Decreto-Lei n.º 77/2017
- Tipo de Diploma:Decreto-Lei
- Páginas:3292 - 3297
Summary in plain english (Without legal value)
What is it?
This decree-law creates securities investment companies to stimulate the economy and short-term debt certificates.
It also changes the way in which control relationships over corporations will be considered in the Portuguese Securities Code.
What will change?
Securities investment companies will be created to stimulate the economy
These companies aim to make at least 70% of their investments in:
- small and medium-sized enterprises
- enterprises with market capitalisation under 50 million euros (average of the last 3 years)
- small mid cap companies or mid cap companies that do not issue securities traded on the stock exchange.
|Term||What it means|
A small enterprise has both:
A medium-sized enterprise has both:
Small mid cap company
A small mid cap company is a company that does not meet the conditions to be considered a micro, small or medium-sized enterprise, and that employs fewer than 500 employees.
Mid cap company
A mid cap company is a company that does not meet the conditions to be considered a micro, small or medium-sized enterprise, and that employs fewer than 3,000 employees.
Securities are financial assets that can be traded in the market (they can be stocks, bonds, certificates, shares in an investment fund or others).
Stock market capitalisation
Stock market capitalisation is an estimate of the company’s total value calculated by multiplying the stock price by the number of shares.
Investment Companies for the Stimulation of the Economy (SIMFE — Sociedades de Investimento Mobiliário para Fomento da Economia) are public limited companies with a minimum share capital of 125,000 euros.
SIMFEs must register with the Portuguese Securities Market Commission (CMVM) before starting their activity. The CMVM will supervise the SIMFEs and must be informed:
- annually on their activity and investment portfolio
- whenever the value of their investment portfolio exceeds the set limits.
SIMFEs have a minimum duration of 10 years and must distribute at least 30% of their profits to their shareholders.
- invest more than 15% of their assets in a single company or in companies of the same group
- ask for loans exceeding 10% of their capital
- buy real estate, except for their facilities.
New rules for commercial paper
Commercial paper is a way for companies to finance themselves through short-term debt.
The maximum term for commercial paper will change from one year to 397 days.
Commercial paper will no longer be issued on paper or belong to anyone holding it. The purchase will now be electronically registered and must include the buyer's identity.
Short-term debt certificates will be created
Short-term debt certificates are a form of commercial paper:
- whose value can be accurately determined
- that can be transferred freely
- that have liquidity (can be sold with limited costs in a short period of time) or an issuing sponsor (entity that holds 5% of the commercial paper issued and discloses it to the market).
These certificates must be identified as such in the information given to investors and in advertising.
New rules for determining whether a control relationship exists
A control relationship exists when a person or organization has a dominant influence in a corporation by having a majority of the voting rights or by being able to appoint or remove the management or supervisory bodies.
From now on, when a person or organization has a control relationship with more than one corporation, these relationships will be taken into account separately.
What are its benefits?
This decree-law is intended to:
- create alternatives to bank credit for small and medium-sized enterprises
- stimulate investment, both national and foreign.
When does it come into effect?
This decree-law comes into effect on 1 July 2017.