Under the terms of the Commercial Company Code (Código das Sociedades Comerciais), the trading of own shares by public companies issuing shares that are admitted for trading on a regulated market is permitted. Nevertheless, the freedom to do so is subject not only to the duty to disclose information regarding transactions, to be carried out only once the fixed threshold has been achieved, but also to general rules designed to regulate price-fixing on the market, such as the prohibition of manipulation or abuse of the market. At present, companies that issue shares are considered special participants in the market where their own shares are traded. They are a source of information which could have an effect on the price of shares, they are naturally the markets' most informed investors and they are generally the most capable of evaluating whether shares are being traded on the right market at the right price, in terms of the financial and economic situation of the company. The same risks are potentially run by controlled companies trading shares in parent companies.

This special situation gives rise to special duties being imposed on issuers, related to the need for care in the manner in which they participate in the same market on which their shares are traded, regardless of the lawful motives underlying this activity.

In this context, the CMVM has deemed it necessary to recommend principles of participation by issuers who trade their own shares or shares which are governed by the same rules as those governing own shares. The same preoccupations exist in relation to the trading of shares in controlled companies by the parent company, in spite of the fact that these transactions are not subject to the rules governing own shares. Nevertheless, such transactions must adhere to the same principles set down with relation to the trading of own shares and similar transactions.

In general terms, such principles always lack the concrete terms of intervention by the issuing company. They should, nevertheless, serve as guidelines for all transactions carried out by public companies on their own shares. It must be stressed that observance of the present recommendations does not exempt the company from proving, if asked to do so, that it has obeyed the rules governing price-fixing and market integrity. The goal of the present Recommendations is merely to encourage issuing companies to increase transparency as regards their participation in the market.

1 - The participation of an issuing company in trading on regulated markets of its own shares must be guided by the principle of neutrality, thus avoiding upsets caused to the markets by the said activity.

2 - The trading of own shares by companies implies, among other situations:

(i) that the issuing company knows the lengths and depths of the market on which its shares are traded, so as to prevent orders issued by the company from interfering with the liquidity of the market;

(ii) that the issuing company informs the financial intermediaries that orders are to be carried out only under the right circumstances as regards the time, the method and the volume involved, so as to prevent upsets to the regular functioning of the market in question;

(iii) that the issuing company issues orders to the financial intermediaries involved so as to avoid the carrying out of such orders at sensitive times for trading, namely at the opening or close of a trading session;

(iv) that the issuer should avoid trading own shares at times when there are disturbances in the market or under any circumstances which could potentially influence or affect the price of shares.

3 - Issuing companies should abstain from trading own shares at times when the disclosure of material events or financial results is imminent.

4- The recommendations listed above are equally applicable to the trading of shares in parent companies by the companies which they directly or indirectly control.