Decreto-Lei n.º 126-C/2017
- Tipo de Diploma:Decreto-Lei
- Páginas:5600-(16) a 5600-(21)
Summary in plain english (Without legal value)
What is it?
This decree-law creates the Co-investment Fund 200M.
This fund will finance Small and Medium-Sized Enterprises (SMEs), through equity and quasi-equity investments, in a co-investment scheme (a partnership with other investors).
Equity investments refer to the purchase of part of a company (part of its capital) in exchange for money given to that company by investors.
Quasi-equity investments are a way for a company to fund itself by receiving money in exchange for a return based on its profits or losses. This type of investment offers no guarantees to investors.
What will change?
The Co-investment Fund 200M will be created
This fund will invest in companies, in which other venture capitalists are also investing, acquiring holdings in these companies. These investments are called co-investment operations.
The portfolio (securities) of the fund may consist of:
- share of SMEs capital
- securities issued by SMEs to finance themselves
- stock options or quotas in companies in which venture capital investors participate
- guarantees provided by the fund in sharing the risk of venture capital operations in co-investment with other investors.
The fund will have 100 million euros of capital
The initial capital of the fund will be fully financed by the European Structural and Investment Funds (FEEI).
The fund’s capital may be increased or decreased by decision of its general council.
The following may contribute to the fund:
- the European Union (e.g. through the FEEI)
- other public investors and financial institutions
- income resulting from the fund’s activity
- other income attributed to it, such as those intended to pay debts to the fund.
Application for the fund must be made by an investor
In order to get the fund to invest in a company, a venture capitalist (the co-investor) must apply to the fund. The co-investor can only apply if they have already decided to make an investment in the company of an amount greater than or equal to what they are asking the fund for.
When investing in a company, the fund and the co-investor may not hold a stake, which combined is greater than or equal to half the capital or voting rights of that company.
The fund will be intended for investing in early-stage SMEs
This fund will finance SMEs with innovative products or processes. Preference will be given to start-up companies.
This fund cannot invest in other funds.
The fund will have an investment committee and a general council
The investment committee evaluates the co-investment operations to be carried out by the fund and decides if they should be made.
The general council manages the fund and approves the necessary instruments for that management, such as annual reports, financial plans and annual budgets. It also decides on capital increase or reduction.
The fund is monitored by:
- a chartered accountant appointed by the general council
- the Finance General Inspection, which assesses whether the law is being complied with and issues a statement on the fund’s annual accounts.
The fund will be represented by its management body
The management body exercises all rights related to the fund’s assets and performs all actions necessary to ensure its correct administration, such as:
- complying with and executing the decisions of the general council
- defining the fund’s organization and functionality
- creating and executing the business plan under the guidelines of the general council and the fund’s participants
- keeping accounting and documentation in order
- monitoring the economic situation of the companies it finances
- informing the general council and the fund’s participants about investment strategies, current and future investments, and the companies' and the fund’s accounts.
The managing body is chosen through a public tender.
What are its benefits?
This decree-law is intended to facilitate the creation and financing of small and medium-sized enterprises (SMEs):
- reinforcing the offer of available equity and quasi-equity financial instruments
- reducing the number of intermediaries and increasing the amounts for investment
- maintaining the participation of public and private venture capital entities, with private-led investment.
It is also intended to develop venture capital activity in Portugal.
When does it come into effect?
This decree-law comes into effect five days after being published.