Country Lawyer Carlos Filipe Couto · Carlos Filipe Couto Vieira de Almeida & Associados, Sociedade...

The information contained in this factsheet is a high-level summary of the applicable regulation and legislation in the relevant domicile. Nothing in the contents of this information is intended to provide legal or other professional advice and we do not accept any responsibility for any loss arising from reliance on this information without seeking legal or other professional advice. This information may not reflect the most current legal developments. Both the content and interpretation of the law and regulation addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken, without seeking professional advice, based on any or all the contents of this page or the entire site to the fullest extent permitted by law.

Portugal

Country Lawyer

Carlos Filipe Couto Vieira de Almeida & Associados, Sociedade de Advogados, S.P. R.L. Rua Dom Luís I, 28 1200-151 Lisboa, Portugal www.vda.pt

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To Whom Can I Sell My Products?

Investor Definition

Client categorisation is contained under Article 30 of the Portuguese Securities Code (Decree-Law No. 486/99 of 13 November, as amended).

Professional Clients

Under the Portuguese Securities Code, a professional client is defined to mean:

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1. the following entities that operate in the financial markets subject to a license or a similar foreign entity under authority supervision:

• investment firms, credit institutions, fund management companies, alternative investment fund managers, depositaries;

• stock exchanges (regulated market operators);

• central securities depositaries, central counterparties;

• insurance companies, pension insurance companies, pension funds;

• firms dealing for their own account on markets in financial futures or options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets, or dealing for the accounts of other members of those markets and being guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such firms is assumed by clearing members of the same markets;

• business entities dealing in commodities and/or commodity derivatives on own account;

• as well as other institutional investors;

2. large business entities that meet at least two of the following criteria according to the


financial statements of the last preceding financial period:

• balance sheet total amounts to at least EUR 20,000,000;

• annual turnover amounts to at least EUR 40,000,000; or;

• own funds amount to at least EUR 2,000,000;

3. Foreign national and regional governments as well as foreign public bodies managing public debt;

4. the European Central Bank and similar foreign central banks as well as the International Monetary Fund, the World Bank, the European Investment Bank and similar international associations and organisations;

5. institutional investors that, as their main field of activity, invest in financial instruments;

6. any other client whom an investment firm treats as a professional client under the below section Elective Professional Clients.

Elective Professional Clients

An investment firm may treat a client other than those referred to above as an elective professional client on its own request, provided that the investment firm has assessed that the client is capable of making independent investment decisions and understands the related risks involved and,


furthermore, that the client meets at least two of the following criteria:

• the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

• the size of the client’s financial instrument portfolio exceeds EUR 500,000;

• the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

The request to be treated as an elective professional client will have to be made in writing by the client and the investment firm will have to evaluate whether that client is capable of both making independent investment decisions and understanding the risks involved.

The investment firm will inform the client in writing that it will not enjoy the protection afforded by either the conduct of business rules contained in the Portuguese Securities Code or the Investors’ Compensation Fund and the client will acknowledge in writing that it is aware of the loss of the protection provided by the conduct of business rules and the Investors’ Compensation Fund.


How Can I Sell My Products?

The Concept of Marketing

The concept of marketing has traditionally been interpreted very widely in Portugal, entailing that essentially any activities aiming to promote financial products or services constitute marketing.

According to the Undertakings for the Collective Investment Act (Law No. 16/2015 of 24 February) marketing is defined as the activity aimed at investors, in order to promote the subscription of units or of shares in alternative investment funds (“AIF”) using any advertising or communication means.

The Portuguese Securities Exchange Commission (Comissão do Mercado de Valores Mobiliários or “CMVM”) tends to have a broad interpretation of marketing.

In any case, marketing is generally considered to begin when sufficiently detailed information on the fund is distributed to the investor enabling the investor to make an investment decision with respect to the fund or when potential investors are furnished with (draft) subscription documents and fund documentation.


The Concept of Premarketing

The concept of premarketing is not established in the Undertakings for the Collective Investment Act. In addition, it shall be noted that the Undertakings for the Collective Investment Act expressly establishes that the marketing of an AIF may only commence after its authorisation or passport to Portugal

Soft-circling activities (including road shows, if no actual offer to sell or buy units of an AIF is made), subject to a case by case analysis, should not constitute marketing. Pitchbook style presentations may generally be provided (but it would be advisable to include an appropriate disclaimer wording) whereas the position draft term sheets and/or offering documents is more nuanced.

The distribution of such documents may be regarded as sufficiently detailed information enabling an informed investment decision and consequently qualify as marketing, albeit regarding draft term sheets and offering documents appropriate disclaimers can be used to mitigate the risk and it is quite common to provide draft term sheets and offering documents as part of non-regulated pre-marketing.

The provision of subscription documents is generally considered to constitute marketing. In addition to including appropriate disclaimers in the premarketing material we would further recommend that prospective investors are informed that there will be no


negotiations on the terms of investment and that no subscriptions will be accepted before the AIFM/AIF has the requisite marketing authorisation in Portugal.

The remarks made above apply also to UCITS funds, however considering that such funds generally target retail investors, additional caution shall be used.

Reverse Enquiry

The concept of reverse solicitation is not expressly provided for under the Undertakings for the Collective Investment Act, but is rather viewed as a tolerated market practice. Nevertheless, the Portuguese Banking Law (Decree-Law No. 298/92 of 31 December) implemented in Portugal Article 42 (provision of services at the exclusive initiative of the client) of Directive 2014/65/EU (“MiFID II”).

Where the service would be provided on a genuine reverse solicitation basis, the Portuguese licensing requirements would not be triggered. Any products, services and information provided to a Portuguese investor on reverse solicitation basis are to be limited to the products or services specifically requested by the Portuguese investor (i.e. the content of the information provided must stay within the reverse-solicitation continuum). Provision of information on a reverse-solicitation basis should be documented and evidenced if so requested by CMVM.


In most cases any prior marketing of particular types of strategies or categories of products/services (including so-called premarketing or soft-circling activities) targeted to the relevant potential investor will result in that the reverse solicitation exemption can no longer be relied upon.

Licensing MiFID II

Investment services may be provided in or into Portugal by

• a Portuguese branch office of a duly licensed EEA investment firm or credit institution; or

• an EEA investment firm, or credit institution duly licensed for the provision of the relevant investment services and ancillary services in its home Member State and passported into Portugal; or

• a duly established Portugal branch office of an non-EU/EEA investment firm or credit institution which branch office has been licenced by the Bank of Portugal and CMVM for the relevant investment services and activities and ancillary services.

A non-EU/EEA investment firm may provide investment services to eligible counterparties and per se professional clients on a cross border basis where such firm is registered with ESMA in accordance with Articles 46-48 of the Markets in Financial Instruments Regulation


2014/600/EU (“MiFIR”). Ancillary services may be provided only in connection with core investment services or activities.

UCITS

When is a notification required

The notification process must be completed before any marketing activities are commenced.

What is Required for a Notification

UCITS established in any EEA country can be marketed in Portugal subject to completion of the passport application provided for by the UCITS directive.

As per the provisions of the Undertakings for the Collective Investment Act, the following documentation should be provided as part of a passport application to be made to the Home State Authority of the EEA UCITS Fund:

1. Notification letter 2. Fund rules / Articles of Association or

Incorporation 3. Prospectus 4. KIID translated in Portuguese language


5. Latest annual and semi-annual reports, where available

The UCITS may commence marketing of its units in Portugal as of the date when the competent authorities of its home country have informed the UCITS that the documents referred to above have been delivered to the CMVM.

The KIID shall be translated to Portuguese language irrespective of the nature of the targeted investors. As for the remaining documents, English language may be used.

Gold-Plating

There is no requirement to prepare a Portuguese specific country supplement.

However, it shall be appointed a local paying agent or a local distributor/paying agent in case the fund manager has not passported its licence to directly distribute the funds in Portugal.

Maintenance of the Authorisation

Foreign EEA UCITS must notify the local regulator (CMVM) of any changes to the documents provided as part of the initial passport notification, as well as translations where required. The amended documents


must be submitted to the CMVM in an electronic format.

The CMVM will need to be informed of changes to marketing arrangements, changes in share classes marketed in Portugal (additional/new share classes and removal of share classes), de-registration of sub-funds, name changes of sub-funds etc. Other changes re the material submitted to CMVM will also need to be notified, as applicable, and updated documents (articles of association/incorporation, prospectus, prospectus supplements, KIIDs) will need to be filed with CMVM without undue delay.

Notification Fees

CMVM does not apply any registration fee for UCITS funds or new/additional sub-funds under an already registered umbrella UCITS fund platform.

An ongoing monthly fee of 125 EUR is due to CMVM by each marketing entity in Portugal for each UCITS fund platform marketed in Portugal.

The payment instructions will be provided by CMVM at the time the marketing entity reports the distribution of the UCITS fund in Portugal to the regulator under CMVM Instruction 10/2012.


Alternative Investment Funds

When is a Notification Required

The notification process must be completed before any marketing activities are commenced.

EU AIFM Marketing EU AIF

EU AIFM may market EU AIF in Portugal subject to completion of the passport application provided for by the AIFM. The marketing of an AIF may begin when the manager has received an announcement to that effect from the competent authority of its home state.

As per the provisions of the local Undertakings for the Collective Investment Act, the following documentation shall be provided as part of a passport application to be made to the Home Member State Authority of the AIFM.

1. A notification letter, including a programme of operations identifying the AIFs the AIFM intends to market, and information on where the AIFs are established;

2. the AIF rules or instruments of incorporation;

3. identification of the depositary of the AIF;


4. a description of, or any information on, the AIF available to investors;

5. information on where the master AIF is established if the AIF is a feeder AIF;

6. any additional information referred to in Art 23 AIFMD for each AIF the AIFM intends to market;

7. information about arrangements made for the marketing of AIFs and, where relevant, information on the arrangements established to prevent units or shares of the AIF from being marketed to retail investors, including in the case where the AIFM relies on activities of independent entities to provide investment services in respect of the AIF.

If an EU AIFMs intend to market AIFs under their management also to non-professional clients in Portugal, they must require CMVM a special authorisation under Undertakings for the Collective Investment Act.

Notification Fees

CMVM does not apply any registration fee for AIF or new/additional sub-funds under an already registered umbrella AIF platform.

An ongoing monthly fee of 125 EUR is due to CMVM by each marketing entity in Portugal for each AIF platform marketed in Portugal.


The payment instructions will be provided by CMVM at the time the marketing entity reports the distribution of the AIF in Portugal to the regulator under CMVM Instruction 10/2012.

National Private Placement Regime

EU AIFM Marketing Non-EU AIF

Pursuant to Undertakings for the Collective Investment Act, it is possible for an EU authorised AIFM to market to professional clients in Portugal the units or shares in a third country AIF subject to a prior notification made to the CMVM. Preconditions to the marketing are as follows:

• Existence of appropriate cooperation arrangements for the purpose of systemic oversight and in line with international standards between the CMVM and the competent authorities of the third country where the AIF is established so as to ensure efficient exchange of information;

• Third country where the AIF is established is not listed as a non-Cooperative Country and Territory by the Financial Action Task Force (FATF);

• The AIFM has appointed entities to perform the functions provided for


under AIFMD Article 21(7) - (9) and has provided relevant details to CMVM. The AIFM is not allowed to perform this function itself.

There is no official standard form for the notification letter released by the CMVM, but the notification letter shall contain the following items:

• A notification letter, including a programme of operations identifying the AIFs the AIFM intends to market, and information on where the AIFs are established;

• the AIF rules or instruments of incorporation;

• identification of the depositary of the AIF;

• a description of, or any information on, the AIF available to investors;

• information on where the master AIF is established if the AIF is a feeder AIF;

• any additional information referred to in Art 23 AIFMD for each AIF the AIFM intends to market;

• information about arrangements made for the marketing of AIFs and, where relevant, information on the arrangements established to prevent units or shares of the AIF from being marketed to retail investors, including in the case where the AIFM relies on activities of independent entities to provide investment services in respect of the AIF;


• A certificate issued by the competent authority of the State of origin of the AIF stating that the AIF was legally set up and it is supervised to protect the investors;

• Latest annual and semi-annual reports, where available; and

• Identification of the Law applicable to the AIF.

CMVM will authorise the marketing if the AIF offers a level of protection to Portuguese investors similar to Portuguese AIF and there is reciprocity in respect of the marketing of Portuguese AIF in such third country.

CMVM shall grant the marketing approval within 30 days as from the reception of the complete application file.

Notification Fees

CMVM applies a registration fee of 5,000 EUR per AIF platform. For the registration of new/additional sub-funds under an already registered umbrella fund platform, CMVM will charge an additional charge of 500 EUR per request.

An ongoing monthly fee of 125 EUR is due to CMVM by each AIF fund platform marketed in Portugal.


Non-EU AIFM Marketing Non-EU AIF

Pursuant to Undertakings for the Collective Investment Act, it is possible for a foreign third-country AIFM to market to professional clients in Portugal the units or shares in a third country AIF subject to a prior notification made to the CMVM. Preconditions to the marketing are as follows:

• Existence of appropriate cooperation arrangements for the purpose of systemic oversight and in line with international standards between the CMVM and the competent authorities of the third country where the AIF is established so as to ensure efficient exchange of information;

• Third country where the AIF is established is not listed as a non-Cooperative Country and Territory by the Financial Action Task Force (FATF);

• The AIFM complies with certain requirements established in the Undertakings for the Collective Investment Act, such as: (i) appointment of an auditor; (ii) preparation of accounting statements; and (iii) disclosure of information to investors and CMVM.

There is no official standard form for the notification letter released by the CMVM, but the notification letter shall contain the following items:


• A notification letter, including a programme of operations identifying the AIFs the AIFM intends to market, and information on where the AIFs are established;

• the AIF rules or instruments of incorporation;

• identification of the depositary of the AIF;

• a description of, or any information on, the AIF available to investors;

• information on where the master AIF is established if the AIF is a feeder AIF;

• any additional information referred to in Art 23 AIFMD for each AIF the AIFM intends to market;

• information about arrangements made for the marketing of AIFs and, where relevant, information on the arrangements established to prevent units or shares of the AIF from being marketed to retail investors, including in the case where the AIFM relies on activities of independent entities to provide investment services in respect of the AIF;

• A certificate issued by the competent authority of the State of origin of the AIF stating that the AIF was legally set up and it is supervised to protect the investors;

• Latest annual and semi-annual reports, where available; and

• Identification of the Law applicable to the AIF.


CMVM will authorise the marketing if the AIF offers a level of protection to Portuguese investors similar to Portuguese AIF and there is reciprocity in respect of the marketing of Portuguese AIF in such third country.

CMVM shall grant the marketing approval within 30 days as from the reception of the complete application file.

Notification Fees

CMVM applies a registration fee of 5,000 EUR per AIF platform. For the registration of new/additional sub-funds under an already registered umbrella fund platform, CMVM will charge an additional charge of 500 EUR per request.

An ongoing monthly fee of 125 EUR is due to CMVM by each AIF fund platform marketed in Portugal.

CMVM will provide the NPPR fee payment instructions after the completion of the authorisation process.

The payment instructions for the monthly fee will be provided by CMVM at the time the marketing entity reports the distribution of the AIF in Portugal to the regulator under CMVM Instruction 10/2012.


Fund Literature and Marketing Material

Disclaimers

For UCITS funds’ premarketing material:

“This [document] is not intended to promote the subscription of units or shares in UCITS funds. Its sole purpose is to inform you of a future and potential financial instrument. There will be no negotiations on the terms of investment and no subscriptions will be accepted before the UCITS fund has the requisite marketing authorisation in Portugal.”

For UCITS funds’ marketing material:

There is no need to have a specific disclaimer for UCITS funds, save for the usual ones utilised for any financial instrument marketing.

For AIFs’ premarketing material:

“This [document] is not intended to promote the subscription of units or shares in AIFs. Its sole purpose is to inform you of a future and potential financial instrument. There will be no negotiations on the terms of investment and no subscriptions will be accepted before the AIF has the requisite marketing authorisation in Portugal.”

For AIFs’ marketing material:


“This [document] shall not constitute an offer to the public in Portugal. The [Fund Interests] are offered in Portugal solely to professional clients as defined in the Portuguese Securities Code (Decree-Law No. 486/99 of 13 November, as amended) and in compliance with the Alternative Investment Fund Managers Directive (2011/61/EU) and the Undertakings for the Collective Investment Act (Law No. 16/2015 of 24 February). This [document] has not been approved by the Portuguese Securities Exchange Commission and it does not constitute a prospectus under the Prospectus Directive (2003/71/EC, as amended) or a key investor information document under the Portuguese Law.”

Managed Accounts

Licensing

The provision of managed accounts would most commonly qualify as the investment service of portfolio management, requiring appropriate licensing for the provision of MiFID II activities amounting to e.g. portfolio management in Portugal. In some cases, managed accounts may be an AIF (although CMVM until the present moment has not issued express guidance on this matter), the marketing of which requires the completion of the relevant notification process.

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Country Lawyer Carlos Filipe Couto · Carlos Filipe Couto Vieira de Almeida & Associados, Sociedade...

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