Decree Law No. 123/2017
- Issuer: Finance
- Diploma Type: Decree Law
- Number: 123/2017
- Pages: 5508 - 5510
Summary in plain english
This decree-law defines the rules for converting bearer securities into registered securities. This conversion is mandatory, is in accordance with the law and must be completed by 4 November 2017.
Securities are documents issued by companies or other entities, which represent rights and duties, and can be bought and sold (for example, on the Stock Exchange). The best-known securities are stocks and bonds, which investors buy with the expectation of future earnings.
Registered securities are issued and sold with a record of the holder's identification; bearer securities do not require such registration and may be by deed (recorded in an account) or certified (represented by paper documents).What will change?
Since 4 May 2017, the law prohibits issuing bearer securities. Therefore, rules will be defined to convert current bearer securities into registered securities, modifying or exchanging these documents so that they contain the identification of each document’s owners.The process for converting securities will be established
1. Companies that have issued bearer securities must announce the conversion of bearer securities on their website, at the Justice Online Portal or on the information disclosure system of the Portuguese Securities Market Commission.
2. If the securities are registered in a centralized system, the announcement must indicate the date of the registered securities conversion.
3. If the certificated securities are not registered in a centralized system, they must be delivered to the issuing company by 31 October 2017 to be updated or exchanged for new ones.Unconverted values will be converted automatically after 4 November 2017
Bearer securities registered in a centralized system that are not converted into registered securities by 4 November 2017 will be converted automatically. The entity that manages the centralized system must convert them.
Deed bearer securities that are registered in a single financial intermediary (for example, a bank) and are not converted into registered securities by 4 November 2017 will be automatically converted. The financial intermediary must convert them.
The remaining bearer securities that are not converted until 4 November can only be used to request their conversion to the issuing company. In the meantime, the proceeds of such securities will be deposited into a bank account to guarantee payment to the holders after the conversion.Facilitating changes to contracts of issuing companies
Partnership agreements and other documents from issuing companies (companies that have issued bearer securities) must be changed. To facilitate this process, those changes can be decided by the companies’ management body (usually the board of directors), without having to be approved at the general shareholder meeting.
In addition, these changes do not have to pay the costs usually charged by registry offices to register changes.What are its benefits?
This decree-law allows for the practical application of the law that prohibits issuing bearer securities, which is a way of combating the use of the financial system for money laundering.When does it come into effect?
This decree-law comes into effect the day after being published.
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