INTRODUCTION
This paper provides an overview of the current state of the Portuguese Capital Markets and addresses the main capital market rules, dealing specifically with the regime of qualified holdings, admission to trading, public offerings and, finally, the sanctioning regime.
The number of domestic listed companies in Portugal has been decreasing. The number of listed companies in Portugal reached its peak in 1990, with 152 listed companies at the Lisbon and Oporto Stock Exchange. Presently, only 53 companies are listed in Euronext Lisbon.
The main reasons for the decrease in the number of listed companies are the change in the shareholding structure of listed companies through a merger or acquisition, which may be followed by a "squeeze-out" of minority shareholders and consequent withdrawal from the stock exchange (as were the cases of Companhia de Seguros Tranquilidade, S.A. and with Vodafone Telecel – Comunicações Pessoais, S.A.) or by decision of the shareholders.
Since 2000, there were more than 50 IPOs in Portugal. Although the number of IPOs decreased after the financial crisis of 2008. SMEs, unlike state-owned companies, have requested to be listed on either the Portuguese regulated market (Euronext Lisbon) or another platform (in particular, multilateral trading facilities such as Euronext Access and Euronext Growth).
The last IPO in Portugal took place in 2021 with the listing of Greenvolt – Energias Renováveis, which meanwhile has been acquired by KKR.
The prices of the twenty listings with the largest market capitalisation form the Portuguese Stock Index 20 ("PSI-20"). PSI-20 is the main benchmark stock exchange index in Portugal, which includes, among others:
- EDP, a power company, which has the largest market capitalisation in the PSI 20 and its subsidiary EDP Renováveis;
- Galp, an oil and gas company with investments in the electricity market as well;
- Millennium BCP, the largest private bank in Portugal;
- SONAE, a conglomerate of industrial and distribution companies;
- Jerónimo Martins a leading Portuguese distribution group with a presence in Poland and Colombia; and
- NOS, the second largest telecom operator in Portugal.
1. REGULATORY FRAMEWORK
The main instrument of regulation of the Portuguese Capital markets is the Portuguese Securities Code (Código dos Valores Mobiliários, "Securities Code"), approved by the Portuguese Government in 1999, under the Decree-law 486/99, of 13 November, whose last amendment was made under Decree-law 66/2023, of 8 August.
The Securities Code provides the basic regulation on financial instruments, public offers, securities negotiation, supervision of the markers and crimes against the market. The Securities Code was an important instrument for the development of the Portuguese Capital Markets as it brought more stability and certainty to companies and investors.
The development of the European Common Market also included the issuing of common rules regarding the capital markets. The main instruments issued by the European Union regarding this matter are:
- Directive 2004/25/EC, of the European Parliament and of the Council of 21 April 2004 on takeover bids;
- Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014, on markets in financial instruments (known as "MiFID II"), which replaced Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004;
- Regulation 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments ("MiFIR")
- Regulation 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse ("MAR"); and
- Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (the "Prospectus Regulation").
The capital markets regulatory framework is completed considering the multiple regulations of the Securities Market Authority (Comissão do Mercado de Valores Mobiliários, "CMVM").
2. LISTING AND TRADING OF SECURITIES
2.1. ADMISSION TO TRADING
In order to be admitted to trading, a financial instrument shall be issued in accordance with the personal law of the issuer.
The issuer must comply with the following requirements:
- It must be duly incorporated and carry out business according to the applicable law;
- It must prove that it has a financial and economic situation compatible with the nature of the securities to be listed.
If the financial instruments are to be listed in the Euronext Lisbon, the issuer must comply with the following additional requirements:
- It must have carried out a business for at least three years; and
- It must have published managing reports and annual financial statements in respect of at least three years before the application for listing is presented.
Besides, for shares to be listed in Euronext Lisbon, the issuer must:
- Ensure that the shares are sufficiently dispersed among the public; and
- Provide evidence that their market capitalisation (or, if this cannot be determined, the company's equity) is at least of €1,000,000.
Sufficient dispersion is deemed to occur if at least 25% of the share capital represented by such class of shares is held by the public.
Shares of foreign companies can be listed if they fulfil all requirements applicable to the listing of Portuguese shares, through the presentation of a legal opinion that states that the general requirements established in the Securities Code are being met. The Securities Commission may not accept to list shares of non-EU companies if they are not listed in their national stock exchange.
Shares may be listed after registration of the company's incorporation or if share capital increases before the commercial registry office, even if its publication has not yet been carried out.
2.2. LISTING PROCEDURE
The listing procedure is initiated with the filing of an application to Euronext Lisbon by (i) the issuing company or (ii) holders of at least 10% of the shares, if the issuer has shares admitted to trading in a regulated market.
Euronext Lisbon then provides the CMVM with a copy of the listing application and the documents necessary for the approval of the prospectus or to assess where a prospectus is not required.
The listing application must be presented with the documents necessary to prove compliance with the listing requirements, such as:
- Copy of the issuer's articles of association;
- Certificate of the Commercial Registration Office;
- Copy of the resolution on the listing;
- Audited financial statements for the last three years; and
- Draft of the listing particulars.
Euronext Lisbon will resolve the listing application within 90 days following the filing.
Prior to the listing application, the issuer must submit to the approval of the CMVM a prospectus containing complete, truthful, updated, clear, objective, and lawful information, allowing the offerees to make an informed assessment of the offering. The liability of the issuer over the information of the prospectus has been reinforced in the last years.
The issuer, the members of the offeror's and the issuer's management body, the members of the auditing body of the offeror and the issuer, the certified accountant of the offeror, the accounting firms and any other individuals that have certified or, in any other way, verified the accounting documents on which the prospectus is based and the financial intermediaries may be liable for damages caused by the non-compliance of the prospectus with the provisions of the Securities Code.
The listing may be rejected if:
- the requirements above mentioned are not met by the issuer or the security;
- the issuer fails to comply with the obligations resulting from admission in another Member State, where the security is already listed; and
- the issuer's situation is such that admission would be detrimental to investors' interests.
2.3. DISCLOSURE OBLIGATIONS
All relevant information on issuers, such as annual reports, amendments to the articles of association, rights attached to the shares and publicity of their financial situation must be notified to the CMVM and Euronext Lisbon.
Issuers of shares listed in Portugal and in other EU Member States are obliged to provide the CMVM and Euronext Lisbon with the same information that they are required to provide to the markets and to the authorities of other EU Member States where such shares are listed.
Issuers of shares listed in a stock exchange located or operating in Portugal and a stock exchange located or operating in a non-EU country must provide the CMVM and Euronext Lisbon with any additional information that, being relevant for the valuation of the shares, they are bound to provide to the markets and to the authorities of that country.
Issuers must also publish their annual reports and information in respect of their activities and financial results in each semester or quarter, depending on the assets, the net sales, and the average employees.
The companies that issue shares admitted to listing must immediately inform the public of any events occurring within their field of activity that are not public knowledge and that, due to their impact over the net asset or financial situation or in the normal course of their business, are likely to influence, in a relevant way, the price of the shares.
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