CMVM - Law 18/2015

Venture Capital, Social Entrepreneurship and Specialised Investment Legal Framework

Law No 18/2015
of 4 March

It partially transpose Directives 2011/61/EU of the European Parliament and of the Council of 8 June and 2013/14/EU, of the European Parliament and of the Council of 21 May which ensure the implementation in national law of Regulations (EU) no. 345/2013 and 346/2013 of the European Parliament and of the Council of 17 April, and ensures the review of the framework applying to the activity of venture capital investment.

(Consolidated version with the amendments introduced by Decree-Law No. 56/2018 of 9 July and Decree-Law No. 144/2019 of 23 September)

TITLE I

Investment activity in venture capital, social entrepreneurship and specialised alternative investment

CHAPTER I
General provisions

Article 1
Purpose

This Legal Framework governs the engaging in investment activity by:

(a) Venture capital companies;

(b) Venture capital fund management companies;

(d) Venture capital funds, including European venture capital funds called "EuVECA", for the purposes of Regulation (EU) no. 345/2013 of the European Parliament and of the Council of 17 April;

(e) Venture capital investors;

(f) Social entrepreneurship companies;

(g) Social entrepreneurship funds, including European social entrepreneurship funds called "EuSEF", in accordance with and for the purposes provided for in Regulation (EU) no. 346/2013 of the European Parliament and of the Council of 17 April;

(h) Specialised alternative investment companies; and

(i) Specialised alternative investment funds.

(j) European Union long-term investment funds designated as 'ELTIFs', authorised in accordance with Regulation (EU) no. 2015/760 of the European Parliament and of the Council of 29 April 2015.

Article 2
Common rules

1. [Repealed].

2. The companies referred to in the preceding article have their registered office and head office in Portugal.

3. The references in this framework to units shall be understood to cover shares of collective investment undertakings in corporate form, and references to unit-holders shall be understood to cover shareholders of the same undertakings, unless otherwise provided for by the provision itself.

4. The companies referred to in the preceding article act independently and in the sole interest of the unit-holders.

5. For the purposes of this Legal Framework, the definitions laid down in article 2 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, apply mutatis mutandis and in the applicable cases, unless otherwise provided for by the provisions of this Legal Framework.

6. The managing bodies may choose to draw up, for as long as the exemption provided for in article 32(2) of Regulation (EU) no. 1286/2014 of the European Parliament and of the Council of 26 November applies, for each alternative investment undertaking provided for in this Legal Framework which is not exclusively addressed to professional investors, a key investor information document intended for investors that comply with the format and content requirements set forth in article 154 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, and respective regulatory standards.

7. The General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February and its regulatory standards, applies in all respects to the key investor information document for alternative investment undertakings if the option provided for in the preceding paragraph is exercised.

Article 3
Venture capital investment

1. Venture capital investment is considered to be the acquisition of equity instruments and debt instruments in companies with high development potential, as a means of benefitting from their appreciation.

2. Venture capital investment companies and venture capital funds are closed-end alternative investment firms undertakings that are jointly referred to as «venture capital investment undertakings».

Article 4
Investment in social entrepreneurship

1. Investment in social entrepreneurship is deemed to mean the acquisition of equity instruments and debt instruments in entities which develop appropriate solutions to social problems, with the aim of achieving measurable and positive social impacts.

2. The main corporate purpose of social entrepreneurship companies is investment in social entrepreneurship and, in the development of their business, they may carry out the operations provided for in article 9 (1), as well as manage social entrepreneurship funds, including European social entrepreneurship funds (EuSEF), in accordance with and for the purposes provided for in Regulation (EU) no. 346/2013 of the European Parliament and of the Council of 17 April.

3. Social entrepreneurship funds are closed-end alternative investment undertakings that may be marketed to professional investors and, under conditions to be defined in a regulation of the Portuguese Securities Market Commission (CMVM), in particular concerning maximum investment amounts, to non-professional investors.

4. The name of social entrepreneurship companies contains the expression or abbreviation 'Social Entrepreneurship Company' or 'SES' and social entrepreneurship funds' names contain the expression or abbreviation 'Social Entrepreneurship Fund' or 'FES', which cannot be used by other entities.

5. Social entrepreneurship funds may be managed by social entrepreneurship companies, venture capital companies and management companies of collective investment undertakings.

6. [Repealed].

7. The rules envisaged for venture capital companies and venture capital funds laid down in Title II apply to social entrepreneurship companies and social entrepreneurship funds, with the specific characteristics laid down in regulation of the CMVM, except those provided for in paragraphs 1(b), 2(a) and 2(b) of article 10.

8. Social entrepreneurship funds managed by management companies of collective investment undertakings are additionally subject to the provisions of chapter IV of Title III.

Article 5
Specialised alternative investment

1. Specialised alternative investment is deemed to be the acquisition of assets of any kinds. Any single asset cannot account for more than 30% of the respective net asset value.

2. The specialised alternative investment companies and specialised alternative investment funds are closed-end alternative investment undertakings which are jointly referred to as «specialised alternative investment undertakings».

3. The rules governing the management of specialised alternative investment undertakings establish, inter alia:

(a) The type of assets in which they may invest;

(b) Their operating rules, in particular the conditions for subscription and reimbursement, the existence and duties of advisory or investment committees and of external consultants;

(c) Maximum or minimum investment limits in relation to the net asset value of the specialised alternative investment undertaking.

4. Specialised alternative investment undertakings are marketed only to qualified investors.

5. Specialised alternative investment funds may be managed by:

(a) Venture capital companies;

(b) [Repealed].

(d) Venture capital fund management companies.

6. The rules for venture capital funds provided for in Title II apply to specialised alternative investment funds managed by the entities referred to in sub-paragraphs (a) of the preceding paragraph, except for those venture capital funds provided for in paragraph 1(b) and in sub-paragraphs (a) and (b) of article 10 (2), with the specific characteristics laid down in regulation of the CMVM.

7. Specialised alternative investment funds managed by the entities referred to in paragraph 5(c) and (d) are also subject to the provisions of Chapter IV of Title III.

8. The rules for venture capital investment companies apply to specialised alternative investment companies.

9. The name of specialised alternative investment companies contains the words or abbreviation 'Specialised Alternative Investment Company' or 'SIAE' respectively, and specialised alternative investment funds contain the term or abbreviation 'Specialised Alternative Investment Funds' or 'FIAE', which may not be used by other entities.

10. The hetero-managed specialised alternative investment companies may be managed by the entities mentioned in paragraph 5(c) and (d) by means of a written contract.

11. [Repealed].

Article 5-A
Authorisation of European Union long-term investment funds, known as ELTIF, in self-managed corporate form

In accordance with Article 5 (5) of Regulation (EU) No 2015/760 of the European Parliament and of the Council of 29 April, the EU long-term investment funds - 'ELTIF' in self-managed corporate form is authorised by the CMVM under:

(a) The framework provided for in Regulation (EU) No 2015/760 of the European Parliament and of the Council of 29 April; and

(b) The framework laid down for venture capital investment companies, and the organisational and operating rules laid down for such companies shall apply mutatis mutandis.

Article 5-B
Undertakings in Specialised Alternative Credit Investment

1. Under the terms of the CMVM Regulation, undertakings in specialised alternative investment (USAI) that invest in credits are specialised alternative investment undertakings.

2 - The designation, USAI referred to in the preceding paragraph includes 'credit company' or 'credit fund', which together are referred to as 'USACIs'.

3 - USACIs that are not self-managed may only be managed by management companies of collective investment undertakings or venture capital fund management companies.

4 - Without prejudice to the provisions of article 5 (1), USACIs may grant and participate in loans, except for operations prohibited in the subsequent articles.

Article 5-C
Prohibited Operations

USACIs are prohibited from:

a) Short selling financial instruments, the use of direct or indirect securities financing operations, including securities lending, and the use of derivative financial instruments, except for hedging purposes.

(b) lending to the following entities:

i) natural persons;

ii) credit institutions;

iii) direct and indirect participants in the respective USACI;

iv) The respective management entity and entities that are in a domain or group relationship with the management entity, or the entities with whom they are in a domain or group relationship;

v) The depositary and subcontracted entities or in a controlling or group relationship with them;

vi) Other collective investment undertakings.

Article 5- D
Indebtedness

USAICs may take out loans for credit for a duration of not less than the duration of the respective assets they intend to finance, up to 60% of their total assets.

TITLE II
Activity of venture capital companies below the relevant thresholds and of venture capital investors

CHAPTER I
Access conditions

Article 6
Scope of application

1. This Title applies to venture capital companies and venture capital funds managed by them, by regional development companies and by entities legally qualified to manage closed-end alternative investment undertakings in securities. This Title also applies to venture capital investors.

2. The assets under management by venture capital companies cannot exceed the following thresholds in total:

(a) EUR 100,000,000, when the portfolios include assets acquired through the use of leverage;

(b) EUR 500,000,000, when the portfolios do not include assets acquired through the use of leverage and for which there are no redemption rights that may be exercised for a period of five years from the date of initial investment.

3. Leverage is deemed to exist, for the purposes of the preceding paragraph, when the exposure of the own portfolio or venture capital funds is increased by any method, whether by borrowing cash or securities, by using derivative positions or by any other means.

4. Venture capital companies notify the CMVM as soon as the thresholds in paragraph 2 are exceeded.

5. If the amounts under management exceed the thresholds referred to in paragraph 2 in a non-temporary manner, as provided for in article 4 of the Commission Delegated Regulation (EU) no. 231/2013 of 19 December 2012, the venture capital companies have a period of 30 days, counting from the date on which the capital thresholds are exceeded, in order to reduce the amount under management to the permitted amounts or to apply for authorisation as a venture capital investment company or as a venture capital fund management company, in accordance with the provisions of Title III.

6. Non-compliance with the provisions of the preceding paragraph is grounds for cancellation by the CMVM of the registration.

7. The calculation of the thresholds provided for in paragraph 2 shall consider the assets managed directly or indirectly through a company to which it is linked by common management or control, or by significant direct or indirect shareholding.

Article 7
Registration and prior notification

1. The establishment of venture capital funds, as well as the start of business by venture capital investors and venture capital companies, require prior registration with the CMVM.

2. The registration referred to in the preceding paragraph does not imply any guarantee by the CMVM on the content and information contained in the relevant instruments of incorporation.

3. The application for registration of venture capital investors and venture capital companies shall be submitted with the following updated information:

(a) Extract of the Commercial Registry Office;

(b) The date of incorporation and the date on which the business activity is to commence;

(c) The venture capital funds and the own portfolio that the venture capital company intends to manage and the respective investment strategies, including the information referred to in the sub-paragraphs of article 5 (2) of the European Commission Delegated Regulation (EU) no. 231/2013 of 19 December 2012;

(d) The articles of association;

(e) The location of the registered office and the identification of branches, agencies, offices or other local forms of representation;

(f) [Repealed];

(g) The identification of the sole member or holders of qualifying holdings;

(h) The members of the governing bodies;

(i) The in-house rules of procedure in the case of a venture capital company;

(j) A statement of adequacy and means;

(k) A questionnaire and statement of good repute of each holder of a qualifying holding and member of the management and supervisory body and of the sole partner, in the case of venture capital investors;

(l) Criminal record and curriculum vitae of the holders of qualifying holding and members of the management and supervisory bodies or of the sole partner in the case of venture capital investors.

4. The application for registration of venture capital funds shall be submitted with the following information:

(a) The name;

(b) Identification of the management entity;

(d) The draft rules of management of the venture capital fund;

(e) The draft contract to be concluded with the depositary and its declaration of acceptance.

5. The registration decision is notified to applicants within 15 days of receipt of the application or, where applicable, receipt of any additional information requested by the CMVM.

6. No notification within the period referred to in the preceding paragraph means the implied rejection of the application.

7. The CMVM shall refuse the registration applications referred to in paragraph 1 if:

(a) The application has not been submitted with all the necessary documents and data;

(b) False declarations have been made;

(c) The suitability requirements of the members of the management and supervisory bodies and of the holders of qualifying holdings of investors of venture capital and venture capital companies, have not been complied with.

8. If there are grounds for refusal pursuant to the preceding paragraph, the CMVM notifies the applicants before refusing the application, giving them a maximum of 10 days to remedy the non-compliance of the dossier, where appropriate, and to comment on the appraisal of the CMVM.

9. Grounds for the cancellation of the registration by the CMVM are:

(a) Verification of facts which would prevent registration if those facts are not remedied within the established time limit;

(b) The registration was achieved by making false statements or by any other irregular means;

(c) The venture capital investor or company does not commence business within 24 months of receipt of the notification granting registration by CMVM, it has stopped business operations for at least six months, or the corporate purpose does not match the business activity actually engaged in by the entity concerned;

(d) Severe systematic breach of laws, regulations or the instruments of incorporation, when the interests of the unit-holders or defence of the market warrants such;

(e) The venture capital fund is not established within 12 months of the date of notification of granting of registration by CMVM.

10. The CMVM, at the request of the management entity and which is duly reasoned, may extend the time limits referred to in sub-paragraphs (c) and (e) of the preceding paragraph.

11. Changes to the data contained in registration applications shall be reported to the CMVM within 15 days. Moreover, changes or renewals of members of the governing bodies and changes concerning holders of qualifying holdings shall be reported with the information established by sub-paragraphs (g), (h), (k) and (l) of paragraph 3.

12. The submission of documents to the CMVM which are up to date or which it may obtain in official publications is not required for the purposes of appraising registration applications as well as for subsequent communications.

13. The register of venture capital investors with the CMVM is not public.

14. The incorporation of venture capital funds and the start of business of venture capital investors whose capital is not placed with the public and whose unit-holders are solely qualified investors or, irrespective of their nature, when the minimum value of the capital commitment by these is equal to or greater than EUR 500,000 per individual investor, require prior notification to the CMVM.

15. The communication referred to in the preceding paragraph shall contain the data set out in paragraphs 3 and 4 and any amendments thereto shall be reported to the CMVM in accordance with paragraph 11.

16. The communication referred to in paragraph 14 ceases to have effect in the situations referred to in sub-paragraphs (c) to (e) of paragraph 9.

17. Venture capital companies whose assets under management do not exceed the thresholds laid down in article 6 (2) may choose to apply for the authorisation envisaged in Title III in accordance with the European Commission's Implementing Regulation (EU) no. 447/2013 of 15 May, in which case the framework provided for in that Title shall fully apply to them.

Article 8
Management, supervision and qualifying holdings

1. The sole partner of the venture capital investor, the members of management and supervisory bodies and the holders of qualifying holdings of venture capital companies, shall meet the conditions that ensure sound and prudent management, and shall comply with the requirements of good repute and experience.

2. Articles 71-T, 71-U and 71-Y of the General Framework of Credit Institutions and Financial Companies, approved as an Annex to Law No 16/2015 of 24 February in its current wording, apply mutatis mutandis to the assessment and supervision of suitability criteria mentioned in paragraph 1.

3. [Repealed].

4. [Repealed].

Article 9
Corporate purpose and authorised operations

1. Venture capital companies and venture capital investors' main purpose is that of investing in venture capital and may undertake the following operations within their activity:

(a) Invest in own equity instruments and in securities or convertible rights, exchangeable or which confer the right to acquire them;

(b) Invest in borrowed capital instruments, including loans and credits, of companies in which they have invested or intend to invest;

(d) Provide guarantees for the benefit of the companies in which they have invested or intend to invest;

(e) Invest their cash surpluses in financial instruments;

(f) Conduct the financial operations, including hedging, that are necessary for the development of the respective activity.

2. Within their main activity purpose, venture capital companies manage:

(a) Venture capital funds, including those eligible for the marketing of European venture capital funds designated as «EuVECA», in accordance with and for the purposes set out in Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April;

(b) Social entrepreneurship funds, including those eligible for the marketing of European social entrepreneurship funds designated as «EuSEF», in accordance with and for the purposes set out in Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April;

3. Venture capital companies may also invest in units of venture capital funds in accordance with article 29.

4. Venture capital companies and venture capital investors may only have, as an additional purpose, the development of activities which prove necessary for the pursuit of their core purpose in relation to the companies they have invested in or, in the case of venture capital companies, in relation to venture capital funds under their management, in particular to:

(a) Provide services to assist the technical, financial, administrative and commercial management of the companies invested in, including those intended to obtain financing for those companies;

(b) Undertake feasibility studies, investment, financing, dividends policy, assessment, reorganisation, concentration or any other form of streamlining business activity, including the promotion of markets, improvement of production processes and the introduction of new technologies, on condition that that such services are provided to those companies or they are involved in the development of projects for the acquisition of shareholdings;

5. Venture capital funds can carry out the operations referred to in paragraph 1 and invest in venture capital investment undertakings, including undertakings that are not incorporated in Portugal.

Article 10
Prohibited operations

1. The following are prohibited to venture capital companies, venture capital investors and venture capital funds:

(a) The conduct of operations not linked to the pursuit of their corporate purpose or their investment policy;

(b) Investment in securities admitted to trading on a regulated market exceeding 50% of the respective assets;

(d) The acquisition of rights on real estate, except those necessary for their own premises in the case of venture capital companies and venture capital investors.

2. The following are also prohibited to venture capital companies and venture capital funds:

(a) Investment of more than 33% of the amount available for investment, whether or not invested in a company or group of companies. This threshold is measured at the end of the two-year period following the date of the first investment carried out for the portfolio, based on the acquisition value;

(b) Investment, in the case of venture capital funds, of more than 33% of its assets in another venture capital fund or, in the case of venture capital companies, more than 33% of its assets in venture capital funds managed by other entities;

(c) Investment in any form in companies which control the venture capital company or the management entity of the venture capital fund, or in companies in a group relationship with these prior to the venture capital investment;

(d) The granting of loans or standing guarantees in any form or means, for the purpose of financing the subscription or acquisition of any securities issued by the venture capital company, by the venture capital fund, by its management entity or by the companies referred to in the preceding sub-paragraph.

3. Current cash operations carried out with companies that control the venture capital company or the management entity of the venture capital fund, or with companies in a group relationship with these prior to the venture capital investment, are not considered to be an investment.

4. If the thresholds laid down in the preceding paragraphs are exceeded as a result of the transfer of goods, transfer in lieu of payment, sale by court order or any other legal means of complying with obligations or intended to enforce that compliance, such assets shall be disposed of within a period not exceeding two years.

5. The CMVM may, in exceptional circumstances and on receiving a reasoned request, and provided that this does not result in damage to the market or to unit-holders:

(a) Exceeding the threshold referred to in paragraph 1(b),

(b) The extension of the investment time limit referred to in paragraph 1(c),

(c) The holding by the venture capital company on its portfolio of assets in respect of which the threshold laid down in paragraph 2(a) has been breached for an additional period of one year.

6. [Repealed].

7. Venture capital funds that meet the characteristics set out in article 7 (14) are exempted from compliance with the provisions of paragraphs 2(a) and (b).

8. When not expressly provided for in the rules governing the management of the venture capital fund, any business between the venture capital fund and the following entities shall require approval by resolution taken at the meeting of unit-holders by simple majority of votes:

(a) The management entity;

(b) Other funds managed by the management entity;

(d) The members of the governing bodies of the management entity and of the companies referred to in paragraph 2(c);

(e) Those entities for which the members of the governing bodies of the entities referred to in sub-paragraphs (a) and (c) work, when not included in the portfolio of the venture capital fund.

9. The entities mentioned do not have the right to vote at the meetings of unit-holders referred to in the preceding paragraph, except when they are the sole holders of units of the venture capital fund.

10. Paragraphs 8 and 9 apply, mutatis mutandis, to the business carried out by venture capital companies.

11. The venture capital company and the management entity of the venture capital fund are responsible for knowing the circumstances and relationships referred to in paragraphs 2(a) and (c) and 8.

CHAPTER II
Venture capital companies

Article 11
Legal form, representation and share capital

1. Venture capital companies are commercial companies set up as public limited companies.

2. The name of a venture capital company includes the words or the abbreviation "Venture Capital Company" or "SCR" respectively. These words and abbreviation, or others which may be mistaken for them, cannot be used by other entities.

3. The minimum capital of venture capital companies, which shall be mandatorily represented by registered and book-entry shares, is EUR 125,000.

4. The capital of venture capital companies may only be called by contributions in cash or some of the asset classes identified in article 9 (1)(a), without prejudice to the possibility of share capital increases in the form of incorporation of reserves, in accordance with general terms of the Commercial Companies Code.

5. The articles of association of the venture capital company may not provide for the possibility of deferring contributions.

6. The management reports and annual accounts of venture capital companies shall be verified by a statutory auditor registered with the CMVM.

7. In addition to the provisions of this Legal Framework and other provisions that are specifically applicable, venture capital companies are governed by their articles of association.

8. Capital contributions by any of the asset classes identified in article 9 (1)(a) for the purpose of paying in the share capital of venture capital companies shall be the object of a report by an auditor registered with the CMVM.

Article 12
Own funds

1. When the total net asset value of portfolios under management by venture capital companies exceeds EUR 250,000,000, they are required to set up an additional amount of own funds equal to 0.02% of the total by which the total net asset value of the portfolios under management exceeds that amount.

2. The venture capital companies referred to in the preceding paragraph may not constitute up to 50% of the additional amount of own funds referred to in the previous paragraph if they are the beneficiary of a guarantee of the same amount provided by a credit institution or an insurance company headquartered in the European Union.

Article 13
Regular information reporting

The venture capital company annually reports to the CMVM on the main instruments it negotiates, on the main risk positions and the most significant concentrations of the funds in venture capital or own portfolio funds it manages, in accordance with article 5 of the Commission Delegated Regulation (EU) no. 231/2013 of 19 December 2012.

CHAPTER III
Venture capital investors

Article 14
Legal form and name

1. Venture capital investors are special venture capital companies which shall compulsorily be established as single-member limited liability company.

2. Only natural persons may be the sole member of venture capital investors.

3. The name of the venture capital investor includes the words or abbreviation "Venture Capital Investor" or "ICR" respectively. These words and abbreviation, or others which may be mistaken for them, cannot be used by other entities.

4. In addition to the provisions of this Legal Framework and other provisions that are specifically applicable, venture capital investors are governed by their articles of association.

CHAPTER IV
Venture capital funds

SECTION I
General provisions

Article 15
Form and legal framework

1. Venture capital funds are autonomous assets without legal personality but with the legal personality belonging to all the holders of the respective units.

2. Venture capital funds are not liable under any circumstances for the debts of the unit-holders, the entities carrying out the management, deposit and marketing functions, or those of other venture capital funds.

3. Only the assets of the venture capital fund are liable for the fund's own debts.

4. Venture capital funds are governed by the provisions of this Legal Framework and by the rules laid down in the respective management rules.

Article 16
Name

1. The names of venture capital funds contain the terms "Venture Capital Fund" or the abbreviation "FCR", or others which are envisaged for the forms of venture capital funds by means of CMVM regulation.

2. Only venture capital funds may include the terms and abbreviations referred to in the preceding paragraph in their name.

SECTION II
Management entities

Article 17
Management

1. Each venture capital fund is administered by a management entity.

2. The management of venture capital funds may be carried out by venture capital companies, regional development companies or by management companies of collective investment undertakings.

3. The rules referred to in article 67 (2) apply to other entities which, by virtue of a special law, are entitled to manage venture capital funds, unless they are subject to an equivalent framework.

4. The management entity acts independently and in the sole interest of the unit-holders in the performance of its duties. It is responsible for performing all the acts and operations necessary for the sound administration of the venture capital fund in accordance with high levels of zeal, honesty, diligence and professional competence, in particular:

(a) Promote the establishment of the venture capital fund, the subscription of its units and compliance with the subscription obligations;

(b) Draw up the venture capital fund's management rules and any proposals for amendment thereto and, where appropriate, draw up the public offering prospectus;

(c) Select the assets which shall form part of the venture capital fund's assets in accordance with the investment policy set out in its management rules and perform the acts necessary for the correct implementation of that strategy;

(d) Acquire and dispose of the assets for the venture capital fund, exercise their rights and ensure the timely fulfilment of their obligations;

(e) Manage, dispose of or encumber assets forming part of the venture capital fund's assets;

(f) Issue and reimburse the units and ensure they are represented in accordance with the provisions of the management rules;

(g) Ascertain the value of the assets and liabilities of the venture capital fund and the value of its units;

(h) Keep the documentation and accounts of the venture capital fund in order;

(i) Draw up the management report and accounts of the venture capital fund and make these documents available to unit-holders for their appraisal, together with the audit documents;

(j) Convene the meeting of unit-holders and make proposals on any matter requiring their decision;

(k) Provide the unit-holders, in particular in the respective meetings, with complete, true, current, clear, objective and lawful information on the matters to be assessed or on which resolutions have to be taken, enabling them to form a reasoned opinion on those matters.

5. When the management entity exercises the powers referred to in the preceding paragraph it shall comply with and ensure compliance with the applicable rules, the management rules of venture capital funds and the contracts concluded in the course of their activities.

6. Management entities may be elected or appointed and they may indicate persons to the governing bodies of the companies in which the venture capital fund they manage has invested or may make its employees available to perform services in the same.

7. Venture capital funds managed by management companies of collective investment undertakings are subject to the provisions of chapter IV of Title III.

8. The regional development companies referred to in paragraph 2 are subject to the duty laid down in article 13.

Article 18
Duties of management entities

1. The management entities of venture capital funds shall perform their activities to protect the legitimate interests of the holders of units of the venture capital funds they manage, and treat them fairly and equally.

2. Management entities shall refrain from engaging in business which generates conflicts of interest with the holders of units of the venture capital funds under their management.

3. The management entities shall have an appropriate organisational structure and internal procedures that are adequate for their size and the complexity of the business activities they perform.

SECTION III
Management and operating rules of venture capital funds

Article 19
Management rules

1. Each venture capital fund has management rules drawn up by its management entity, which sets out the contractual rules governing its operations.

2. The subscription or acquisition of units of the venture capital fund implies being subject to the rules of its management.

3. The management rules shall contain at least the following:

(a) Identification of the venture capital fund;

(b) Identification of the management entity;

(d) Identification of the credit institutions that are depositories of the assets of the venture capital fund;

(e) Duration of the venture capital fund and any extension;

(f) The annual economic period when different from the calendar year;

(g) The amount of capital of the venture capital fund and the number of units;

(h) The conditions under which the venture capital fund may increase and reduce its share capital;

(i) Identification of the categories of units and description of their rights and obligations;

(j) Method of representation of units;

(k) Initial subscription period for units, which may not exceed 25% of the duration of the venture capital fund;

(l) Subscription price of the units and the minimum number of units required for each subscription;

(m) Rules on the subscription of units, including criteria for the allocation of subscribed units, and on the paying in of the venture capital fund's capital, including amounts and time limits for each category;

(n) The arrangements applying in the event of incomplete subscription;

(o) Indication of the entities responsible for promoting the subscription of units;

(p) Investment policy of the venture capital fund;

(q) Limits on the indebtedness of the venture capital fund;

(r) The venture capital fund income distribution policy;

(s) Valuation criteria and how the unit value of each category of units is determined;

(t) The form and periodicity of communication to unit-holders of the detailed composition of the fund's applications and of the unit value of each category of unit;

(u) Indication of the fees to be paid to the management entity and to the depositaries, broken down by method of calculation and the collection conditions, as well as other charges borne by the venture capital fund;

(v) The terms and conditions of liquidation, including when done in advance, the sharing out of the assets, winding up and termination of the venture capital fund;

(w) Other rights and obligations of unit-holders, the management entity and depositaries.

4. Venture capital funds set out in the management rules the criteria, frequency or timing of subscriptions and paying in of share capital.

Article 20
Amendment of the management rules

1. It is the sole responsibility of the management entity of the venture capital fund to submit proposals for amendments to its management rules.

2. Amendments to the management rules which are not the result of mandatory legal provisions require approval by resolution of the meeting of unit-holders, taken by majority of the votes cast, subject to the provisions of the following paragraph.

3. Amendments to the rules that concern the following do not require approval by the meeting of unit-holders, unless such is established by the management rules:

(a) Changes to the name, registered office and contact details of the management entity, the depository and the auditor;

(b) The provisions of sub-paragraphs (d), (g), (n), (o), (s) and (t) of paragraph 3 of the preceding article;

(d) Change in the holders of the management entity's share capital;

(e) Control or group relationships concerning the management entity;

(f) Inclusion of new marketing entities;

(g) Reduction of the overall amounts collected by way of fees concerning management, deposit, subscription, redemption and transfer or the establishment of other more favourable terms;

(h) Updating quantitative data;

(i) Adaptations to legislative or regulatory changes; and

(j) Merely formal corrections which do not fall under any specific legal provisions.

4. When the amendment to the management rules entails the modification of the rights allocated to a category of units, the coming into effect of the change requires the consent of the holders of the respective units, which shall be provided by means of resolution taken by a special meeting of that category of unit-holders, approved by a majority of at least two-thirds of the votes cast.

Article 21
Capital

1. Venture capital funds have a minimum committed capital of EUR 1,000,000.

2. The capital of venture capital funds may be increased by new capital contributions as defined in article 39.

Article 22
Units

1. The worth of venture capital funds is represented by shares, of no nominal value, designated as units.

2. The subscription of a venture capital fund is subject to a minimum subscription value of EUR 50,000 for each investor, except for the members of the management entity's management body.

3. The establishment of the usufruct or pledge of units is by the means required for the transfer of units between living persons.

4. Units in venture capital funds shall be book-entry and registered.

Article 23
Unit categories

1. Different categories of units may be issued according to the rights or special characteristics of the units, provided they are established in the fund's management rules and that consistency with the risk profile and investment policy of the venture capital fund is ensured.

2. The categories of units may be defined on a reasoned basis, in particular on the basis of one or more of the following criteria:

(a) Management and deposit committees;

(b) Subscription and paying in conditions;

(d) Degree of preference in reimbursements, payment of income and payment of the proceeds of liquidation.

3. The units in each category have the same characteristics and guarantee their holders the same rights and obligations.

4. The specific income and costs of each category are allocated to the assets represented by the units of that category.

5. The value of the units of each category, where different from that of other categories, is calculated autonomously by dividing the total net value of each category by the number of units in circulation of that category.

6. Notwithstanding the above paragraphs, the different categories of units do not comprise autonomous asset compartments and this characteristic should be highlighted in the respective instruments of incorporation.

Article 24
Calculation of the value of units

1. Without prejudice to the management rules setting a shorter time limit, the management entity determines the unit value of the units of the venture capital fund relative to the last day of each half-year.

2. The unit value of the units held and the composition of the portfolio of the venture capital fund are reported to the unit-holders concerned in accordance with the management rules. The frequency of such shall not exceed 12 months.

Article 25
Autonomous asset compartments

1. The management rules may provide for the splitting of the venture capital fund into autonomous asset compartments, called 'sub-funds' in accordance with this Legal Framework and regulation of the CMVM.

2. Each autonomous asset compartment is represented by one or more categories of units and is governed by the rules of asset autonomy.

3. The value of the units of the autonomous asset compartment is determined, at each time, by dividing the net asset value of the autonomous asset compartment by the number of units of that autonomous compartment in circulation.

4. The venture capital fund with autonomous asset compartments has a single set of management rules, even if the investment policies of each compartment are necessarily different from each other. The rules, in addition to other requirements under this Legal Framework, establishes an appropriate segregation of contents to establish the unambiguous correspondence between each autonomous asset compartment and the information referring thereto, as well as criteria for the division of responsibilities that are common to more than one sub-fund.

5. The legal framework established for the respective venture capital fund applies to each autonomous asset compartment, including the framework for units and capital requirements.

6. The venture capital fund management rules set out the conditions for the transfer of units between autonomous asset compartments.

7. Autonomous accounts are kept for each separate asset compartment.

Article 26
Paying in capital

1. Each unit subscriber is obliged to contribute to the venture capital fund in cash or some of the asset classes identified in article 9 (1)(a) and (b).

2. The capital contributions in any of the asset classes referred to in the previous paragraph have to be assessed in a report by an auditor registered with the CMVM. That auditor shall be appointed by the management entity of the venture capital fund specifically for this purpose and it must not have any interests related to the subscribers concerned.

3. The value attributed to the investment of each subscriber cannot exceed that of the respective contribution to the venture capital fund, so, the respective cash contribution or the value attributed to the assets by the auditor referred to in the preceding paragraph shall be considered for this purpose.

4. If an overvaluation of the asset delivered by the subscriber to the venture capital fund is found to exist, the subscriber is responsible for paying to the venture capital fund the difference established within the time limit referred to in article 28 (1) and (2). If that time limit expires without that amount having been paid, the management entity shall reduce, by cancellation, the number of units held by the subscriber concerned in the amount of that difference.

5. If the venture capital fund is deprived of the asset committed by the subscriber, by a legitimate act of a third party, or if it becomes impossible to pay that commitment, the subscriber shall make its capital contribution in cash and, in the event it fails to comply with that contribution in good time, the provisions of the final part of the preceding paragraph shall apply.

6. The acts of the management entity or the resolutions of the meetings of unit-holders which fully or partly exempt unit-holders from the obligation to make the stipulated contributions are deemed to be null and void, except in the case of capital reductions.

7. The CMVM shall report to the public prosecutor's office any acts referred to in the preceding paragraph for the purpose of filing the relevant actions for the declaration of invalidity.

Article 27
Establishment and paying in of deferred contributions

1. Venture capital funds shall be deemed to be incorporated at the time when at least one of the subscribers makes the first contribution to its capital.

2. The paying in of contributions for the units may be deferred for the period stipulated in the rules governing the management of the venture capital fund.

3. The paying in of funds for the units is done under the same conditions for all investors in the same category of units.

4. The obligation to pay called capital contributions becomes due with the respective units.

Article 28
Late commitment of capital contributions

1. Notwithstanding the time limits laid down in the venture capital fund rules for paying in contributions, the holder of units is only deemed to be in arrears after it has been notified of such by the management entity of the venture capital fund.

2. The notification shall be made by individual communication to the holder and it shall set a time limit of between 15 and 60 days for compliance, after which it shall be deemed to be in arrears.

3. Unit-holders who are in arrears as regards the obligation to pay capital contributions cannot be paid income or provided with other assets of the venture capital fund, since those amounts shall be used to offset the capital contribution shortfall, for as long as the arrears continues.

4. Unit-holders who are in arrears as regards the obligation to pay called capital contributions cannot participate in or vote at the meetings of unit-holders, including through a representative.

5. Failure to make any outstanding capital contributions within 90 days of the commencement of the arrears entails the loss to the venture capital fund of the units in respect of which payment is in arrears and the sums paid on account of the same.

Article 29
Acquisition of units by the management entity

Management entities can acquire units of the funds they manage up to a limit of 50% of the units issued by each of the referred funds.

Article 30
Acquisition of units by the venture capital fund

1. A venture capital fund may not acquire units it has issued, except in the situation provided for in article 28 (5) or as a result of the universal acquisition of an asset.

2. The units acquired under the exceptions provided for in the preceding paragraph are disposed of within one year of the date of acquisition, otherwise they shall be cancelled at the end of that period, with the consequent reduction in capital of the venture capital fund.

Article 31
Depositaries

1. The relationship between the management entity and depositaries of the venture capital fund's assets is governed by a written contract, which includes the functions of the depositary and its remuneration.

2. Credit institutions that are depositaries of venture capital funds' assets cannot take on the role of management entity of that venture capital fund.

3. Depositaries may freely subscribe or acquire units of the venture capital fund for which they act as depositaries.

Article 32
Charges

The charges of the venture capital fund include costs associated with its management, in particular:

(a) Remuneration of the management entity;

(b) Remuneration of depositaries;

(d) Costs of investments and disinvestment in assets, including associated expenses;

(e) Costs associated with the investment of excess cash, including intermediation fees and commissions;

(f) Costs related to the documentation to be made available to unit-holders and related to the convening of meetings of unit-holders;

(g) Costs of legal, financial and tax advisors to the venture capital fund.

Article 33
Remuneration of the management entity

The remuneration of the management entity for the services of management of the venture capital fund shall be included in the fund management rules and this information shall clearly, fully and transparently state the calculation and collection conditions, which may include:

(a) A fixed management fee;

(b) A variable management fee, depending on the performance of the venture capital fund.

Article 34
Accounts

1. The accounts of venture capital funds are closed annually with reference to 31 December or in accordance with article 65-A of the Commercial Companies Code and they are the object of a report by an auditor registered with the CMVM.

2. The management report, the balance sheet and the income statement of the venture capital fund, together with the auditor's report, are made available to unit-holders at least 15 days before the date of the annual meeting of unit-holders.

SECTION IV
Meetings of unit-holders

Article 35
Meetings of unit-holders

1. The convening and functioning of the meeting of unit-holders is governed by the law applicable to shareholders' meetings, unless otherwise provided for in this Legal Framework.

2. The meeting of unit-holders is convened at least 20 days in advance.

3. The notice of meeting of unit-holders may be sent by registered letter with acknowledgement of receipt addressed to each unit-holder, or, in the case of those who have previously communicated their consent, by e-mail with a read receipt, or also by a notice published in at least one major newspaper of widespread readership in the country or by a notice published through the CMVM information disclosure system.

4. The holders of units providing at least one vote are entitled to attend the meeting of unit-holders.

5. The holders of units may be represented by a third party, by means of a letter addressed to the Chair of the board of the meeting of unit-holders.

6. There may be special meetings of unit-holders of a single category of units.

7. The board of the meeting is composed of a chair and a secretary appointed by the management entity of the venture capital fund, who cannot be members of the management bodies or staff of the management entity or of companies which directly or indirectly control it or are controlled by it.

8. Each unit corresponds to one vote, unless otherwise provided for in the management rules.

9. A unit-holder with more than one vote may not split its votes to vote in different ways on the same proposal or so as not to vote with all its eligible votes.

10. The meeting takes decisions regardless of the number of unit-holders present or represented and the capital they represent.

11. The meeting adopts decisions by majority of the votes cast, except in cases where this majority has to be higher according to legislation or the venture capital fund's management rules.

12. The meeting of unit-holders may only take decisions on matters which, pursuant to this Legal Framework, fall within its powers or on matters that are specifically routed to it by the management entity, and solely on the basis of proposals made by the management entity. It cannot, unless the management entity agrees, modify or replace proposals submitted by the management entity for decision by the meeting.

13. The resolutions of the meeting of unit-holders are binding on the holders of units who did not attend the meeting, as well as those who abstained or voted against.

Article 36
Annual meeting of unit-holders

The annual meeting of unit-holders shall meet within four months of the end of the previous financial year, in order to:

(a) Decide on the activity report and the accounts for the financial year;

(b) The management entity may inform the unit-holders; and

(c) Assess the general situation of the venture capital fund and the investment policy pursued during that financial year.

Article 37
Invalidity of resolutions

1. Actions for the declaration of invalidity or for the annulment of resolutions of meetings of unit-holders are brought against the venture capital fund.

2. The provisions regarding invalidating the resolutions of members of commercial companies apply, in all situations not contrary to the respective nature, to the invalidity of resolutions of meetings of unit-holders.

SECTION V
Vicissitudes of venture capital funds

Article 38
Duration and extension

1. Venture capital funds shall have a specified duration, unless the instruments of incorporation provide for the trading of its units on a regulated market, in a multilateral trading system or in any other organised forms of multilateral trading.

2. The extension of the duration of the venture capital fund, one or more times, for periods not exceeding the initial period, is allowed provided that a favourable decision on such is obtained from the meeting of unit-holders on proposal by the management entity, by majority of the votes cast, and taken six months before the expiry of the fund.

3. The unit-holders who vote against the extension may request the redemption of their units.

4. The value of a unit for which redemption is requested under the preceding paragraph, corresponds to that of the last day of the period initially envisaged for the duration of the venture capital fund. An auditor must have issued an opinion on the same, drawn up no more than 30 days before the redemption date, expressly stating its position on the valuation of the assets of the venture capital fund.

5. Article 42 (13) applies mutatis mutandis to the financial settlement of the redemption of units.

6. The management entity notifies the CMVM of the extension of the duration of the venture capital fund within 15 days of the decision.

Article 39
Capital increase

1. The increase of the capital of the venture capital fund require the resolution of the meeting of unit-holders taken, on proposal of the management entity, by majority of the votes cast, unless another majority is required by the fund rules.

2. Unit-holders have a preferential right, in proportion to the amount of their holding, in capital increases by new cash contributions, unless otherwise stipulated in the management rules.

3. Unit-holders are informed at least 15 days in advance of the time limit and conditions for the exercise of their preferential right, in accordance with article 35 (3).

4. The preferential right referred to in paragraph 2 may be cancelled or restricted by resolution of the meeting of unit-holders, taken by a majority of at least two-thirds of the votes cast, on proposal by the management entity, in which the beneficiaries of such cancellation or restriction may not vote.

5. The provisions of article 20 (4), second part, and article 27 apply to the paying in of contributions for reasons of an increase in capital.

Article 40
Capital reduction

1. The capital of the venture capital fund may be reduced to release excess capital, to cover losses or to cancel units, in accordance with article 30 (2).

2. Except in the case referred to in Article 30 (2), which involves total cancellation of the units, capital reduction may comprise the regrouping of units or the total or partial cancellation of all or some of them.

3. The conditions for the reduction in capital of the venture capital fund which are not directly governed by the law and which are not provided for in its management rules require the resolution of the meeting of unit-holders taken, on proposal by the management entity, by a majority of the votes cast, unless another majority is required according to the management rules.

Article 41
Merger and splitting

1. The merger or splitting of venture capital funds which are not directly governed by the law and which are not provided for in its management rules require the resolution of the meeting of unit-holders taken, on proposal by the management entity, by a majority of the votes cast, unless another majority is required according to the management rules.

2. Venture capital funds resulting from the splitting or merger of two or more venture capital funds maintain the legal obligations arising from the investment portfolio of the merging or dividing venture capital funds.

3. The rules laid down in CMVM Regulation also apply to mergers and splittings.

Article 42
Winding up and liquidation

1. Venture capital funds are wound up by:

(a) The period of time for which they were established has ended;

(b) Resolution of the meeting of unit-holders, where appropriate;

(d) Decision of the CMVM in accordance with paragraph 6.

2. The event giving rise to winding up is immediately reported to the CMVM in the situations referred to in sub-paragraphs (a) and (b) of the preceding paragraph.

3. The wound up venture capital fund is immediately liquidated. This is irreversible in the case of a fund established by public offering.

4. The winding up of a venture capital fund is in accordance with the rules laid down in the fund's management rules and, in the situation referred to in paragraph 1(b), shall be subject to the resolution of the meeting of unit-holders taken, on proposal from the management entity, by a two-thirds majority of the votes cast.

5. The management entity acts as liquidator, unless the CMVM designates a different person, in which case it sets the fee to be paid by the management entity. In this case, the liquidators shall have the powers conferred on the management entity by this Legal Framework, while maintaining the duties imposed on depositaries.

6. The CMVM may decide to wind up a venture capital fund when, as a result of breach of the management rules or of the laws and regulations governing venture capital funds, the interests of unit-holders and defence of the market warrant such.

7. The winding up procedure referred to in the preceding paragraph begins with the notification of the decision to the management entity and to the depositaries.

8. The liquidator is liable for the loss caused to the unit-holders as a result of errors and irregularities in the winding up proceedings that can be attributable to it.

9. The liquidation accounts of the venture capital fund are sent to the CMVM within 15 days of the closure of the liquidation, occurring at the time of payment of the proceeds of the liquidation to the unit-holders.

10. The venture capital fund is deemed to be wound up on the date of receipt of the liquidation accounts by the CMVM.

11. The liquidation accounts include the balance sheet, income statement, cash flow statement, venture capital fund auditor's report and liquidation report.

12. The liquidation report includes:

(a) The breakdown of all transactions carried out to implement its liquidation;

(b) Statement of the liquidator that all the rights of the unit-holders in the venture capital fund have been safeguarded.

13. The reimbursement of the units by the payment referred to in paragraph 9 shall occur no later than one year after the start of the liquidation of the venture capital fund and the CMVM may extend that period, following duly reasoned request by the management entity.

Article 43
Public distribution

The provisions of Title III of the Securities Code, approved by Decree-Law no. 486/99 of 13 November, and its regulations, mutatis mutandis, apply to the public offering of distribution of venture capital fund units.

TITLE III
Venture capital investment above the relevant thresholds

CHAPTER I
Entities and undertakings concerned

Article 44
Scope of application

1. This Title applies to venture capital fund management companies, the venture capital funds managed by those entities and to venture capital investment companies.

2. The venture capital funds subject to the framework provided for in Chapter IV of this Title may only be managed by the management companies referred to in the preceding paragraph and by the management companies of collective investment undertakings.

3. [Repealed].

4. The entity responsible for management shall mean, for the purposes of this Title, the companies referred to in paragraphs 1 and 2.

5. Venture capital investment companies are subject to the conditions laid down in Article 10.

6. The hetero-managed venture capital investment company may be managed by a management company of collective investment undertakings or by a venture capital fund management company by means of a written contract.

7. The companies referred to in paragraph 1 are special venture capital companies.

CHAPTER II
Conditions for taking up business of venture capital fund management companies and venture capital investment companies

Article 45
Business of venture capital fund management companies and venture capital investment companies

1. Venture capital fund management companies also have as their main purpose the management of:

(a) Venture capital investment undertakings and specialised alternative investment undertakings governed by the framework provided for in Chapter IV of this Title;

(b) European Union long-term investment funds designated as 'ELTIFs', authorised in accordance with Regulation (EU) no. 2015/760 of the European Parliament and of the Council of 29 April, and

(c) Qualifying venture capital funds with the designation EuVECA and qualifying social entrepreneurship funds with the designation EuSEF, in accordance with Regulation (EU) no. 345/2013 of the European Parliament and of the Council of 17 April and Regulation (EU) no. 346/2013 of the European Parliament and of the Council of 17 April, amended by Regulation (EU) no. 2017/1991 of the European Parliament and Council, of 25 October.

2. The corporate purpose of venture capital investment companies is to invest venture capital by means of the transactions referred to in article 9 (1).

3. The business of the companies referred to in the preceding paragraphs fall under the scope of article 66 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February.

Article 46
Share capital and own funds

1. The minimum share capital of venture capital fund management companies is EUR 125,000 and its share capital shall be fully paid-up since its incorporation and be represented by registered and book-entry shares.

2. The minimum share capital of self-managed venture capital investment companies is EUR 300,000 and its share capital shall be fully paid-up since its incorporation and be represented by registered and book-entry shares.

3. Article 11 (4) and (8) apply to the paying in of the capital.

4. Article 71-M of the General Framework for Collective Investment Undertakings, approved as an Annex to Law no. 16/2015 of 24 February in its current wording, applies to the companies referred to in the previous paragraphs, in respect of capital requirements.

5. Article 29 also applies to venture capital fund management companies.

Article 47
Management, supervision and qualifying holdings

1. The members of management and supervisory bodies of venture capital fund management companies and self-managed venture capital investment companies are persons of proven good repute and experience and namely consider the types of of alternative investment undertakings under management and the respective investment strategies and shall:

(a) The CMVM shall be immediately informed of the identity of these persons and of all successors in those duties;

(b) The effective management shall be guaranteed by at least two persons meeting the above conditions.

2. The shareholders of venture capital fund management companies and venture capital investment companies with qualifying holdings shall be persons of good repute, taking into account the need to ensure the sound and prudent management of such companies.

3. Articles 71-T, 71-U and 71-Y of the General Framework of Credit Institutions and Financial Companies, approved as an Annex to Law No 16/2015 of 24 February in its current wording, apply mutatis mutandis to the assessment and supervision of suitability criteria mentioned in paragraphs 1 and 2.

Article 48
Prior authorisation

1. The commencement of the activity of venture capital fund management companies and the constitution of venture capital investment companies requires the prior authorisation of the CMVM.

2. The application for authorisation contains the following information:

(a) Information on the members of the management and supervisory bodies of the company, including the questionnaire and declaration of good repute of each member, their criminal records and curriculum vitae;

(b) Information on the identity of shareholders holding, directly or indirectly, qualifying holdings whether natural or legal persons, the number of shares held, voting rights and the corresponding percentage of capital, including a questionnaire and declaration of good repute of each shareholder, their criminal record and curriculum vitae;

(c) A plan of activities setting out the organisational structure of the company, including a description of the human, technical, material and IT resources to be allocated to the exercise of the business and information on how it intends to comply with the obligations under this Legal Framework;

(d) Information on remuneration policies and practices;

(e) Information on the mechanisms envisaged for the subcontracting of functions.

3. The application for authorisation of a venture capital investment company and a venture capital fund management company shall contain the following information on the venture capital investment undertaking in corporate form or on the venture capital funds the management company intends to manage:

(a) Information on investment strategies, including the types of underlying funds, if the venture capital investment undertaking is a fund of funds, and the company's policy on the use of leverage, on risk profiles and other features of the funds it manages or intends to manage, including information on the Member States or third countries in which those funds are established or are expected to be established;

(b) Information on the place where the master investment fund is established, if the investment fund is a feeder-type of investment fund;

(d) Information on the arrangements for hiring the depositary of each of the funds that the company intends to manage, pursuant to article 120 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February;

(e) The additional information referred to in article 221 (1) of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, for each of the funds which the company manages or intends to manage.

4. The term "fund" covers venture capital investment companies for the purposes of the preceding paragraph.

5. The CMVM may limit the scope of the authorisation of the business of management of alternative investment firms, in particular as regards investment strategies.

6. The application for authorisation also examines the additional data referred to in article 7 (3)(a) to (e), with any necessary adaptations if the company has not yet been incorporated.

7. The authorisation depends on the prior consultation with the competent authority of the relevant Member State where the company is:

(a) A subsidiary of another management entity of the European Union, of an investment company, of a credit institution or of an insurance company, authorised in that Member State;

(b) A subsidiary of the parent company of an entity referred to in the preceding sub-paragraph;

8 - The CMVM shall communicate quarterly to the European Securities and Markets Authority (ESMA) the authorisations granted under this article, as well as the revocation of those authorisations.

9 - The CMVM may implement and develop the instructional elements referred to in this article via Regulation.

Article 49
Authorisation decision

1. The decision of the CMVM is notified to the applicants within 30 days of receipt of the complete application.

2. The period referred to in the preceding paragraph is suspended for the purpose of the notification referred to in paragraph 3 of the following article and for the period specified therein.

3. In the absence of a decision by the CMVM within the period laid down in paragraph 1, the authorisation shall be deemed to be rejected.

Article 50
Refusal of authorisation

1. The CMVM refuses authorisation to management companies of venture capital funds and venture capital investment in the following situations:

(a) The information contained in the application is insufficient;

(b) The company does not demonstrate that it is capable of carrying out the duties laid down in this Legal Framework.

2. The CMVM also rejects the application for authorisation if the effective exercise of supervisory functions is jeopardised by:

(a) Close links between the venture capital fund management companies and venture capital investment companies and other natural and legal persons;

(b) The laws, regulations or administrative provisions of third countries governing natural or legal persons with which venture capital fund management companies and venture capital investment companies maintain such relationships; or

3. If there are grounds for refusal pursuant to the preceding paragraph, the CMVM notifies the applicants before refusing the application, giving them a maximum of 10 days to remedy the information shortfall or to comment on the appraisal of the CMVM.

Article 51
Expiry and revocation of authorisation

1. The authorisation of a venture capital fund management company and a venture capital investment company expires if the company does not use it within 12 months or has ceased its business activity for at least six months.

2. The CMVM may withdraw the company's authorisation:

(d) In the event of severe systematic breach of laws, regulations or the instruments of incorporation, in the interests of the unit-holders or the defence of the market warrants such;

(b) The authorisation was achieved by making false statements or by any other irregular means;

Article 52
Subsequent amendments

The provisions of Articles 25 and 26 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, apply to amendments to the initial conditions for the authorisation of venture capital fund management companies and venture capital investment companies.

CHAPTER III
Functioning conditions of venture capital fund management companies and venture capital investment companies

Article 53
General requirements and remuneration policy

1. Venture capital fund management companies and venture capital investment companies comply at all times with the duties to:

(a) Act honestly, with due skill and with care, diligence and correctness in the conduct of its activities;

(b) Act in the best interests of the unit-holders and the venture capital investment undertakings it manages and the integrity of the market;

(c) Have the resources and procedures necessary for the adequate conduct of their business activities and employ them efficiently;

(d) Take all reasonable steps to avoid conflicts of interest and, if they cannot be avoided, to identify, manage and monitor and, where appropriate, to disclose such conflicts of interest, in order to avoid adversely affecting the interests of venture capital investment undertakings and unit-holders, as well as to ensure that the venture capital investment undertakings they manage receive fair treatment;

(e) Comply with all regulatory requirements applicable to the conduct of its business in order to promote the interests of unit-holders in the venture capital investment undertakings it manages and promote the integrity of the market;

(f) Treat all unit-holders in venture capital investment undertakings fairly.

2. No unit-holder in a venture capital investment undertaking may benefit from preferential treatment, except where this is disclosed in the instruments of incorporation of the venture capital investment undertaking concerned.

3. Venture capital fund management companies and venture capital investment companies have and apply remuneration policies and practices, as provided for in article 71-O of the General Framework for Collective Investment Undertakings, approved as an Annex to Law no. 16/2015 of 24 February in its current wording.

Article 54
Conflicts of interest

1. Venture capital fund management companies and venture capital investment companies take all reasonable steps to identify the possible occurrence, during the management of venture capital investment undertakings, of conflicts of interest between:

(a) The company itself, including the members of its management bodies, employees and natural or legal persons who have a direct or indirect control relationship with these, and the undertaking managed or its unit-holders;

(b) The venture capital investment undertaking or its unit-holders, and another venture capital investment undertaking or its unit-holders;

(d) Two clients of the company.

2. Venture capital fund management companies and venture capital investment companies maintain and implement effective organisational arrangements and procedures in order to identify, prevent, manage and monitor conflicts of interest that adversely affect the interests of the venture capital investment undertakings they manage and their unit-holders.

3. Venture capital fund management companies and venture capital investment companies shall:

(a) Maintain a separation, in the context of their own operation, between functions and responsibilities which may be considered incompatible with each other or which may give rise to systematic conflicts of interest;

(b) Assess whether their operating conditions may entail any other significant conflicts of interest and disclose any such conflicts to the unit-holders of venture capital investment undertakings.

4. If the organisational measures taken by venture capital fund management companies and venture capital investment companies to identify, prevent, manage and monitor conflicts of interest are not sufficient to ensure with reasonable certainty that the risks of damage to the interests of unit-holders have been removed, companies shall:

(a) Clearly inform the unit-holders, before carrying out any operation on their behalf, of the general nature and sources of such conflicts of interest; and

(b) Implement appropriate policies and procedures in that context.

5. Whenever venture capital fund management companies and venture capital investment companies envisage the possibility of, on hiring the services of a master broker, transferring and re-using assets from the venture capital investment undertaking, it shall:

(a) Be included in the written agreement between the parties:

(b) Be communicated to the depositary of the venture capital investment undertaking.

6. Venture capital fund management companies and venture capital investment companies shall act with due skill, care and diligence in the selection and appointment of master brokers.

7. The reuse of assets by the depositary of the venture capital investment undertaking depends on the prior consent of the venture capital fund management company or the venture capital investment company, as applicable.

8. The possibility referred to in paragraphs 5 and 7 may be provided only for venture capital investment undertakings intended solely for qualified investors.

Article 55
Risk management

1. Venture capital fund management companies and venture capital investment companies shall functionally and hierarchically separate the risk management functions of the operating units, including portfolio management.

2. The functional and hierarchical separation of the risk management functions referred to in the preceding paragraph shall be reviewed by the CMVM in accordance with the principle of proportionality. It is considered that venture capital fund management companies and venture capital investment companies shall be able to demonstrate in any case that there are specific safeguards against conflicts of interest, that allow the independent exercise of the risk management activities and that the risk management process complies with the requirements of this article and it is consistently effective.

3. Venture capital fund management companies and venture capital investment companies establish appropriate risk management systems to adequately identify, measure, manage and monitor all risks relevant to the investment strategy of each venture capital investment undertaking and to which each undertaking is or may be exposed.

4. The assessment of the creditworthiness of the assets of venture capital investment undertakings shall not be exclusively or automatically based on credit ratings issued by a credit rating agency, within the meaning of article 3 (1)(b) of Regulation (EC) no. 1060/2009 of the European Parliament and of the Council of 16 September.

5. Venture capital fund management companies and venture capital investment companies shall review their risk management systems with sufficient frequently, at least once a year, and adapt them where necessary.

6. Venture capital fund management companies and venture capital investment companies shall, at least:

(a) Comply regularly with due diligence requirements, in an appropriate manner and documenting them, on investments made on behalf of the venture capital investment undertaking in accordance with the investment strategy and the risk profile of the investment;

(b) Ensure that the risks associated with each investment position of the venture capital investment undertaking and its overall effect on the respective portfolio may be properly identified, measured, managed and monitored on a permanent basis, including through the use of appropriate stress testing techniques;

(c) Ensure that the risk profile of the venture capital investment undertaking is consistent with its size, the structure of its asset portfolio and its investment objectives and strategies as defined in its management rules.

7. The CMVM, taking into account the nature, scale and complexity of the activities of the venture capital investment undertaking, checks the adequacy of the credit assessment processes of venture capital fund management companies and venture capital investment companies, assesses the use of references to credit ratings in the investment policies of venture capital investment undertakings and, where appropriate, encourages mitigation of the impact of such references in order to reduce the exclusive or automatic dependency of the referred companies on credit ratings.

8. Venture capital fund management companies and venture capital investment companies set the maximum level of leverage that they may employ on behalf of each venture capital investment undertaking they manage, as well as the extent to which re-use may occur of the assets pledged under the legal instrument that gave rise to the leverage effect, taking into account in particular:

(a) The type of venture capital investment undertaking;

(b) The investment strategy of the venture capital investment undertaking;

(d) Any other relevant interdependence or relationship with other financial services institutions that may pose systemic risk;

(e) The need to limit exposure to any particular counterparty;

(f) The extent to which the leverage effect is guaranteed;

(g) The ratio of assets to liabilities;

(h) The scale, nature and extent of the business of venture capital fund management companies and venture capital investment companies in the relevant markets.

Article 56
General organisational requirements

1. Venture capital fund management companies and venture capital investment companies shall ensure at all times the adequate and appropriate human and technical resources necessary for the sound management of the venture capital investment undertaking.

2. Venture capital fund management companies and venture capital investment companies shall, also taking into account the nature of the venture capital investment undertakings managed:

(a) Use sound administrative and accounting procedures and have control and security mechanisms for electronic data processing;

(b) Have appropriate internal control procedures, including, in particular, rules on the personal transactions of their employees and on the holding or management of investments to invest on their own account.

3. The procedures referred to in sub-paragraph (b) of the preceding paragraph ensure, at least, that:

(a) Each transaction involving the venture capital investment undertaking may be reconstructed according to its origin, the parties to it, its nature, and the time and place at which it was effected; and

(b) The assets of the venture capital investment undertaking are invested in accordance with its management rules and the laws in force.

Article 57
Subcontracting

1. Venture capital fund management company and venture capital investment companies wishing to subcontract third parties for the performance of functions on their behalf shall notify the CMVM before the subcontracting takes effect and satisfy the following conditions:

(a) The company shall be able to give objective reasons for the whole subcontracting structure;

(b) The subcontractor shall have sufficient resources to perform its duties and the persons who effectively conduct its activities shall have a good reputation and sufficient experience;

(c) When the subcontracting relates to portfolio management or risk management, only entities authorised to manage assets and subject to supervision may be subcontracted or, where this condition cannot be met, following prior permission of the CMVM;

(d) When the subcontracting relates to portfolio management or risk management and the intention is to subcontract a third country undertaking, in addition to the requirements of the preceding sub-paragraph, cooperation between the CMVM and the supervisory authority of the undertaking concerned shall be ensured;

(e) The subcontracting cannot impair the supervision effectiveness of the company, and it shall not, in particular, prevent the supervision from acting or from managing the venture capital investment undertaking in the interests of its unit-holders;

(f) The company shall be able to demonstrate that the subcontractor is capable of carrying out the functions in question, that it has been chosen with all due care and that it is capable of effectively monitoring the subcontracted activity at any time, of giving additional instructions to the subcontractor or of terminating the subcontracting with immediate effect where this is in the interests of the unit-holders.

2. The venture capital fund management company and the venture capital investment company shall regularly review the services provided by each subcontractor.

3. No portfolio or risk management function may be subcontracted from:

(a) The depositary or its subcontractor;

(b) Any other entity whose interests may conflict with the interests of the company or the unit-holders of the venture capital investment undertaking, unless that entity has functionally and hierarchically separated the performance of its portfolio management or risk management functions from other potentially conflicting functions and the potential conflicts of interest have been properly identified, managed, controlled and disclosed to the unit-holders of the venture capital investment undertaking.

4. The responsibility of the venture capital fund management company and the venture capital investment company for the venture capital investment undertaking and its unit-holders is not affected by the fact that the company has subcontracted functions to a third party or by any other subcontracting.

5. The venture capital fund management company and the venture capital investment company may not subcontract their functions in such a way that, in actual terms, it undermines their activity and they can no longer be considered as entities responsible for the management and they have become a mere postal address.

6. The third party may outsource any functions subcontracted to it by a venture capital fund management company or a venture capital investment company, provided that the following conditions are met, in addition to the conditions laid down in paragraph 1:

(a) The company has given its prior consent to the subcontracting;

(b) The company has notified the CMVM before the subcontracting has come into effect.

7. The subcontracted third party may not outsource portfolio or risk management functions to the entities referred to in paragraph 3.

8. The subcontracted third party shall regularly review the services provided by each entity it subcontracts.

9. When the second subcontractor, in turn, contracts any of the functions subcontracted to it, the conditions laid down in paragraph 6 apply mutatis mutandis.

CHAPTER IV
Operating conditions of venture capital investment undertakings

Article 58
Venture capital investment undertakings managed by entities above the relevant thresholds

The venture capital investment undertakings of this Title are subject to the provisions of this Chapter and to the provisions of Chapters I and IV of Title II in respect of venture capital funds, in so far as this does not conflict with the provisions of this Chapter.

Article 59
Liquidity management

1. For each of the venture capital investment undertakings they manage and which have used leverage, the entities responsible for management:

(a) Implement an adequate liquidity management system and adopt procedures to monitor the liquidity risks of the venture capital investment undertaking; and

(b) Ensure that the liquidity profile of the undertaking's investments enables them to meet their obligations.

2. The entities responsible for management regularly carry out stress tests, under normal conditions and exceptional liquidity conditions, to enable them to assess and monitor the liquidity risks borne by the venture capital investment undertaking under those conditions.

3. The entities responsible for management ensure the consistency of the investment strategy, the liquidity profile and the redemption policy for each of the venture capital investment undertakings they manage.

Article 60
Asset valuation requirements

1. Articles 93 to 95 and 133 of the General Framework for Collective Investment Undertakings, apply, mutatis mutandis, to the management of venture capital investment undertakings in terms of the valuation of assets, as approved by Law no. 16/2015 of 24 February.

2. The entities responsible for management ensure that the net asset value per unit of venture capital investment undertakings is calculated and disclosed to unit-holders in the event of an increase or reduction of the respective capital.

3. Unit-holders shall be informed of the assessments and calculations in the manner provided for in the management rules of the venture capital investment undertaking.

Article 61
Depositary

The entities responsible for management contract a depositary in accordance with Chapter II of Title II of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, and such depositary is subject to all the obligations laid down therein.

Article 62
Annual report

1. The annual report, including the auditor's report, of each venture capital investment undertaking managed or marketed in Portugal is made available to unit-holders upon request, as sent to the CMVM and, if applicable, made available to the competent authorities of the home Member State of the venture capital investment undertaking.

2. The annual report shall comply with article 161 and article 221 (3), both of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February.

Article 63
Information to investors and the CMVM

1. For each venture capital investment undertaking managed or marketed in Portugal, the entity responsible for management:

(a) Makes available to investors, in accordance with the respective instruments of incorporation and before the investment in those undertakings occurs, the information referred to in article 221 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February;

(b) Sends to the CMVM the reports provided for in article 222 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February.

2. The provisions of article 223 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, also apply to venture capital investment undertakings for the purposes of risk control, with reference to the information envisaged in sub-paragraph (b) of the preceding paragraph.

CHAPTER V
Obligations arising from control positions in unlisted companies and issuers of shares admitted to trading on a regulated market.

Article 64
Applicable framework

The entities responsible for management are subject to the provisions of Section III of Chapter III of Title III of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February.

CHAPTER VI
Management and marketing in Portugal and the European Union

Article 65
Applicable rights and procedures

1. The authorisation of management entities of third countries that exclusively manage venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings exclusively for professional investors is subject to Subsection I of Section IV of Chapter I of Title II of the General Framework for Collective Investment Undertakings, approved as an Annex to Law no. 16/2015 of 24 February in its current wording.

2. The provisions of Sections V and in Subsection II of Section IV of Chapter I of Title I, in relation to alternative investment undertakings of the approved Annex to Law no. 16/2015 of 24 February in its current wording apply to venture capital fund management companies, venture capital investment companies and specialised alternative investment companies, as well as to management entities of third countries which exclusively manage venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings authorised in Portugal.

3. The provisions of Section VI and in article 109-C of Subsection III of Section IV of Chapter I of Title II of the approved Annex to Law no. 16/2015 of 24 February in its current wording, apply to management entities of the European Union and to management entities of third countries which exclusively manage venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings for which the state of reference is not Portugal.

4. The provisions of Section IV of Chapter III of Title III of the General Framework of Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, apply to the marketing of venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings in Portugal and in the Member States by venture capital fund management companies, venture capital investment companies, specialised alternative investment companies, by management entities of the European Union and third country management entities that exclusively manage venture capital investment undertakings, social entrepreneurship investment undertakings, or specialised alternative investment undertakings.

5. [Repealed].

Article 65-A
Legal framework for managers of qualifying venture capital funds and social entrepreneurship funds

1. The managers of qualifying venture capital and social entrepreneurship funds who only register pursuant to and for the purposes of Regulation (EU) no. 345/2013 of the European Parliament and of the Council, of 17 April, and Regulation (EU) no. 346/2013 of the European Parliament and of the Council, of 17 April, as amended by Regulation (EU) no. 2017/1991 of the European Parliament and of the Council, of 25 October, adopt the form of public limited company.

2. The managers of qualifying venture capital and social entrepreneurship funds referred to in the previous paragraph shall provide the CMVM with the information provided for in article 5 of Delegated Regulation (EU) no. 231/2013 of the European Commission, of 19 December 2012.

3. The reporting referred to in the preceding paragraph is carried out in accordance with that laid down for venture capital and social entrepreneurship companies.

4. The provisions of article 71-U of the General Framework of Collective Investment Undertakings, approved as an Annex to Law No. 16/2015 of 24 February in its current wording and mutatis mutandis, the supervision of the suitability criteria provided for in the European legislation referred to in paragraph 1.

5. The rules established in the preceding paragraphs apply to the qualifying venture capital and social entrepreneurship funds who register as managers pursuant to and for the purposes of Regulation (EU) no. 345/2013 of the European Parliament and of the Council, of 17 April, and Regulation (EU) no. 346/2013 of the European Parliament and of the Council, of 17 April, as amended by Regulation (EU) no. 2017/1991 of the European Parliament and of the Council, of 25 October.

TITLE IV
Management and marketing of qualifying venture capital funds and social entrepreneurship funds under the designation EuVECA or EuSEF

Article 66
Registration for marketing a EuVECA and EuSEF

1. The CMVM is the competent authority for the registration of:

(a) The managers of qualifying venture capital and social entrepreneurship funds who intend to use the designation EuVECA or EuSEF in the marketing of such funds, pursuant to Regulation (EU) no. 345/2013 of the European Parliament and of the Council, of 17 April, and Regulation (EU) no. 346/2013 of the European Parliament and of the Council, of 17 April, as amended by Regulation (EU) no. 2017/1991 of the European Parliament and of the Council, of 25 October;

(b) The qualifying venture capital and social entrepreneurship funds, pursuant to Regulation (EU) no. 345/2013 of the European Parliament and of the Council, of 17 April, and Regulation (EU) no. 346/2013 of the European Parliament and of the Council, of 17 April, as amended by Regulation (EU) no. 2017/1991 of the European Parliament and of the Council, of 25 October.

2. Venture capital companies and social entrepreneurship companies wishing to obtain the registration referred to in the preceding paragraph shall comply with all the requirements laid down in the referred Regulations.

Article 67
Supervision and regulation

1. The CMVM is responsible for supervising the provisions of this Legal Framework and it shall have for this purpose, in addition to the functions and powers provided for in the Securities Code, approved by Decree-Law no. 486/99 of 13 November, those specified in this Title.

It is incumbent upon the CMVM to supervise the provisions of the current Legal Framework and shall have for said purpose the following powers in:

a) The Securities Code, approved by Decree-Law No. 486/99 of 13 November in its current wording;

b) Articles 71-Q and 71-R of the General Framework of Collective Investment Undertakings, approved as an annex to Law No. 16/2015 of 24 February with the current working and mutatis mutandis; and
c) This Title.

2. The CMVM is responsible for setting the rules for the provisions of this Legal Framework, in particular as regards the following matters:

(a) Valuation of assets and liabilities;

(b) Organisation of accounts;

(d) Authorisation and registration procedure;

(e) Suitability assessment of members of the management and supervisory bodies and holders of qualifying holdings;

(f) Marketing;

(g) Rules applying to social entrepreneurship companies and social entrepreneurship funds;

(h) Rules applying to specialised alternative investment companies and specialised alternative investment funds;

(i) Vicissitudes of investment undertakings and sub-funds, including merger, splitting and liquidation.

3. The nature, scale and complexity of the business activities carried out shall be taken into account in the rules referred to in the preceding paragraph.

4. The rules necessary for the implementation of the Legal Framework enter into force on the business day following the entry into force of the Legal Framework.

5. The CMVM's duty pursuant to paragraph 1 covers the duty of supervising the activity of granting and participating in loans by USACIs.

Article 68
Methods of the competent authority

The CMVM establishes the appropriate methods to verify whether the entities managing venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings comply with their obligations, taking into account the guidelines established by the European Securities and Markets Authority.

Article 69
Prudential supervision of third country management entities authorised in Portugal

1. The CMVM is responsible for the prudential supervision of third country management entities managing venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings authorised in Portugal, irrespective of whether such entities manage or market venture capital investment undertakings in another Member State.

2. Notification received from the competent authorities of the host Member State of the management companies of venture capital funds, venture capital investment companies, specialised alternative investment companies or third country managing entities that manage venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings authorised in Portugal, stating clear and demonstrated grounds for believing that such do not comply with the rules that it is the responsibility of the CMVM to supervise, those authorities take appropriate measures including, where necessary, requesting additional information from the competent supervisory authorities of third countries.

Article 70
Supervision of management entities established or authorised in another Member State

The supervision of the business in Portugal of management entities of venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings of the European Union and of third countries authorised in another Member State shall be subject to articles 246 and 247 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February.

Article 71
Non-compliance by third country management entity authorised in Portugal

When the CMVM considers that a management entity of venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings of a third country authorised in Portugal does not comply with the obligations under this Legal Framework, it shall notify the European Securities and Markets Authority of such, and its reasons for reaching that conclusion, as soon as possible.

Article 72
Cooperation with the European Securities and Markets Authority and Banco de Portugal

1. At the request of the European Securities and Markets Authority, the CMVM acts in accordance with article 249 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February.

2. The CMVM cooperates with the competent authorities of other Member States and with the European Securities and Markets Authority in supervising:

(a) Management entities of venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings of third countries, as provided for in article 248 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February; and

(a) The actions of the management entities of venture capital investment undertakings, social entrepreneurship investment undertakings or specialised alternative investment undertakings that are not subject to its supervision, as provided for in article 251 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February.

Article 73
Cooperation and exchange of information

1. When a venture capital investment undertaking, social entrepreneurship fund or specialised alternative investment undertaking or the entity responsible for management has been declared insolvent or its compulsory winding up has been ordered by the courts, the confidential information not involving third parties involved in attempts to recover that undertaking or entity may be disclosed in civil or commercial proceedings, notwithstanding the provisions on the duty of secrecy laid down in legislation in force.

2. The provisions of article 252 of the General Framework for Collective Investment Undertakings, approved by Law no. 16/2015 of 24 February, shall also apply with reference to the business activity concerning the undertakings referred to in the preceding paragraph.

TITLE V
Penalty framework

Article 74
Scope of application

The infringements of a merely corporate nature provided for in this Title concern both the breach of the duties laid down in this Legal Framework and the respective regulations, as well as the breach of duties established in national or European Union law, in relation to the matters governed by this Framework.

Article 75
Administrative Infractions

1. The following typical unlawful acts are very serious administrative infractions, punishable by a fine of EUR 25,000 to EUR 5,000,000:
(a) The communication or reporting of information to the CMVM which is not true, complete, impartial, current, clear and lawful, or the omission of such communication or reporting;

(b) The communication or disclosure of information to the public which is not true, complete, impartial, current, clear and lawful, or the omission of such communication or disclosure of information;

(c) The communication or disclosure of information to the unit-holders which is not true, complete, impartial, current, clear and lawful, or the omission of such communication or disclosure;

(d) Engaging in venture capital, social entrepreneurship or specialised alternative investment activities without authorisation, registration, prior notification or outside the scope of authorisation or registration;

(e) Performing acts concerning venture capital, social entrepreneurship and specialised alternative investment by entities operating without authorisation or prior notification of the competent authority;

(f) Non-cooperation with supervisory authorities or the disruption of supervisory activities;

(g) Carrying out prohibited operations;

(h) Failure to comply with own funds levels;

(i) Non-compliance with the investment or debt thresholds;

(j) Failure to act independently and in the sole interest of the unit-holders;

(k) The unfair, non-professional or discriminatory treatment of unit-holders;

(l) The settlement of conflicts of interest in an unfair or discriminatory manner;

(m) Failure to comply with obligations relating to conflicts of interest;

(n) Failure to comply with the rules on separation of assets;

(o) The failure to draw up, defectively draw up or omit communicating the report and accounts;

(p) Failure to comply with the rules on asset valuation;

(q) Non-compliance with risk assessment and risk management rules;

(r) Non-compliance with the rules on the custody of assets;

(s) The subcontracting of depositary functions other than the permitted cases;

(t) Performing acts without the prior approval of the meeting of unit-holders;

(u) Failure to comply with the rules on asset compartments or categories of units;

(v) Non-compliance with legal or regulatory obligations towards unit-holders;

(w) Non-compliance with obligations laid down in the instruments of incorporation;

(x) The failure to carry out audits;

(y) The use of the reserved name or designation without prior authorisation or registration.

2. Serious administrative infractions, punishable by a fine of EUR 12,500 to EUR 2,500,000 are:

(a) The failure to communicate to the CMVM any supervening facts and changes concerning the authorisation application;

(b) The failure to comply with the minimum thresholds for share capital;

(d) Failure to convene the meeting of unit-holders;

(e) Non-compliance with the rules on the vicissitudes of entities with the activity of venture capital, social entrepreneurship and specialised alternative investment;

(f) Failure to comply with the rules on remuneration policy;

(g) Failure to comply with the rules on internal organisation;

(h) The non-adoption of required valuation procedures;

(i) Non-compliance with the duties relating to the matters referred to in article 74 not punishable as a very serious administrative infraction.

3. In addition to the fine and depending on the seriousness of the infringement and the fault of the agent, the following additional penalties may be levied on those responsible for any administrative infraction, in addition to those provided for in the general framework of infringements of a merely corporate nature:

(a) Seizure and loss of the object of the infraction, including the proceeds of the benefit obtained by the infringing party by committing the administrative infraction;

(b) Prohibited, for a maximum period of five years from the date of final judgment by res judicata, to engage in the business activity to which the administrative infraction relates;

(c) Disqualification, for a maximum period of five years from the date of final judgment by res judicata, to hold posts in governing bodies and administrative, managerial, senior and supervisory posts when the offender is a member of the governing bodies of the company, holds administrative, managerial, senior or managerial positions or acts as legal representative or representative of any legal person falling under the scope of this Legal Framework;

(d) Publication by the CMVM of the penalty imposed for being found guilty of the administrative infraction, at the expense of the offender, and in suitable places for the purpose of general prevention of the legal system and the protection of the financial system and of the securities markets or other financial instruments;

(e) The withdrawal of authorisation or cancellation of registration necessary for the performance of venture capital, social entrepreneurship or specialised alternative investment activities.

4. The publication referred to in sub-paragraph (d) above may be in full or in extract form, as decided by the CMVM.

Article 76
Competence

The CMVM is the competent authority for the processing of administrative infractions, the levying of fines and additional penalties and precautionary measures.

Article 77
Subsidiary law

The substantive and procedural rules of the Securities Code, as approved by Decree-Law No 486/99 of 13 November, shall apply to the administrative infractions provided for in this law and to the proceedings relating thereto.

Venture Capital, Social Entrepreneurship and Specialised Investment Legal Framework

Co-financed by :