an offering shall be made public by the
Portuguese Securities Market Commission (CMVM), at the expense of
the offeror, under the same terms under which the informative
memorandum was published.
5
Article 15
Assistance and placement
1. Public offerings of commercial paper must be carried out with the
intervention of a financial intermediary which is legally qualified for
this purpose, and which, at least, provides the following services:
a) Assistance and placement in public offerings for distribution of
commercial paper;
b) Payment, on behalf and on the instructions of the issuer, of the
equity claims arising from the issue.
2. Private offerings of commercial paper issued by an entity without
legal certification of their accounts or an audit carried out by an
official auditor or auditing firm require the intervention of a financial
intermediary, which, in all cases and regardless of other duties
imposed by law, must proceed with the prior verification of
compliance with the limit established in Article 2.2.
Article 16
Admission to trading
1. Commercial paper may be admitted to listing on a securities
market.
2. When petitioned by the market operator, the Portuguese Securities
Market Commission (CMVM) may define the information to be
provided by the issuer, in complement to that provided in the
informative memorandum referred to in Article 17, if this is deemed
necessary for the purpose of listing on the market.
TITLE IV
Information duties
Article 17
Informative memorandum
1. Entities issuing commercial paper must draw up an informative
memorandum based on the issue or the issue programme and
containing information on their consolidated shareholder equity and
economic and financial situation, which must include the following
compulsory information:
a) The elements referred to in Article 171 of the Commercial
Company Act;
b) The identity of the persons responsible for the quality of the
information contained in the informative memorandum;
c) The general characteristics of the issue programme, particularly as
regards amounts, terms, name and expiry of the issue of commercial
paper;
6
d) The means of calculating interest and, in public offerings, the
terms of disclosure of same;
e) The nature and scope of any guarantees which could be granted
with regard to the issue;
f) Information on the risk rating assigned by a risk rating firm
registered with the Portuguese Securities Market Commission
(CMVM), should one exist;
g) The identification code of the commercial paper being offered, if
one exists;
h) The applicable taxation system;
i) The balance sheet, profit and loss account and statement of source
and application of funds of the issuer for the three financial years
preceding that of the issue programme or merely those financial
years which have elapsed since the issuer was established with
approved accounts;
j) A summary indication of any events which are of significant
importance to the activities of the issuer and could affect their
profitability within the term of the issue programme until the date of
the last redemption, namely licenses, patents, contracts of new
manufacturing procedures.
2. The informative memorandum of the public offering of commercial
paper must include, on its cover, a description of the risk factors
inherent to the offering, reference to the issuer and its activities and
a description of the limitations placed on the proposed investment, as
well as the risk rating assigned to the issue or the issue programme,
should this exist.
3. With regard to the informative memorandum for an issue
programme, the issuer must, prior to each issue, draw up a
complementary informative document, should this be necessary for
the individualisation thereof.
4. Whenever the issuer is a company in control of another one, the
information referred to in sub-paragraphs i) and j) of paragraph 1
must be drawn up independently with regard to the company and in
consolidated form for the group.
5. A new informative memorandum must be drawn up, containing all
the elements stipulated in the previous paragraphs, whenever any
circumstance arises which could have a relevant influence on the
evaluation of the financial capacity of the issuer or guarantor.
6. The provisions set down in Articles 116 and 156 of the Portuguese
Securities Code shall not apply to entities issuing commercial paper.
7
Article 18
Language
1. The informative memorandum of a private offering is not subject
to the provision set down in Article 6 of the Portuguese Securities
Code.
2. The provisions set down in Articles 163-A and 237-A of the
Portuguese Securities Code shall apply to the informative
memorandum for public offerings of commercial paper.
Article 19
Disclosure
The informative memorandum shall be provided free of charge to
investors:
a) In public offerings of commercial paper, prior to the start of the
term of the offering, through the issuer and placement agents and by
means of the information disclosure system of the Portuguese
Securities Market Commission (CMVM);
b) In private offerings of commercial paper, through the issuer, prior
to the start of the term for subscription of the issue.
Article 20
Responsibility for the content of information provided
The provisions set down in Article 149 et seq of the Portuguese
Securities Code shall apply to the information included in the
informative memorandum of public offerings of commercial paper.
TITLE V
Final and transitory provisions
Article 21
Regulation
The Portuguese Securities Market Commission (CMVM) is responsible
for drawing up the regulations necessary to implement the provisions
of this document and any other aspects related to commercial paper,
such as the following matters:
a) Support for the request for approval of the information
memorandum;
b) The means of paying interest on the issue of commercial paper;
c) Conditions for pro rata allocation;
d) Expiry of approval of the information memorandum;
e) The adaptation of the contents of the informative memorandum to
issuers of commercial paper which are in a relationship of control
over other companies;
8
f) The terms under which the public offering of commercial paper
should be made public;
g) The terms under which material events related to the issuers
should be disclosed.
Article 22
Supervision
The Portuguese Securities Market Commission (CMVM) is responsible
for monitoring compliance with this document and the supervision of
the markets in which commercial paper is traded.
Article 23
Statistical information
Statistical information relating to the issue of commercial paper shall
be submitted to Banco de Portugal under terms to be set down by
this institution.
Article 24
Transient law
This document shall apply to issues of commercial paper decided on a
date prior to the date on which it comes into force, and to issues of
commercial paper carried out under the scope of new programmes or
programmes renewed on a date prior to that of its entry into force.
Article 25
Revocation
Decree-Law no. 181/92, of 22 August, with the amendments
introduced by Decree-Law 231/94, of 14 September, 343/98, of 6
November and 26/2000, of 3 March, is hereby revoked, as is
Ministerial Decree no. 815-A/94, of 14 September.
Article 26
Entry into force
This document shall come into force 30 days subsequent to its
publication.
Read and approved by the Council of Ministers on 11 February 2004 José Manuel Durão Barroso - Maria Manuela Dias Ferreira Leite Maria Celeste Ferreira Lopes Cardona.
Promulgated on 12 March 2004.
For publication.
President of the Republic, JORGE SAMPAIO
Countersigned on 15 March 2004.
The Prime Minister, José Manuel Durão Barroso. Durão Barroso.
9