Further to Law 15/2017 of 3 May, which has (i) prohibited the issue of new bearer securities and (ii) created a transitional six-month regime —until 4 November 2017 (“Transitional Period”)— in order to convert the existing bearer securities into registered securities, Decree-Law 123/2017 was published on 25 September 2017 (DR 185, Series I, of 25 September 2017) and entered into force on 26 September 2017.
Decree-Law 123/2017 establishes the procedure applicable to this conversion.
Issuers of bearer securities shall, during the Transitional Period, publish an announcement informing the holders of those securities about the procedure for their conversion into registered securities. The announcement shall contain, in particular:
- the identification of the securities at stake;
- the legal grounds for the decision regarding the conversion;
- the date on which the amendments to the company’s articles of association and to the remaining documents regarding the conversion of bearer securities into registered securities were approved, as well as the corresponding deliberative body;
- the expected date for filing registration requests regarding the amendments to the articles of association and remaining acts subject to commercial registration;
- the consequences of the non-conversion of the bearer securities during the Transitional Period;
- in the case of bearer securities represented by certificates that are not integrated in a centralised system, the reference that the certificates shall be presented to the issuer or financial intermediary indicated by the latter (a) by the holders or through their instructions and on their behalf, (b) by the depository entities, or (c) by the entities which hold the certificates in their possession (including beneficiaries ofguarantees) until 31 October 2017, for the purposes of their update or replacement; and
- in the case of bearer securities integrated in a centralised system, the indication of the estimated date of conversion in said system.
This announcement shall be published (i) on the issuer’s website, when it exists; (ii) on the Ministry of Justice’s website, in the section Online Publications of Corporate Acts; and (iii) in the case of issuers of securities admitted to trading on a regulated market or multilateral trading facility or publicly traded companies, in the Information Disclosure System of the Portuguese Securities Commission.
DUTY OF FINANCIAL INTERMEDIARIES
The financial intermediaries with whom bearer securities represented by certificates and not integrated in a centralised system are deposited shall communicate to each client, in a durable format, that the certificates shall be presented to the issuers to be converted, as well as inform them of the legal consequences in the event of non-conversion.
MODES OF CONVERSION
A) DURING THE TRANSITIONAL PERIOD, AT THE INITIATIVE AND EXPENSE OF THE ISSUER
The conversion occurs during the Transitional Period:
- in the case of bearer book-entry securities, by registration in the respective individual securities accounts;
- in the case of bearer securities represented by certificates and integrated in a centralised system or bearer securities represented by certificates deposited with a financial intermediary and whose issue or series is represented by a single certificate, by replacement or amendment of the respective certificates and registration in the respective individual securities accounts; and
- in the remaining cases of bearer securities represented by certificates, by replacement or amendment of the respective certificates.
B) DURING THE TRANSITIONAL PERIOD, BY THE MANAGING ENTITY OF A CENTRALISED SYSTEM OR FINANCIAL INTERMEDIARY
When the same are not converted upon the initiative of the issuer:
- bearer securities integrated in a centralised system shall be converted by the managing entity of the centralised system on the last day of the Transitional Period, in the terms to be defined by the managing entity; and
- bearer book-entry securities registered with a single financial intermediary shall be converted by that financial intermediary on the last day of the Transitional Period.
C) AFTER THE TRANSITIONAL PERIOD
The certificates representative of the bearer certificated securities which have not been converted into registered securities during the Transitional Period shall be presented to the issuer to be converted (by replacement or amendment of the respective certificates).
UPDATE OF REGISTRATIONS
Following the conversion:
- issuers shall request the registration, among other matters, of the amendments to their articles of association and to the remaining documents subject to commercial registration which are necessary for the conversion of the bearer securities into registered securities; and
- the managing entity of a centralised system, registering entities and issuers shall update the respective registries of the converted securities.
EXEMPTION OF FEES
The commercial registry acts and the publications carried out pursuant to Decree-Law 123/2017 are exempted from fees.
CONSEQUENCES OF A BREACH
Under the terms of Law 15/2017, once the Transitional Period has lapsed:
- the transfer of bearer securities will not be valid; and
- the right to participate in the distribution of results associated with the bearer securities will be suspended.
In this context, Decree-Law 123/2017 establishes that the amount of dividends, interest and any other form of income whose payment is suspended shall be deposited in an account opened in the issuer’s name with a single, authorised credit institution and be delivered to the security holders once the conversion has taken place.
 The amendments to the articles of association and to the remaining documents regarding the issue of securities that are necessary for the conversion of the bearer securities may be approved by the issuer's board of directors, without the need for approval at the shareholders’ general meeting (however, this corporate body may also pass resolutions on these matters).