Private placement rules and law in Portugal

1. Summary of private placement provisions for fund interests (if applicable)

The Portuguese Securities Code enacted by Decree-Law 486/99, in its current version, given by Decree-Law 66/2023 (“PSC”), does not provide specific private placement provisions applicable to the offer of securities (which include shares, bonds, equity instruments, units in collective investment undertakings, covered warrants, certain rights detached from securities and other documents representing similar legal situations, provided they may be traded on the market). 

All those that are not legally defined as public offers should be considered private placements. In this regard, the PSC determines that public offers are: 

  1. Public offers of securities requiring prior disclosure of a prospectus or other document required pursuant to European Union legislation; and 
  2. Takeover bids. 

As general rule, private placement is not subject to any particular regulatory rule or supervision. Nevertheless, there are some activities that are exclusive of regulated entities, therefore falling under the scope of supervision of CMVM, and some securities shall follow certain rules when being marketing. We refer to, without limitation, (i) financial activities (investment services and ancillary services as defined in MiFID II) which are exclusive of regulated financial intermediaries and investment companies, (ii) the asset management activity (which includes UCITS, AIFs, AIFs and management entities in general), (iii) banking and credit activity (which are exclusive of regulated entities). 

The above means that private placements of securities do not mandatorily have to follow strict and regulatory rules, however, it is necessary to assess whether an entity is allowed or not to deal with such securities and whether a particular security has a specific legal framework (such as units in collective investment undertakings which must follow the rules set forth in the Asset Management Regulation, approved by Decree-Law 27/2023). 

2. Pre-marketing and marketing by AIFMs and UCITs Management Companies in Portugal 

The Asset Management Regulation, which entered into force during 2023, set forth multiple rules related to the pre-marketing and marketing of collective investment undertakings’ units. Not only establishes what kind of entities are allowed to develop these activities, as foresees how these activities can be carried out. 

A summary of the Portuguese pre-marketing and marketing regime regarding UCITS and AIFs can be found at UCITS Passporting in Portugal | CMS Expert Guides and AIFM Passporting in Portugal | CMS Expert Guides, respectively. 

3. Other forms of possible placement options for fund interests outside fund regulations

Reverse solicitation is not deemed to constitute a public offering in Portuguese territory and, in such context the entity does not need to be registered or have a prospectus approved in Portugal. 

According to the Legal Framework for Investment Companies (entered into force in December 2021) as general rule investment companies from third-countries that aim to provide investment services and activities in Portugal must obtain prior authorization from the CMVM. However, the Legal Framework for Investment Companies also establishes an exemption from this general rule in case of “reverse solicitation”. The law expressly refers that investment companies from third-countries do not need to obtain prior authorization from CMVM “when a client, whether a professional or non-professional investor, established or located in Portugal, initiates exclusively on its own initiative the provision of an investment service or the exercise of an investment activity by an investment firm based in a third-country”.  

4. Consequences of non-compliance with placement regimes for fund interests 

Making a public offer without approval of a prospectus or registration with the CMVM is considered to be a very serious offence and may be subject to an administrative fine of between EUR 25,000 and EUR 5,000,000.

Additionally, certain additional sanctions may be imposed on those responsible for any offence:

  1. Apprehension and loss of the object of the offence, including the benefit obtained by the infringer;
  2. Temporary suspension or disqualification of the exercise by the infringer from the profession or the activity to which the offence relates;
  3. Disqualification from the exercising the functions of administration, management, control, supervision and, in general, representation of any financial intermediary within the scope of any or all activities of intermediation in securities or other financial instruments;
  4. Publication by the CMVM of the sanction imposed in view of the offence, at the expense of the infringer and in places suitable for the accomplishment of the aims of general prevention of the legal system and protection of securities or other financial instruments markets;
  5. Revocation of the authorisation or cancellation of the registration necessary for the performance of the activities of financial intermediation in securities or in other financial instruments.

5. Private placement rules for non-fund investments available

As previously mentioned, the PSC does not provide private placement provisions applicable to offers of securities, which include shares, bonds, equity instruments, units in collective investment schemes, covered warrants, certain rights detached from securities and other documents representing similar legal situations, provided they may be traded on the market.

Similarily, investments related to the transfer of shares of limited liability companies by quotas (sociedades por quotas) which are not subject to the PSC, as the same are not considered to be securities under Portuguese law, are not subject to specific private placement rules.