On October 28, 2010, the Council of Ministers has approved the accession of Portuguese State to the London Agreement relating to the European Patent Convention. The London Agreement establishes simplifying rules on the procedure for translation of European patents granted under the European Patent Convention dated 5 October 1973.
European patents granted by the European Patent Office (“EPO”) entitle their holders to the same rights as the rights of a national patent granted by local authorities. Notwithstanding this, a European patent must be validated in each State where it should be made effective.
In Portugal, the validation of European patents is held by the Portuguese Institute of Industrial Property (“INPI”). Currently, the completion of this validation process requires that the holder of patent submits a Portuguese translation of the descriptions, claims and abstracts of the European patent.
With the accession of Portuguese State to the London Agreement, the holder of the European patent will be only obliged to translate into Portuguese the claims of the patent. The remaining elements can be now submitted in English. These elements are mainly of technical nature, such as descriptions, abstracts and drawings, and represent between 70% and 90% of patent documentation.
This translation scheme exemption is not still extended to all patents granted by the EPO. The English patents granted in English are exempted from translation; however, this does not apply to the patents issued in German or French.
Furthermore, the European patents will continue to be fully translated into Portuguese to the extent they may be subject to legal proceedings in Portugal, which is explained by facilitating the understanding of the matters in dispute between the parties.
This translation scheme is mainly aimed at reducing the high costs of translation incurred by citizens and companies, thus increasing foreign investment in Portugal.
Nevertheless, some critics point out that this new scheme may undermine the protection of the Portuguese language.
The INPI and the European Patent Organization are therefore developing a software tool that enables an automatic and free of charge translation of the technical elements of the patents into Portuguese. This translation tool is expected to be available in 2011, providing consultation to all the elements of the patent in Portuguese.
Portuguese State has joined a group of 16 countries that are already signatories of the London Agreement, which was originally signed in 2000 by the EPO.
The Portuguese Government issued this week Resolution 79/2010 which approved the main terms and conditions of the eighth phase of the re-privatisation of EDP – Electricidade de Portugal, S.A. (“EDP”).
EDP is the Portuguese producer and distributor of electricity. It holds investments in the USA, Brasil, Spain, France, Belgium, Poland and Romania.
Presently, EDP is the third largest renewable energy operator in the Iberian market and the third largest player in wind energy world-wide. It was recently recognised as number one in the utilities sector of the Dow Jones Sustainability Indexes.
The re-privatisation of EDP started in June 1997, with the sale of 30% of EDP’s share capital. The others phases took place in May and June 1998, October 2000, October 2004, December 2005 and November 2007.
The new phase of EDP’s re-privatisation was included in the Portuguese Stability and Grow Programme with a view to reducing the public debt and the debt charges. The 2010 State Budget approved the re-privatisation programme of certain public companies and public owned shareholdings, including Galp Energia and EDP. The target is to obtain 1,200 million Euros, corresponding to 0.73 % of the gross domestic product.
Before EDP’s re-privatisation, the Portuguese Government launched the fifth phase of re-privatisation of Galp Energia, through the issuance of convertible bonds corresponding to 7% of Galp Energia’s share capital, worth 885 million Euros.
Decree-Law 105/2010, of 1 October 2010, approved the eighth phase of the re-privatisation of EDP. Under this Decree-Law, the re-privatisation of EDP will also be carried out through the issuance of convertible bonds by Parpública corresponding up to 10% of capital stock of EDP.
Resolution 79/2010, of 12 October, set out the re-privatisation of a maximum of 365 million shares of EDP. The convertible bonds will be distributed by a restrict group of national and international institutions, including, among others, Caixa Geral de Depósitos, Bank of America – Merryl Linch, BNP Paribas, Citigoup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Royal Bank of Scotland and UBS.
Each convertible bond will give its holder the rights to earn interest, the repayment of principal or the delivery of certain EDP’s shares. The maturity of the bonds will be 7 years. The reference price will be determined based on the average stock prices in the previous 5 days of the begining of the subscription period. These bonds may, at Parpública’s option be listed at Euronext or other markets.
If any of the shares that are being re-privatised are not used by Parpública to repay the bonds to the investors, Parpública must sell those shares in the national or international stock exchanges.
After this eight phase of re-privatisation, the Portuguese State will keep a shareholding of, approximately, 12.55% of EDP’s share capital.
© 2010 Macedo Vitorino & Associados
1. No par value shares
As of the entrance into force of the new corporate rules, public limited liability companies may issue no par value shares, which are expressed by the quantity of issued shares and their issue value. It is important to refer that a public limited liability company is forbiden to have par value shares and no par value shares at the same time. Moreover, the issue value of no par value shares cannot be lower than 1 cent and they must represent the same part of the share capital.
The permission to issue no par value shares aims to facilitate companies’ capital raising where those raising were not permited as they would involve the issue of shares below par, which is not allowed, or the previous reduction of the capital’s face value in order to adjust it to the corporate assets (the so-called “harmonium operations”). Therefore, a public limited liability company may issue no par value shares at a price similar to their real value and, as a result, more attractive to investors than other shares.
2. The strengthening of shareholders’ rights
The Decree-Law sets out new rules on shareholders’ rights of listed companies, transposing to the Portuguese legal framework Directive 2007/36/CE of the European Parliament and the Council, of 11 June, which eliminates significant barriers to the exercise of shareholders’ full voting rights at listed companies.
Thus, it should be highlighted the following aspects (i) the new attorneyship rules at shareholders’ meetings, according to which the articles of association cannot forbid any shareholder to be represented by another person during shareholders’ meetings, which applies not only to listed companies but also to public limited liability companies, (ii) the possibility of appoint a different attorney for each share account owned by the shareholder, (iii) the possibility for financial intermediaries to vote in different ways according to the interest of each of their clients and (iv) the strengthening of the rights of shareholders on the information to be included on the notice of shareholders’ meetings and on the clarification of the aspects to be included, particularly, on the agenda of those meetings.
3. Entry into force
Decree-Law 49/2010 entered into force on 24 May 2010.
The Portuguese government has endorsed strategic guidelines for the energy sector by defining the National Energy Strategy for the next ten years (“ENE 2020”). Recently approved by the Cabinet Resolution no. 29/2010, it implements the "New Energy Plan ("Plan”) proposed by the government.
1. The National Energy Efficiency Fund
The Fund will be the financial instrument of the National Action Plan for Energy Efficiency. It is endowed with 1.5 million euros and aims to achieve three goals, (i) encouraging energy efficiency, (ii) supporting new energy efficiency projects and (iii) promoting behaviour change.
The Fund will finance the purchase of equipment with high energy performance by citizens and companies and will grant facilities to support the investment in renewables, including the solar thermal energy through the National Reference Strategic Framework – QREN.
2. Strengthening renewable energies
The Plan includes the consolidation of the already scheduled investments on hydroelectric dams currently under construction. There is also margin for expansion in small hydro power facilities of 250 MW, helping to achieve a total of 8600 MW of hydro power. The implementation of projects of reversible capacity with integrated wind energy is also contemplated enabling the reuse and storage of hydropower energy based on wind.
By 2020, public tenders for wind farms licensing up to 3000 MW must have been launched. Several solar programmes will increase the installed capacity to 1500 MW. The government has a target of 250 MW for wave power plants and 250 MW for geo thermal energy.
3. Other investments
A system of planning and monitoring of demand and supply will be implemented in the first semester of 2010. And by 2012, a pilot project, the smart city of Évora, will contribute to give the majority of Portuguese consumers access, by 2020, to intelligent networks, as well as to the creation of a fund of balance tariffs.
The Plan confirms the evolution of MOBI.E, ensuring the creation of a nation wide network of charging electric vehicles, in order to substitute, approximately, 10% of fossil fuel consumption.
On 8 October 2009, the Portuguese Competition Authority ("AdC") was notified of an acquisition proposal of joint control of Grupo Media Capital, SGPS, S.A. by Ongoing Media, SGPS, S.A. and Vertix, SGPS, S.A..
To be approved, this transaction would consist in the acquisition by Ongoing of 35% of share capital of Media Capital in line with a shareholders' agreement to be executed between Ongoing and Vertix.
Ongoing Media is a holding company of Ongoing Group, which operates in several areas, such as online financial publications, owning the daily newspaper “Diário Económico” and 23% of Impresa. Impresa is, in turn, owner of the newspaper “Expresso” and the magazine “Visão” and the television channel “SIC”.
Vertix is a holding company, wholly owned by Prisa, and operates in the sector of written press and publishing and distributing books in Portugal.
Media Capital is a holding company owned 95% by Prisa, which operates mainly in the television and radio sectors.
The assessment of this merger required two binding opinions of the regulatory authorities for the media ("ERC") and the electronic communications (“ANACOM”).
ANACOM considered that the merger would not enhance the market share of Ongoing on the electronic communications market. Unlike, ERC opposed the transaction.
According to ERC, its positive opinion would be unable to get by without the sale of Ongoing’s share capital in Imprensa so that it has become less than 1%.
Moreover, Ongoing, as shareholder of Media Capital, would not be allowed to (i) increase its equity participation on Impresa beyond 1% and (ii) interfere in internal affairs, social, editorial or otherwise in Impresa.
After hearing and reviewing the comments submitted by the stakeholders, AdC has decided to oppose the merger on the basis of the negative binding opinion issued by ERC.
Despite the competition assessment of this transaction, AdC considered that the public interest in safeguarding the diversity and pluralism in media, as stated in ERC’s opinion, would justify the refusal of this merger.
This negative decision evidences that, rather than a competition assessment, AdC especially took into account ERC’s opinion to refuse the merger.
In this context, it would be interesting to verify whether AdC could not be subjected the clearance of this transaction to the remedies, as stated in the ERC's opinion, including the sale of almost all of Ongoing’s equity capital in Impresa.
One year after the nationalisation of Banco Português de Negócios (BPN), during which BPN was managed by the State bank Caixa Geral de Depósitos, the Portuguese Government has approved the guidelines for the re-privatisation of BPN.
The decision to nationalise BPN was announced in November 2008, following the assessment of €700 million of losses. The nationalisation was aimed at avoiding the systemic effect that could result from the insolvency of an institution of the size of BPN.
In the announcement of the Council of Ministers, the Government justified the re-privatisation of BPN taking into account that the worst phase of the financial crisis had been overcome.
According to the Government’s announcement, the re-privatisation will be carried out by way of an invitation for tenders for the acquisition of 95% of the share capital of BPN. The remaining 5% will be privatised in a public offering reserved to the employees as required by law.
The only entities allowed to submit tenders for the acquisition of the 95% of BPN will be:
(a) Credit institutions;
(b) Insurance companies; and
(c) Holding companies owned by credit institutions or insurance companies or holding companies that own 100% of credit institutions or insurance companies.
The bids may be submitted by any of these institutions, individually or in consortia.
In order to ensure the stability of the shareholder structure, the Government will impose a five-year lock-up period of 51% of the shares acquired in the re-privatisation.
Notwithstanding, this limitation will not prevent the restructuring, merger or the incorporation of BPN into the winning bidder.
The employees that acquire shares under the public offering will be subject to a one month lock-up period.
For the purposes of the assessment of the minimum bidding price, the board of directors of BPN will submit a proposal to the Minister of Finance after obtaining two independent valuations.
Over the last year, it was publicised that there were various local and international banks, including Montepio, Banco Popular, BBVA and Barclays, which could be interested in acquiring some of BPN’s assets, in particular in its 218 branches which is one of the largest retail networks in Portugal. However, the appetite of potential bidders for BPN will depend on the actual terms and conditions of the tender, in particular the manner how the Government proposes to deal with the disclosed and undisclosed liabilities of BPN and its Cape Vert bank, Banco Insular.
© 2009 Macedo Vitorino & Associados
Following the financial crisis, the Portuguese Government granted a guarantee in favour of Banco Privado Português (“BPP”). This guarantee was approved by the European Commission on 13 March 2009.
BPP is a small Portuguese financial institution providing private banking, corporate advisory and private equity services, mostly to private clients.
The purpose of the guarantee, amounting to 450 million euros, was to help BPP to get credit from other financial institutions. With this support, BPP managed to obtain a loan from six Portuguese financial institutions.
The European Commission authorized the Portuguese Government to provide the guarantee for an initial period of six months but required the submission of a plan setting out the measures that the Portuguese Government intended to implement in order to ensure the restructuring of BPP, in compliance with the European Community rules on State aids.
The adoption of this plan was a condition for accepting a guarantee fee below the level that would have been applied under the European Commission guidelines on state aid to overcome the financial crisis.
However, until now no restructuring plan was submitted to the European Commission. In addition, on 5 June 2009 the Portuguese Government extended the term of the guarantee for an additional period of six months, which it failed to notify to the European Commission.
As a result of the lack of approval of the plan and the extension of the term of the guarantee, the European Commission has now decided to open a formal investigation to assess whether the guarantee is still in accordance with the guidelines of the European Commission on State aids.
In particular, the European Commission intends to assess whether that aid is appropriate to solve the specific situation of BPP without distorting competition in the European Community market.
The European Commission also intends to determine if the restructuring of BPP is still a satisfactory measure to solve BPP’s situation and would avoid further State aids in favour of this financial institution in the future.
Although the outcome of this investigation is not predictable, if the European Commission concludes that the guarantee is an illegal aid, it is likely that the Portuguese Government will have to withdraw or change such aid, which may aggravate the situation of BPP and compromise its restructuring in the short or medium term.
Whatever decision is taken by the European Commission, the Portuguese Government will be bound to comply, as otherwise the European Commission could initiate a proceeding against the Portuguese Government before the European Court of Justice, which could imply the application of sanctions.
© 2009 Macedo Vitorino & Associados
Following several complaints filed in 2003, the Competition Authority imposed a fine of 53 million Euros to the PT Group and ZON Group for abuse of dominant position in the broadband access wholesale and retail markets.
At the time of the filing, the PT Group was the main national supplier In the wholesale and retail markets and held, through its wholly owned subsidiaries Telepac and TV Cabo, a market share of 70.7% in 2002 and 77.7% respectively.
Taking into account that PT Group’s wholesale supply – “PT ADSL Network” – was indispensable for the provision of electronic communication services, the PT Group artificially fixed tariffs’ prices, and discriminated and limited the production, distribution, technical development and investment in "SAPO ADSL.PT" wholesale service and in "SAPO ADSL.PT - Standard", "Speed On Netcabo 640", "Use Netcabo Speed RC" and "Speed On Netcabo 128”, all retail services.
According to the Competition Authority, the PT Group systematically applied different conditions for equivalent services and engaged in positive discrimination in favour of another PT Group’s undertaking by applying a discount system to the wholesale tariff offer.
It is estimated that PT’s competitors, such as Clix, Novis Telecom, Media Capital and Onitelecom, have suffered losses of approximately 11 million Euros during the period between 22 May 2002 and 30 June 2003.
The fines now applied by the Competition Authority to PT and ZON (which was span off from PT in 2007) follows two other landmark decisions against PT of 2007 and 2008 for abuse of dominant position, by refusing access to TVtel and Cabovisão to its cable networks, and for abuse of dominant position in the wholesale market for circuit leasing respectively.
This last decision confirmed that the Competition Authority wishes to create a level plain field in the electronic communications market by applying exemplary fines to the incumbent operator for breaching competition law, following the European Commission’s trend as shown by the recent the Microsoft and Intel cases.
However, in the future, the Competition Authority’s procedures should be more expedient, not only to avoid the risk of impunity of the offending undertakings that may result from the prescription of the procedures, but also to reduce the barriers to the entry of other competitors in the market, which may ultimately harm end consumers.
The decision, which may still be appealed by PT and ZON, may lead to civil claims from the operators that were harmed by PT’s conduct. In these civil actions, the operators may claim compensations against PT and ZON for the suffered damages by the abuse of dominant position.
© 2009 Macedo Vitorino & Associados
Decree-Law No. 185/2009, enacted on 12 August 2009, (i) establishes a set of measures aiming at simplifying the corporate restructuring procedures and (ii) amends the reporting obligations of Portuguese companies, implementing the provisions of Directive No. 2006/46/EC of 14 June 2006, which has established new rules with a view to enhance the comparability of financial information in the European Union and to reinforce the corporate governance policies.
With respect to the simplification measures, we would highlight the following:
(a) Simplification of the proceedings of merger and spin-off of companies by (i) making available an online draft merger or spin-off project, where the company may also request the registration of such project with the Commercial Registry Office, (ii) establishing that the publication of the call for the shareholders assembly of a company resolving on the merger or spin-off project is automatically promoted by the Commercial Registry Office simultaneously with the publication of the registration of the merger or spin-off project and without charge, (iii) establishing that the creditors may oppose the merger or spin-off by submitting a request before the Court within one month as of the publication of the registration of the merger or spin-off project (thereby eliminating the obligation to publish a special notice to that effect), and (iv) extending the simplified merger by incorporation proceeding to companies holding 90% of the share capital of the company to be incorporated (until now such proceedings would only apply to wholly-owned companies);
(b) Simplification of the tax exemption proceedings applicable to corporate restructuring operations by establishing a 10-day period for the relevant authority to issue its opinion on the proposed operation (which is considered to be favourable in case the opinion is not issued within the above-mentioned period). Also, the intervention of the Competition Authority and of the Registration and Notary Institute in such proceedings is eliminated;
(c) The costs of registration of the merger or the spin-off before the Real Estate Registry, the Vehicle Registration and the Ship Registration are included in the costs of registration of the merger or spin-off before the Commercial Registry, ceasing to be an additional cost; and
(d) Companies may adopt corporate governance models other than those established set out in the Portuguese Companies Code.
As to the reporting obligations, the companies are obligated (i) to report in their annual accounts and consolidated accounts, when applicable, the nature, purpose and financial impact of some off-balance sheet operations and (ii) to make available information on the adopted corporate governance model.