version with the amendments introduced by Decree-Law No. 52/2010 of 26 May,
Decree-Law No. 157/2014 of 24 October and Law No. 35/2018 of 20 July)
The present Decree-Law partially transposes to national law the Directive of the European Parliament and of the Council No. 2004/39/EC of 21st April, on the Markets in Financial Instruments. This Directive amends the Directive of the European Parliament and of the Council Nos. 85/611/EEC, of 20th December and 93/6/EEC, of 15th March, and Directive of the European Parliament and of the Council No.2000/12/EC, of 20th March, and repeals the Council Directive No. 93/22/EEC, of 10th May. Thus, establishing the legal framework applicable to companies whose exclusive object is to provide investment advice in financial instruments and the reception and transmission of orders on behalf of a third party with respect to same.
The Framework now enshrined does not impair maintaining a form wholly regulated by national law – investment advisers whose main activity is securities investment advice. Taking into consideration that, on the one hand by virtue of the Directive on the Markets in Financial Instruments, the financial instruments investment advice shall become one of the financial intermediation activities that comprises a group of principal investment services and activities, and on the other hand, only duly authorized investment firms or credit institutions may pursue said services and activities on a cross-border basis. It is important to ensure that the entities that purport to carry out said activity comply with the necessary requirements that allow same to be classified as investment firms and benefit from the designated community passport. Thus, based on the authorisation that is granted to same by the Member State in which it has its registered office, the investment firms are entitled to operate all over the European Union.
Within this framework, the new form 'Investment Advice Firm' is hereby established, and the respective legal system is regulated by autonomous legislation. These firms may take the legal form of a public limited company or limited company. The fact that the parties may opt for one of the abovementioned types of company is based on whether a greater or lesser complex corporate structure is sought, and this should be reflected on the type of company adopted.
As to the firms that adopt the public limited company type, it is also worth noting that the respective capital should be compulsorily represented by nominal shares, so that its shareholders may be easily ascertained. This is in order to control whether same complies with the necessary conditions for ensuring the sound and prudent management of said companies, particularly, the holders of qualifying holdings.
Also, particularly salient is that the investment advice firms, as investment firms, become subject to a prior authorization system, without which it may not carry out its activity. Said authorisation system is constituted in a single document by the CMVM. Thereby, assigning the responsibility for supervising said companies from a prudential point of view to the CMVM. The Directive enables the Member States, which recognise the companies whose main activity is financial instruments investment advice, the possibility of benefitting from a more flexible system in terms of prudential supervision. As a result of this option, more moderate prudential requirements are established than that applicable to other investment firms, but nevertheless, still capable of meeting the prudential requisites, in order to ensure the sound functioning of said firms.
Furthermore, it is particularly salient that, in order to ensure that the investment advice activity is developed in compliance with the best existing rules on the matter, it is hereby required that the Directors, the members of the Supervisory Board and the other persons that effectively direct the business are of good repute and professionally suitable for carrying out the respective duties.
Under the legislative authority granted by Law No. 25/2007, of 18 July, and pursuant to Article 198/1/a/ and b) Constitution, the Government decrees as follows:
1 – The present Decree-Law establishes the legal framework applicable to firms whose exclusive purpose is to provide investment advice in financial instruments and the reception and transmission of orders on behalf of a third party with respect to same.
2 - Investment advice firms may provide ancillary services as provided for in article 291(c) and (d) of the Securities Code, approved by Decree-Law No. 486/99 of 13 November, as well as provide consultancy services for structured deposits.
3 - This Decree-Law partially transposes into national law, Directive 2014/65/EU, of the European Parliament and of the Council, of 15 May 2014, on the markets in financial instruments, which amends Directive 2002/92/EC and Directive 2011/61/EU.
Definition and Registered Office
1 – The investment firms exclusively authorised to carry out the investment advice activities and the reception and transmission of orders on behalf of a third party envisaged in article 290(1)(a) and (f) of the Securities Code are investment advice firms.
2 – The registered office and the head office of the investment advice firm must be located in Portugal.
3 – The provision of consultancy services regarding structured deposits by investment advisory firms is subject to the supervision of Banco de Portugal, governed by the provisions of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92 of 31 December, and by the provisions of specific legislation.
4 - In all that is not provided for in this Decree-Law and does not concern the provision of consultancy services regarding structured deposits, the Securities Code, approved by Decree-Law no. 486/99, of 13 from November is additionally applicable.
Type of Company and Management
1 – The investment advice firms may adopt the form of a public limited company or a limited company.
2 – The capital of an investment advice firm that takes the form of a public limited company should be represented by nominal shares.
3 – Unless dealing with a single-member private limited company, the management of an investment advice firm shall be undertaken, by at least two members.
The investment advice firms are banned from carrying out the following transactions:
a) Holding clients' money or financial instruments;
b) Loaning in any form;
c) Providing personal or real collateral in favour of third parties;
d) Acquiring for own account any financial instruments and real estate, unless same is necessary for the installation of its own business.
1 - Any person who proposes to hold a qualifying holding in an investment advice firm shall comply with the requirements that ensure the sound and prudent management of said company.
2 - The following are considered to be qualifying holdings:
a) Which, directly or indirectly, represent a percentage of not less than 10% of the capital or voting rights in the investment advice firm; or
b) Which, for any reason whatsoever, allow for a substantial influence to be had on the management of the investment advice firm.
3 - For purposes of the current Decree-Law, the provisions laid down in Articles 20, 20-A and 21 of the Securities Code, mutatis mutandis, apply to the calculation of the voting rights of the holder in the investment advice firm.
4 - In calculating qualifying holdings in the investment advice firm, the following are not taken into account:
a) The voting rights held as a result of providing the underwriting of financial instruments or the placing of financial instruments on a firm commitment basis, provided that the voting rights are not exercised or otherwise used to intervene in the management of the company and are disposed of within one year from the acquisition date;
b) The shares traded for the sole purpose of clearing and settlement within the usual short settlement cycle;
c) The stake of a financial intermediary acting as a market maker that reaches or exceeds 5% of the voting rights corresponding to the share capital, provided that said intermediary does not intervene in the management of the subsidiary, nor exert influence on the acquisition of said shares or back the share price;
d) The shares held by custodians, acting in said capacity, and provided the custodians show the CMVM that it may only exercise the voting rights attached to shares under instructions issued in writing or by electronic means.
5 - For purposes of subparagraphs b) and c) above, the provisions of Articles 16-A and 18 of the Securities Code are applicable.
Good Repute and Professional Experience
1 - In order to ensure sound and prudent management, the members of management and supervisory bodies of the investment advice firm and the persons that manage the business, shall be of good repute and have the appropriate professional experience and availability for carrying out the respective duties, ensuring sound and prudent management.
2 - Articles 30-D, 31 and paragraphs 1, 2 and 11 of article 33(11)(1) and (2) of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law no. 298/92 of December 31, are applicable to the opinion, by the CMVM, of the requirements of suitability, professional qualification and availability.
3 - For the purposes of verifying the requirements set out in this Article, the CMVM exchanges information with the Portuguese Central Bank and the Portuguese Insurance Institute.
4 - For the purposes of this article, the good repute of the members of the management and supervisory bodies that are registered with the Portuguese Central Bank and the Portuguese Insurance Institute is deemed to be verified when said registration is subject to the requirements of good repute, unless new information appears at the date of such registration that would lead the CMVM to rule to the contrary.
1 - The management and supervisory bodies of investment advisory firms define, supervise and are responsible, within the scope of their respective duties, for the application of governance systems that guarantee the effective and prudent management of the same, including the separation of functions within the company and the prevention of conflicts of interest.
2 - In defining the governance systems, it is incumbent upon the management and supervisory bodies, within the scope of their respective duties to:
a) Be responsible for the firm, approve and supervise the implementation of its strategic objectives, risk strategy and internal government;
b) Ensure the integrity of the accounting and financial information systems, including financial and operational control and compliance with the laws and regulations applicable to the firm;
c) Supervise the disclosure process and the reporting duties to the CMVM;
d) Monitor and control top management activity.
3 - The management and supervisory bodies periodically monitor and assess the effectiveness of corporate governance systems and, within the scope of their respective competences, take and propose appropriate measures to correct any deficiencies detected.
1 – When the constitution is authorised, the investment advice firm should comply with at least one of the following financial requirements:
a) A minimum initial capital of EUR 50,000.00 as at the date of the company constitution;
b) Indemnity insurance covering the whole territory of the European Union, or any other comparable guarantee against liability arising from professional negligence, which represents at least EUR 1,000,000 applicable per claim and on the whole EUR 1,500,000 per year for all claims;
c) A combination of initial capital and indemnity insurance in such a manner that the level of coverage is equivalent to that mentioned in the above subparagraphs.
2 – Whenever the guarantee is not automatic or when the respective purpose does not envisage the extension or nature covering the liability intended, the CMVM may object to the guarantee presented pursuant to the abovementioned sub-paragraph (b).
The investment advice firms shall adopt the accounting standards applicable to investment firms.
Authorisation for the Constitution
1 – The constitution of an investment advice firm is subject to authorisation by the CMVM.
2 – The following shall accompany the application for authorisation:
a) Information provided for in Commission Delegated Regulation (EU) 2017/1943 of 14 July 2016, which complements Directive 2014/65/EU, of the European Parliament and of the Council, of 15 May 2014, with regard to regulatory technical standards on information and requirements for authorisation of investment firms;
d) Names of the supervisory board members;
e) Statement of compliance with asset requirements;
f) Expected date for commencement of activity.
g) Indication of whether you want to provide advice on structured deposits, independently or not.
3 - The granting of authorisation for the constitution of an investment advisory firm that will adopt the type of a single-member private limited company, depends on the verification of the conditions provided for in the Commission Delegated Regulation (EU) 2017/1943, of 14 July 2016, which complements Directive 2014/65/EU, of the European Parliament and of the Council, of 15 May 2014, with regard to technical regulatory standards on information and requirements for the authorisation of investment firms.
4. The granting of authorisation to an investment advice firm, which is one of the following, depends on the prior consultation with the supervisory authority of the EU Member State:
a) Company controlled by an investment firm authorised in said Member State, or company controlled by the parent company of the investment firm in said conditions, or controlled by said natural or legal persons that control the investment firm authorised in said Member State;
b) Company controlled by a credit institution authorised in said Member State, or company controlled by the parent company of the credit institution in said terms and conditions, or controlled by said natural or legal persons that control the credit institution authorized in said Member State;
c) Company controlled by an insurance firm authorised in said Member State, or company controlled by the parent company of the insurance firm in said terms and conditions, or controlled by said natural or legal persons that control the insurance firm authorised in said Member State;
5 - The CMVM shall exchange information with the supervisory authorities referred to in the preceding paragraph in order to assess the requirements envisaged in Articles 5 and 6.
6 - The opinion by the CMVM, on the suitability of the holders of qualifying holdings within the scope of the authorisation request, the provisions of Commission Delegated Regulation (EU) 2017/1943 of 14 July 2016, which complements Directive 2014/65/EU, of the European Parliament and of the Council, of 15 May 2014, with regard to technical regulatory standards on information and requirements for the purposes of authorisation of investment firms, are applicable.
Grant and Refusal of Authorisation for Constitution
1 – The applicant is notified of the decision granting or refusing the authorisation for the constitution within 30 days as from the reception date of the application or the supplementary information requested, if applicable.
2 – The authorisation shall be refused if the applicant does not comply with the requirements envisaged in this Decree-Law or via regulation, namely, when:
a) The inadequacies in the application for authorisation are not remedied within the period laid down by the CMVM;
b) The application is impaired by inaccuracies or false information;
c) The CMVM does not consider that the requirements of suitability and professional experience established in articles 5 and 6 have been complied with;
d) The applicant does not have the stipulated financial requirements;
e) The adequate supervision of an investment advice firm becomes unfeasible due to close links between same and third parties;
f) The adequate supervision of an investment advice firm becomes unfeasible by virtue of any legal or regulatory provisions of a third country governing any person with whom the company has close links or inherent difficulties in the enforcement of same.
g) The adequate supervision of the investment advisory firm is rendered unfeasible under the terms of the Commission Delegated Regulation (EU) 2017/1943 of 14 July 2016, which complements Directive 2014/65/EU, of the European Parliament and of the Council, of May 15, 2014, with regard to technical regulatory standards on information and requirements for the authorisation of investment firms.
3 – The granting of authorisation implies the initial registration of activities referred to in Article 295 Securities Code.
Withdrawal and Expiry of Authorisation for Constitution
1 – The CMVM withdraws the authorisation for the constitution on the following grounds:
a) If obtained by making false statements or any other illegal means;
b) No longer meets some of the requirements whereon the granting of same depends, and the company does not rectify the situation within the period that the CMVM stipulated;
c) If the firm carries out activity that does not correspond to that which is registered;
d) If the company ceases activity or is reduced to an insignificant level for a period greater than 12 months;
e) If serious irregularities in the management, accounting organisation or internal audit of the company have been recorded;
f) If the company breaches the rules that regulate the business.
2 – The withdrawal of the authorisation implies the dissolution and liquidation of the company.
3 – The authorisation shall expire if the company expressly renounces the authorisation or does not commence activity within 12 months as from its constitution.
Communicating qualifying holdings
1 - The person who, directly or indirectly, purports to acquire qualifying holding in an investment advice firm shall first notify the CMVM of the intent and the resulting amount of participation.
2 - The provisions of the preceding paragraph are also applicable to the cases wherein an increase in the qualifying holdings that said person holds, so that the percentage of voting rights or the capital held reaches or exceeds 10%, 20%, a third or 50%, or if for any other reason, a control relationship with the investment advice firm is established.
3 - Prior notification of projects for the acquisition or increase of qualifying holdings must be accompanied, as applicable, by the information provided for in Commission Delegated Regulation (EU) 2017/1946 of 11 July 2017 which complements Directive 2014/65/EU, of the European Parliament and of the Council, of 15 May 2014, with regard to regulatory technical standards for an exhaustive list of information to be included by potential acquirers in the notification of a proposal for the acquisition of a qualifying holding in an investment firm.
4 - Within two working days from the date of receipt of the communication provided for in paragraphs 1 and 2, the CMVM informs the proposed acquirer in writing of the receipt of the communication and the date of the end of the appraisal period.
5 - As an alternative to the provisions of the preceding paragraph, if the communication provided for in paragraphs 1 and 2 is not accompanied by the elements and information that are required, the CMVM informs, in writing and within two working days of its receipt, the proposed purchaser of the missing elements.
6 - Without prejudice to the provisions of the present decree-law, the process for appraising by the CMVM of the conditions that guarantee a sound and prudent management of investment advisory companies is applicable, mutatis mutandis, article 103 of the General Regime of Credit Institutions and Financial Companies.
7 - The acts by means of which the acquisition or increase of qualified participation is subject to prior notice must be communicated to the CMVM by the participants, within 15 days.
Ban on Voting Rights
1 - The acquisition or increase in qualifying holdings pursuant to article 12 lays down the ban on the exercise of voting rights attached to the holding as required in order to prevent the acquirer from exercising greater influence over the company by voting than said person had before the acquisition or increase of holdings, provided any of the following situations occurs:
a) The acquirer did not comply with the reporting duty envisaged in article 12(1);
b) The acquirer has acquired or increased its holdings after complying with the notification envisaged in article 12(1), but before the CMVM has issued a decision;
c) The CMVM has opposed the proposed acquisition of or increase in qualifying holdings.
2 - Pursuant to article 12(7), breaching the duty of disclosure prescribes a ban on voting rights until disclosure of the outstanding notification.
3 - The CMVM may determine the inhibition of the exercise of voting rights inherent to the holding in question on the basis of relevant facts of which it becomes aware after the constitution or increase in qualifying holding and which create a well-founded fear that the influence exercised by the holder of qualifying holding may impair the sound and prudent management of the subsidiary.
Special Framework for Revoking Resolutions
1 - Whenever the CMVM or the investment advice firm's management board become aware of any case concerning a ban on exercising voting rights pursuant to the preceding article, same should immediately report this to the Chair of the Presiding Board of the Company's General Meeting. Said Chair should act in such a way so as to prevent the exercise of the banned voting rights.
2 - Resolutions passed on the basis of blocked votes can be declared null and void, unless it is proved that the resolution would have been adopted without said votes.
3 - Annulling the resolution may be challenged generally or also by the CMVM.
1 - The CMVM shall obtain the opinion of the competent authority of the Home Member State if the proposed acquirer is one of the following:
a) Credit institution, insurance company, reinsurance undertaking, investment firm or management entity of undertakings for collective investment in transferable securities (UCITS) as defined in article 1-A(2) of Council Directive No. 85/611/EEC, of 20 December 1985, authorised in another Member State;
b) Parent company of an entity referred to in the preceding sub-paragraph;
c) A natural or legal person that controls an entity referred to in subparagraph a) above.
2 - The CMVM shall obtain an opinion from the Portuguese Central Bank or Portuguese Insurance Institute, in the event of the proposed buyer being one of the entities envisaged in the preceding paragraph and authorised in Portugal by the Portuguese Central Bank or Portuguese Insurance Institute, respectively.
3 - In light of receiving the request for an opinion from another competent authority, the CMVM shall communicate key information on the assessment of proposed acquisition of qualifying holdings, and other information that is relevant, if so required.
Article 12 – D
Decrease in holding
1 – Natural or legal persons wishing to acquire a qualifying holding in an investment advice firm or decrease same to such an extent that the percentage of the voting rights or capital held drops below any threshold of 20%, a third or 50% or that the control relationship with the investment advice firm ceases to exist, shall inform the CMVM of same beforehand and communicate the new envisaged investment amount to the former.
2 – Acts of acquisition or decrease of a qualifying holding that are subject to prior communication shall be communicated by the investors to the CMVM within 15 days.
Article 12 – E
Communication by the investment advice firm
The investment advice firm shall communicate to the CMVM as soon as it has knowledge of the amendments referred to in articles 12 and 12-D.
Notification of the members of the management and supervisory bodies
1 – The CMVM should be notified of the appointment of the members of the management and supervisory bodies by the investment advice firm within 15 days of said occurrence.
2 – The investment advice firm or any other interested party may notify the CMVM of the intention to appoint members of the management and supervisory bodies of same.
3 - Based on the lack of good repute, professional qualifications or availability and within a period of 30 days after receipt of the notification identifying the person concerned, the CMVM may oppose the said appointment or intention to appoint.
4 - The members of the management and supervisory bodies may not commence exercising said duties before the end of the period referred to in the preceding paragraph.
5 – The opposition based on the lack of good repute or experience of the members of the management and supervisory bodies shall be communicated to the interested parties and the investment advice firm.
6 – The lack of notifying the CMVM or the exercising of duties before the period for opposition has lapsed does not determine the invalidity of the acts carried out by the person concerned in the exercise of his duties.
7 – In the absence of ascertaining, by a supervening fact or as at the date of the non-opposition act the CMVM has no knowledge of the suitability requirement, the CMVM should notify the investment advice firm to immediately release the person concerned from his duties and proceed with the respective replacement within a period to be established.
The investment advice firm should notify the CMVM, within 30 days of the occurrence of the following:
a) The changes to the objects, registered office, capital and the paid-in capital;
b) The place and date for the establishment of branches and agencies;
c) The shareholders' agreements whereof same are aware.
Cross border Activity
The provisions of Articles 199-D and 199-E General Regime for Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92, of 31st December, are applicable, mutatis mutandis, to the investment advice firms based in Portugal that purport to exercise its activity in another EU Member State, and those based in an EU Member State purporting to exercise the activity in Portugal. The notifications, communications and other procedures which are required for the remedy of a complaint of the applicants are with the CMVM.
The investment advice firms are subject to prudential supervision by the CMVM.
The CMVM stipulates the following by regulation:
a) Information accompanying the authorisation application for the constitution of the investment advice firm and the respective procedures;
b) The information required for the assessment of the good repute and professional experience envisaged in articles 5 and 6;
c) The requirements and procedures for the appraisal of the professional skills of those that provide the advice service;
d) The manner of presentation and disclosure of the company's financial information;
e) The prudential requirements applicable, particularly relating to the capital adequacy requirements.
Entry into force
The present Decree-Law comes into force on 1 November 2007.
Seen and approved in the Council of Ministers on 9 August 2007. - José Sócrates Carvalho Pinto de Sousa - Manuel Lobo Antunes - Fernando Teixeira dos Santos - Alberto Bernardes Costa.
Promulgated on 22 October 2007.
Is hereby published.
The President of the Republic, Aníbal Cavaco Silva.
Countersigned on 25 October 2007.
The Prime Minister, José Sócrates Carvalho Pinto de Sousa.