Raposo Bernardo > Lisbon, Portugal > Firm Profile
Raposo Bernardo Offices
AV. FONTES PEREIRA DE MELO
EDIFÍCIO AVIZ, N.35, 18TH FLOOR
1050-118 LISBON
Portugal
Raposo Bernardo > The Legal 500 Rankings
Portugal > Transport Tier 2
Major domestic and international cruise, cargo and airline companies turn to Raposo Bernardo for advice on lease transactions, financing mandates, insurance issues and regulatory matters. Joana Andrade Correia is particularly skilled in corporate restructurings, M&A and the acquisition of commercial aircraft. She co-leads the team with Júlio Martins Júnior, whose practice covers regulatory law, licensing procedures and financing operations.Practice head(s):
Joana Andrade Correia; Júlio Martins Júnior
Testimonials
‘Raposo Bernardo’s transport department works with us in aeronautical and aviation law and we consider its services in this area of extraordinary quality. Its lawyers are true experts and the results they get for us are impressive.’
‘I highlight Joana Andrade Correia and Júnio Martins Júnior, who are excellent. Joana Andrade Correia has total mastery of aviation matters and the ability to listen and understand our requests and always give detailed and objective answers. Júlio Martins Júnior is another great specialist in aeronautical and aviation law, an area to which he has dedicated himself for many years, as a lawyer and scholar, and in which he has a phenomenal domain, being in my opinion one of the top few specialists in this area.’
‘Raposo Bernardo & Associados has incredible qualities. In addition to the superb quality of legal services, the treatment given to clients is 5 stars.’
‘Its lawyers know a lot about the aviation sector. They know everything there is to know about airport management, flight procedures, etc. They are true experts in aviation.’
‘Raposo Bernardo’s capabilities include its unique and world-class know-how in the area of cruise ships, the extreme professionalism of all its lawyers and the strong legal preparation of its lawyers. An elite team.’
‘Joana Andrade Correia is one of the best lawyers for cruises. She is meticulous, prudent, intelligent, cultured and very clear in her interventions.’
‘The Bernardo and Raposo team, especially Júlio Martins has been a fantastic partner for us. After years of working together on various projects, the firm’s commitment to the client is unparalleled.’
‘Deep knowledge of transport and aviation matters. The lawyers pay attention to all details and let nothing escape.’
Work highlights
- Advised a client on three major operations, including the acquisition of a vessel through a structured financing for a total amount of $450m.
- Acted for a client in all matters related to its operation in Portugal.
- Assisted a client in the leasing and acquisition of three aircraft for the amount of €135m.
Portugal > Energy and natural resources Tier 3
The ‘superb’ energy team at Raposo Bernardo is retained by companies, investors and financial institutions to advise on complex projects in the wind and solar energy, oil and gas, and biogas sectors. Nelson Raposo Bernardo leads on M&A, banking and project finance mandates and co-heads the practice with Júlio Martins Júnior, who is seasoned in licensing and regulatory matters as well as financing contracts.Practice head(s):
Nelson Raposo Bernardo; Júlio Martins Júnior
Testimonials
‘I really appreciate Raposo Bernardo’s services, which are of high quality. This is a law firm that has in-depth knowledge of the energy sector.’
‘We always feel very supported and safe with Raposo Bernardo.’
‘The lawyers that stand out in the Energy team are Nelson Raposo Bernardo and Júlio Martins Júnior, who are responsible for a fantastic team. Nelson Raposo Bernardo is a very charismatic, authentic, serious and honest lawyer. Júlio Martins Júnior has the ability to communicate in a simple way. He is very practical and always available, whatever the time. He always takes care of our affairs with the utmost attention and care.’
‘The team is superb and we highlight Nelson Raposo Bernardo. He is distinguished by his in-depth knowledge of the energy sector and project finance.’
‘Nelson Raposo Bernardo leads the team and is one of the great energy practitioners in our country. He is very practical, effective and resolute. He never gives up on finding the best solution for us. He is extremely astute and a unique negotiator.’
‘The quality of services provided by Raposo Bernardo in the area of energy and natural resources is excellent. Anyone who knows well what an energy project is knows the importance that the legal part has in its final success. Raposo Bernardo offers added value advice.’
‘Raposo Bernardo offers tailored services and transmits confidence. We trust in the successful results delivered by the team.’
‘Nelson Bernardo is recommended for his experience and expertise in the energy sector. He demonstrates rigour, analytical skills, pragmatism and clarity. He is a skilled negotiator, who has a natural gift for leading projects and teams.’
Work highlights
- Advised a client with a major wind farm plant, an investment in the amount of €225m.
- Assisted a client with an upstream oil and gas agreement.
- Advised a client on a hydroelectric power station project with installed capacity of 32MW.
Portugal > Projects and project finance Tier 3
Clients praise Raposo Bernardo for its ‘deep knowledge of the legal framework, and ‘unique and differentiated service‘ it offers in the fields of project finance and development. Portuguese and international lenders, promotors, contractors and engineering companies turn to the team for assistance in the spectrum of infrastructure and energy projects. Joana Andrade Correia and Nelson Raposo Bernardo, the latter of whom ‘excels in all the areas necessary to master a project‘, jointly oversee the group.Practice head(s):
Nelson Raposo Bernardo; Joana Andrade Correia
Testimonials
‘The quality of services provided by Raposo Bernardo is the best I know in the area of Projects, its capabilities are very wide, with emphasis on the technical and legal domain, the ability to respond immediately to requests and questions that we ask, the ability to create a multidisciplinary task force from one moment to the next, availability 24 hours a day, 7 days a week, the general brilliance of the team and pragmatism which are the key to any project in Portugal and abroad.’
‘Nelson Raposo Bernardo knows everything there is to know about projects, is extremely rigorous in the advice he gives, and brilliant in identifying possible ways forward.’
‘The skills that make Raposo Bernardo strong in this area are: the vast legal knowledge of the team; they know how a Project is conceived and developed; anticipate and solve the problems normally associated with each component.’
‘In a team that is cohesive and works like clockwork, there must always be a commander. And that’s what happens with Nelson Raposo Bernardo. Nelson is full of charisma and qualities, he has everything we hope the ideal lawyer to work on projects has. He excels in all the areas necessary to master a project from A to Z.’
‘The degree of collaboration that I regularly see between the lawyers on the team is almost contagious and a great example, which brings us enormous benefits as a client, with concrete results and an excellent quality-cost ratio.’
‘Raposo Bernardo has provided a unique and differentiated service, as it has a deep knowledge of the legal framework, a lot of practical experience and are permanently updated. This attitude allows it to provide a highly competitive, safe, pragmatic and solution-oriented legal service that is truly what matters.’
‘Nelson Bernardo has been extremely skilful in negotiating our projects.’
‘Quality of the answers – in terms of scope and depth-, the technical knowledge of the projects, the ability to interrelate all the necessary legal areas and components, and the experience of many years in this area.’
Work highlights
- Advising a client on a preliminary phase of an airport infrastructure project.
- Assisting a client in a project for the extension and renovation of a highway through Public–Private Partnership (PPP) and project finance.
- Advising a client on the financing of a project for the exploration of water concession in twelve northern municipalities and management of solid waste in those same municipalities.
Portugal > Banking and finance Tier 4
Raposo Bernardo‘s ‘excellent‘ banking and finance team is regularly instructed by international and Portuguese banks in an array of financing deals – most notably real estate, project and asset finance – and regulatory matters. On the transactional front, the team is also skilled in international credit operations and NPLs. The ‘incredibly responsive‘ Nelson Raposo Bernardo is the main point of contact in the practice; he is proficient in both domestic and cross-border lending transactions.Practice head(s):
Nelson Raposo Bernardo
Testimonials
‘Very knowledgeable of banking law and the banking sector, record response times, complete and focused answers on what we need, practical spirit and strong commercial sensibilities.’
‘The team is excellent, all the lawyers are of an above average quality. Nelson, who leads this area, is a great inspiration.’
‘They always demonstrate a strong ability to adapt in more difficult and pressured contexts, are agile and flexible in carrying out the work. In terms of the team, all lawyers are fantastic, very versatile, with a huge capacity for work and a great experience in international bank financing.’
‘I highlight the passion they put into what they do, the absolute commitment to provide us with the best service, the enormous speed of response, the deep legal knowledge of our sector and of the market.’
‘The quality of their work is fantastic, as is the quality of their lawyers.’
‘Nelson in particular is incredibly responsive, and always provides us with quality advice in record times.’
Work highlights
- Advising a client on a refinancing through the restructuring of credits and bank financing of a Portuguese business group.
- Assisting a client in an aviation finance transaction.
- Acting for a client in the financing for the construction of six mini water dams, the network connections, and several other supporting infrastructure.
Portugal > Capital markets Tier 4
Lauded for its ‘strong legal know-how‘, Raposo Bernardo has ample experience in the capital markets space. The team continues to be instructed by an array of international banks and investment funds in both transactions and regulatory mandates. Managing partner Nelson Raposo Bernardo spearheads the group; he maintains a broad practice which besides capital markets also covers asset financing, banking and project finance.Practice head(s):
Nelson Raposo Bernardo
Testimonials
‘Unique firm because of the way it combines strong legal know-how, with a capacity to provide services like no other Portuguese firm can.’
‘The firm’s main capabilities includes the efficiency and effectiveness in the work carried out, the response timing, which is immediate, the understanding and clarity of the answers and, the very high quality of the team of lawyers, who are always available to listen to us and meet our needs.’
‘Raposo Bernardo has been, over the last few years, the law firm that helped us achieve the best results. That’s why we consider it to be the one that best serves our goals and needs.’
‘They prepare all their interventions in detail, in order to guarantee that our interests are always safeguarded. They work methodically, in an organised manner and with great discipline, which allows them to more easily achieve the desired results.’
‘Nelson Raposo Bernardo is a great lawyer in the capital markets area.’
‘Nelson demonstrates superior intelligence, strategic vision, very refined sensitivity and complete dedication to clients.’
Work highlights
- Advising a client as a capital markets placement agent in the assembly, organisation and general arrangement of a Dilutive Secondary Offering.
- Advising a client on a securitisation transaction.
- Advising a client on a debt security offering for a company in the real estate and hospitality sectors.
Portugal > Commercial, corporate and M&A Tier 4
Highlighted for its ‘professional skills, experience and efficiency‘, Raposo Bernardo is retained by a diverse mix of domestic and international clients, including investment banks, funds and corporates from an array of sectors. The firm, which is well placed to advise on non-transactional corporate law matters, has remained busy acting in M&A deals, business combinations, and corporate reorganisations. ‘Great leader‘ Nelson Raposo Bernardo possesses ‘enormous experience in business purchases and sales‘. Singled out for her ‘complete command of corporate and M&A transactions‘, Joana Andrade Correia is able to ‘anticipate possible difficulties in contract negotiations‘.Practice head(s):
Nelson Raposo Bernardo; Joana Andrade Correia
Testimonials
‘In a sentence, Raposo Bernardo is unique because it exceeds expectations and takes care of the relationship with the client like no other firm. What ends up differentiating them is their professional skills, experience and efficiency. What sets them apart is the way they treat clients.’
‘Despite the enormous quality of the entire team, I would like to highlight the heads of the department, Nelson Raposo Bernardo and Joana Andrade Correia. Nelson’s qualities that I most value are his ability to relate legal topics, his endless legal knowledge, his ability to analyse any document very quickly and to react successfully to any unforeseen event.’
‘I emphasise the absolute rigour of analysis and responses, the speed in these responses, the focus on uncomplicated and finding solutions, the total availability, and the complete transparency in fees.’
‘Nelson Bernardo is a great leader, with an impressive charisma and an incredible vocation for the law.’
‘What makes this firm unique is, in my opinion, its attitude towards the legal profession and towards its clients. The high quality of the services provided is revealed in the rigour and in the very complete and appropriate way in which the work is carried out.’
‘Nelson is the best Portuguese lawyer to support a company’s capital transaction. He is an outstanding lawyer, with enormous experience in business purchases and sales.’
‘Joana Correia has a complete command of Corporate and M&A transactions, managing to anticipate possible difficulties in contract negotiations.’
‘The quality of service provided by Raposo Bernardo is the highest I know of in legal services. It is a law firm specialised in satisfying its clients.’
Work highlights
- Advising a client on a transaction involving an industrial company.
- Advising a client in 16 M&A transactions of companies.
- Advising a client on its acquisition of another company that created an Iberian leader in its sector.
Portugal > Employment Tier 4
With an active presence across a wide range of sectors, including insurance, real estate, telecoms and tourism, the employment department at Raposo Bernardo offers day-to-day advice on employment contracts, background checks, hiring policies and employment status, among other matters. The team is also skilled in collective bargaining negotiations, redundancy plans and labour litigation. Described by a client as a ‘go-to lawyer for employment matters’, Ana Cláudia Rangel oversees the practice and is often sought after to handle restructuring operations and HR matters.Practice head(s):
Ana Cláudia Rangel
Testimonials
‘A super team, with excellent associates, led by Ana Cláudia Rangel. The team offers great support for our HR department and Ana Cláudia Rangel is a very focused, committed and dedicated lawyer, with in-depth knowledge of labour and HR matters.’
‘Ana Cláudia Rangel is always very open and honest when it comes to our discussions about a particular subject and related risks. She is our go-to lawyer for employment matters.’
‘Raposo Bernardo is always there for us. It is the firm with which we most enjoy working because it is very focused on client care.’
‘Raposo Bernardo’s labour team is exemplary and unparalleled in the treatment of each subject. The team is committed to providing an excellent service. Its expertise covers all aspects of labour matters, including union negotiations, disciplinary proceedings, dismissals, disputes in labour courts, collective bargaining agreements, etc.’
‘The entire team is of an unparalleled quality. The team is led by Ana Cláudia Rangel, who is a magnificent professional, with a modern and sophisticated vision. She is very attentive, resourceful and experienced, with an in-depth knowledge of labour law.’
‘Cláudia Rangel is a brilliant labour specialist. She has extensive legal expertise and is extraordinary in both labour law consultancy and disputes before labour courts.’
‘The team offers a service of exceptional quality. Although the entire team is fantastic, I would highlight Ana Cláudia Rangel, who is a top-quality lawyer, with the ability to quickly capture the details of any new subject.’
‘Ana Cláudia Rangel is very experienced in all matters related to labour law, including dealings with unions and workers’ committees as well as cases before labour courts. She is a very thoughtful lawyer in everything she does, proactive in the information she gives us, and very calm in her approach.’
Work highlights
- Advised a client on a collective hiring programme involving 450 highly skilled workers.
- Acted for a client in a labour workforce restructuring as a consequence of the retrenchment of 150 employees.
- Assisted a client with the layoff of 250 workers and in the hiring of 400 workers.
Portugal > EU and competition Tier 4
Praised for its ability ‘to bridge the gap between law and the management of a company‘, Raposo Bernardo is equally adept in merger control, abuse of dominance cases and antitrust compliance matters. The team provides a ‘first-rate service in the prevention of competitive practices, regulatory investigations, state aid, and competition issues in general‘, acting for an array of clients from the worlds of banking, insurance, and pharmaceuticals, among other sectors. The ‘extremely methodical and organised‘ Mafalda Contumélias Baptista, a key contact for TMT clients, oversees the competition and EU law practice.Practice head(s):
Mafalda Contumélias Baptista
Testimonials
‘The lawyers of the European and Competition Law department are extremely attentive, very competent, gifted in law, with a very strong practical sense, and know how to bridge the gap between law and the management of a company.’
‘Mafalda Contumélias Batista has done an absolutely magnificent job. Mafalta has many professional characteristics that I admire; she is very determined, focused, proactive, efficient, and always available.’
‘They have a team of extraordinary quality; all of them are extremely complete, have an exceptional legal know-how, and provide quality services.’
‘They all have great legal, professional and even human qualities. Mafalda Contumélias Batista is totally focused on results and 100% pragmatic. She is always available to her clients, is very proactive, and is totally reliable.’
‘Long experience in competition and European law matters, with many relevant cases won before the Competition Authority and European Courts. As a team, they provide a first-rate service in the prevention of competitive practices, regulatory investigations, state aid, and competition issues in general.’
‘ Mafalda Contumélias Batista stands out for being a creative thinker, and coming up with very original solutions that unlock problems.’
‘Complete command of European and Competition law.’
‘Mafalda Contumélias Batista is responsible for this department at Raposo Bernardo, and has done a magnificent job. She is extremely methodical and organised.’
Work highlights
- Advising a client on natural gas supply agreements containing several competition clauses.
- Acting for a client in an investigation by the PCA involving a distribution agreement.
- Advising a client on competition matters.
Portugal > Insolvency and restructuring Tier 4
With ‘an impeccable legal service’, Raposo Bernardo has a wealth of experience handling insolvency proceedings, restructuring plans and rescue financing in a wide range of sectors, most notably banking, aviation, real estate and transportation. The department is led by the ‘reliable, highly competent, well-known and prestigious’ Ana Cláudia Rangel, whose practice covers insolvency, restructuring, labour law, litigation and arbitration.Practice head(s):
Ana Cláudia Rangel
Testimonials
‘With an impeccable legal service of superior quality, Raposo Bernardo has extensive capabilities. All the work is very well done, error free, focused precisely on what we need and technically very solid. The team established a very open dialogue with our internal team.’
‘In my opinion, Ana Cláudia Rangel is without a doubt a leading practitioner.’
‘Raposo Bernardo’s service is excellent. The team is accessible at any time and we always get a quick response. In the development of the work, opportunities as well as risks are analysed in detail and discussed in an understandable way. As clients, we feel that we are in very good hands, well advised and professionally represented. The open, friendly and objective way the team take care of our affairs has created a very trusting relationship between us and the firm.’
‘I highlight Ana Cláudia Rangel, the leader of the insolvency and restructuring department. She is reliable, highly competent, well known in the market and prestigious. With her in charge, we feel security and confidence. The team has performed brilliantly. Ana Cláudia Rangel is our go-to-lawyer in Portugal.’
‘The quality of services provided by Raposo Bernardo is excellent, including the speed, clarity and focus of its service. In general, the entire relationship with our company is one of total professionalism. The team of lawyers reveals a complete commitment to achieving the best results for us and you can see the value they bring to our business.’
‘Ana Claudia Rangel distinguishes herself for her availability, commitment, timely manner responses and being present whenever necessary. She is an excellent lawyer, who has easily become indispensable to us.’
‘The department is led by Ana Cláudia Rangel, a fantastic lawyer. She is extremely diligent, prompt, efficient and very effective. Her attitude towards any emergency is spectacular, she is always receptive to help us. This is an area that requires a lot of precision and rigour and Cláudia is excellent at this, always meeting deadlines.’
‘Regarding fees, it is important to note that as clients we can opt for fixed, variable, mixed or cap-fee models adjusted to our needs at any given time. All invoicing is fully transparent, indicating the description and time of the interventions carried out by date and the lawyers involved. We are super happy and confident in our relationship with Raposo Bernardo.’
Work highlights
- Advised a client on a large corporate restructuring involving the acquisition of the three insurers.
- Assisted a client in its restructuring and the rearrangement of the company’s business for increasing its efficiency and profitability.
- Acted for a client in its judicial applications against its corporate debtors, which did not repay financing granted by the bank.
Portugal > Intellectual property Tier 4
Pharmaceuticals, telecoms, retail, technology and insurance clients turn to Raposo Bernardo for advice on a wide range of contentious and non-contentious IP matters. With a proven track record in trade mark and patent opposition proceedings, the team is jointly led by Maria Sirec and Serena Argente Escartín, whose practice covers trade marks, patents, franchising deals, sponsorship agreements and licensing matters.Practice head(s):
Serena Argente Escartín; Maria Sirec
Testimonials
‘We highlight Serena Argente Escartin, who is extremely detailed, rigorous, meticulous and with an impressive capacity for work. She manages to solve what would be thought impossible. We also highlight Maria Sirec for her availability, assistance, organisation and impressive work capacity.’
‘I highlight its honesty, clarity, open dialogue, organisation and ability to meet deadlines.’
‘The Raposo Bernardo & Associados office is the one that brings together all the characteristics we look for in a law firm. Proximity to the client, impressive know-how and dedication.’
‘Serena Argente is distinguished by her enormous knowledge in intellectual property matters. She is extremely diligent, organised, creative in the search for legal solutions, assertive and an excellent communicator.’
‘With regard to the IP department, I emphasise the qualities of the practice head Serena Argente Escartín, who has extensive experience in IP matters and always manages to overcome all challenges and is great at finding solutions.’
‘The intellectual property department has a team of immense quality, which guarantees complete fulfillment of our objectives. Leading the team is Serena Argente Escartin, who always offers an impeccable service. She is able to identify the risks and difficulties in any IP matter right from the start and has the knowledge and experience to solve problems efficiently. I especially admire her focus, discipline, organisation and flexibility in adjusting to new and unexpected situations.’
‘The entire team deserves recognition for its quality, commitment and results obtained.’
‘Serena Argente Escartín is the lawyer responsible for the brilliance of her team, being herself a unique professional in this complex legal area. She is a lawyer with a lot of presence, generating high empathy with all the parties involved. We are very confident in her performance.’
Work highlights
- Advised a client on patent protection matters, including completing the registration process.
- Assisted a client in IP asset protection and technology licensing agreements.
- Represented a client in a trade mark and patent infringement action.
Portugal > Public law Tier 4
Raposo Bernardo‘s public law practice works alongside the firm’s real estate, projects and infrastructure teams to assist clients with public tenders, concessions, administrative disputes and PPPs related to construction projects. The department is led by Manuel Esteves Albuquerque, who has extensive experience advising on investment operations in the real estate sector and international projects in the Iberian Peninsula and Eastern Europe.Practice head(s):
Manuel Esteves Albuquerque
Testimonials
‘They have excellent abilities. They are sensitive enough to understand our activity, they know that their work has to facilitate our activity and not to complicate it. They have permanent communication with clients. In addition, I am a fan of all the technological innovations that have been made available to us.’
‘Manuel Esteves Albuquerque stands out. He is extremely knowledgeable about all the intricacies of public law and also real estate and construction. He is always available to assist us, he always has a reassuring word, he knows how to understand what we want and identify the best solution. He has an excellent ability to summarize and turn the most complicated issues in our favor, which has made him very important to our company.’
‘One of the main qualities is the team’s level of response, which continuously exceeds our expectations. According to our experience, the level of client care service is the best you can have. They offer an incredible set of highly qualified professionals who are prepared for any type of complexity in any legal context related to Public Law. The consistency of advice and the unique negotiation skills of the Raposo Bernardo team has allowed our company to gain an edge over the competition.’
‘The Raposo Bernardo team is very strong, with highly prepared lawyers, with high knowledge of the legal system and the legal system and with a total dedication to client matters. The partner leading this public law department is Manuel Esteves de Albuquerque, who with his excellent team always manages to resolve situations with a very high degree of technical and legal perfection.’
‘We know Raposo Bernardo well, we absolutely trust its lawyers and we know that they are a partner that we highly value, for the important role they play in our operation. They deal with the full spectrum of matters in public law, having a very high level in all areas, be it public administration, public procurement, administrative litigation, etc. They invest in client relationships and work with us in a fully collaborative way. They also have a strong innovation component, as they soon realized the importance of ESG in public law.’
‘In public law, the most relevant partner is Manuel Esteves Albuquerque. He can basically read our minds – as soon as I make a request to him, he seems to know immediately what my main concerns are, which I may not be thinking about but should… He is a true partner to our team.’
‘Raposo Bernardo’s Public Law team is of enormous quality. It always manages to meet and even exceed our demanding standards, which are very high. Of the most relevant skills for us, I highlight the high legal know-how, the legal and intellectual quality of the lawyers, their experience, the total dedication to our affairs, the rigor and security of legal advice, the compliance with deadlines and the quick turnaround time.’
‘What makes Raposo Bernardo’s Public Law department truly unique is the way they approach every new situation we put them in, every new subject or project. They always show a super professional attitude, total availability, a lot of commitment and a very positive attitude in order to solve what we present to them. Moreover, no matter in public law is new to them, they know everything there is to know, have immense experience and always show complete confidence and ability to solve and even surprise us.’
Work highlights
- Advised a client on the preliminary phase of a construction and concession of an airport infrastructure project, an investment valued at €480m.
- Acted for a client in a public procurement procedure for the construction of a motorway and adjacent access routes and bridges valued at €245m.
- Assisted a client in a public tender launched by the Ministry of Health for the supply of all medical devices related to diabetes.
Portugal > Real estate and construction Tier 4
Raposo Bernardo assists real estate brokers, investment funds and construction companies, and its recent workload includes large acquisitions, financing deals and investment transactions involving touristic, residential, office and commercial properties. Manuel Esteves Albuquerque oversees the practice and is highly experienced in investment operations in the real estate and construction sectors.Practice head(s):
Manuel Esteves de Albuquerque
Testimonials
‘It is an office that always exceeds all expectations and is also unique in that. The team shows total pragmatism and efficiency in resolving issues. Enormous knowledge of our business and everything related to large real estate purchases and sales.’
‘The individual in the team who stands out the most is Manuel Albuquerque. We are very satisfied with the results obtained and we strongly recommend this lawyer for real estate matters. His ability to summarise issues and involve other teams is extraordinary and unique. He is also a highly regarded professional for his negotiation skills, transparency and huge technical expertise.’
‘The Raposo Bernardo team deserves to be highlighted for its proximity and relationship of trust with its clients. Availability is total and cross-referencing with other legal areas is carried out whenever necessary, so that each issue can be addressed in all its aspects.’
‘Although the team works as a whole and is fantastic, I highlight the department leader Manuel Esteves de Albuquerque as a highly reputable professional lawyer with extensive knowledge of all real estate matters. He is very diligent and very quick to understand what we want.’
‘What makes this firm unique is the exceptional quality of its work, associated with transparent communication and the collaborative relationship they develop with the clients. Among other qualities and skills, I point out its comprehensive knowledge of real estate, licensing and construction matters.’
‘This office is unique for its qualities. The service provided by the real estate and construction department is of the highest quality. The skills that most impress me and contribute to the quality of the services provided are: its total dedication to our affairs and the capacity to provide a fast and efficient service, with excellent results.’
‘I consider Manuel Esteves Albuquerque very focused on achieving positive results, patient, very persistent, determined, very well prepared legally and with a lot of experience.’
‘Manuel Esteves de Albuquerque deserves our total admiration for the safe and effective way in which he manages our affairs. He has a deep knowledge of our sector and has extensive experience in large international transactions.’
Work highlights
- Advised a client on the acquisition of a business park and aside plots of land for the construction of a hotel and a commercial zone.
- Advised a client on a hotel acquisition process in Algarve, with a global value of €145m.
- Acted for a client in the acquisition and financing of a portfolio of 12 logistics parks and simultaneous sale of a part of the park, and on its acquisition of an office portfolio of 15 properties in six areas in Portugal.
Portugal > Dispute resolution Tier 5
The disputes group at Raposo Bernardo ‘stands out for its creativity in finding the best solutions in difficult and complex situations’. Prominent in the aviation, real estate, insurance, retail and pharmaceuticals segments, the team is often engaged in shareholder disputes, IP litigation, insurance claims and debt recovery proceedings. The practice is led by Ana Cláudia Rangel, who is ‘a very talented litigation and arbitration lawyer’ and has significant experience handling contentious matters related to insolvency and restructuring, labour law and commercial matters.Practice head(s):
Ana Cláudia Rangel
Testimonials
‘Raposo Bernardo is unique for its competence, extreme rigour in the analysis of matters and immediate and very clear answers. But it is even more unique for the confidence it inspires. We trust 100% in its lawyers, in their competence and in their word. I’d also point out the strong experience in all types of litigation, strong and united teams, complete availability, efficiency and effectiveness to obtain results.’
‘In terms of individuals in the litigation department, my applause and admiration go out to Ana Cláudia Rangel, without forgetting the entire team, which is extraordinary. She is always available to assist us, responds promptly and clearly. We know that we can always count on her support.’
‘Ana Cláudia Rangel always has a solution for any problem, in a diligent and practical way. She gives us total confidence and tranquility; we cannot be more relaxed than we are with our disputes being handled by Claudia Rangel.’
‘The quality of service is impressive and convinces any client right away. Communication with the firm is spectacular. Everything runs in a natural and transparent way; the team is totally open and practical.’
‘Ana Cláudia Rangel is a great litigator and is without a doubt the highlight of the team. She has a presence in court, especially in larger and complex cases, that impresses even the lawyers of the opposing parties. She is brilliant, with an ability to argue that reveals great legal wisdom and reasoning.’
‘Raposo Bernardo & Associados stands out for its creativity in finding the best solutions in difficult and complex situations and for the enormous experience of its lawyers in litigation.’
‘Raposo Bernardo’s team of lawyers is very experienced and knowledgeable about Portuguese law. I would like to highlight the fantastic work of Ana Cláudia Rangel, who is a very talented litigation and arbitration lawyer. She always manages to disarm the counterpart and thus obtain very advantageous results for our group.’
‘Ana Cláudia Rangel is a very studious, organised, available and feared lawyer by her peers in court. She is a great lawyer that I highly recommend.’
Work highlights
- Represented a client in a major court case in the amount of €380m.
- Acted for a client in a complex court case for the recovery of non-performing loans related to a mortgage credit portfolio in the amount of €460m.
- Assisted a client in a €180m dispute relating to the share acquisition of a luxury hotel.
Portugal > Tax Tier 5
Carlos Santiago leads Raposo Bernardo‘s tax practice, which is noted for its ‘wide ranging know-how of tax law‘, including transactional tax and litigation. The team is adept at representing clients from the worlds of banking, energy, life sciences, aviation, infrastructure and distribution in proceedings before the tax authorities and judicial courts. Santiago – a ‘great specialist in tax law‘ -also possesses experience in the tax structuring of M&A transactions, corporate reorganisations and financing deals.Practice head(s):
Carlos Santiago
Testimonials
‘There are many factors that make me choose the Raposo Bernardo & Associados team for all of our tax matters. I emphasise their wide ranging know-how of tax law, mastery of all tax law aspects and tax litigation. Analyses are very rigorous, detailed and thoughtful, and everything is presented in a clear way. They are punctual and strictly respect deadlines, with maximum discipline and organisation.’
‘Carlos Santiago has great knowledge of tax law, knowing the ins and outs of this very complicated area. He is very understanding of clients’ needs.’
‘At Raposo Bernardo we find a “first class” service. The tax law department is well structured, and provides us with a service that is solid. They are very proactive, have great technical support and provide us with constant monitoring and on-time responses.’
‘The team as a whole is magnificent. I would highlight Carlos Santiago, as he is a world-class lawyer. He has shown excellent levels of commitment, responsibility and knowledge in the work he does for our company.’
‘The team’s capabilities are many, with emphasis on complete and in-depth knowledge of all Portuguese and international taxation. Ability to respond in a timely manner, in a simple and clear way.’
‘The entire Tax team deserves my consideration for being excellent. They are highly professional lawyers. Carlos Santiago is a great specialist in tax law, who is always fully available to listen to us, understand our reality and point us to the best solutions. He is totally dedicated to our affairs.’
Work highlights
- Advising a client on the financing of a turnkey project for the design, construction and assembly of a factory.
- Advising a client on the structuring of tax equity investments using the sale-leaseback mechanism.
- Advising a client on cross-border tax implications of its credit cards settlement in foreign countries during an international operation assessing the differences between territorial and worldwide taxation.
Portugal > TMT Tier 5
Raposo Bernardo has significant experience advising domestic and international clients from the technology, telecoms and fintech sectors. Co-led by Mafalda Contumélias Batista and Maria Sirec, the practice is well versed in research and development projects, GDPR compliance, software licensing and contractual matters.Practice head(s):
Mafalda Contumélias Batista; Maria Sirec
Testimonials
‘The team respects diversity and follows policies of inclusion and attention to minorities, as our own company does.’
‘Mafalda Contumélias Batista is a brilliant professional, of great technical calibre, with a consolidated domain of matters directly and indirectly related to the TMT area.
‘At Raposo Bernardo we have someone who is always present, there are no constant changes of lawyers, the work is done by more senior and experienced lawyers and the complicity they create with our teams allows us to have much better results. In terms of fees and invoicing, I emphasise that these are completely transparent and supported by detailed and complete information. There are no deviations from what is expected in terms of the cost of the work performed.’
‘Raposo Bernardo & Associados has teams with an irreproachable level of preparation, very focused on the client’s business, and oriented to the success of operations. Mafalda Contumélias Batista is a fantastic leader, who manages to make the best use of the highly qualified teams she leads, with a very high capacity for argumentation.’
‘The entire team is fabulous and highly professional, standing out from others for its work in the TMT sector. I highlight Mafalda Contumélias Batista, who has a unique level of competence, high performance in the presentation of solutions and scrupulous compliance with deadlines.’
‘Mafalda Contumélias Batista is the face of this fantastic team and the lawyer that I would like to highlight for the superior quality of her work. She is a phenomenal lawyer. She knows everything in this area and also helps us a lot with European legislation.’
‘Raposo Bernardo is a law firm with strong foundations. The office is congratulated for the effort, dedication and intelligence with which its professionals manage each of our matters.’
‘The entire team is fabulous and highly professional, standing out in this area of law. To single out an individual, we consider the head of the department Mafalda Contumélias Batista an authority in this area. She has an extraordinary ability to work, handles several operations in the telecommunication area simultaneously. We are absolutely confident in her work and in the fantastic support she provides to our company’s projects.’
Work highlights
- Advised a client on electronic communication and advertising matters.
- Acted for a client in a project involving the development of an e-commerce channel for the sale of products and related e-commerce law matters.
- Assisted a client in regulatory matters related to cloud computing, digital exchange platforms and network sharing.
Angola > Foreign firms
Raposo Bernardo‘s strong banking and finance offering attracts a roster of major financial institutions and domestic and international companies operating in key sectors of the Angolan economy, most notably oil and gas, energy, infrastructure and transportation. With over 20 years of experience practising in Angola, Ana Cláudia Rangel is a key contact for real estate, oil and gas, tourism, banking and pharmaceuticals clients seeking assistance with matters relating to their operations in the country. Notable for his vast expertise in cross-border matters, managing partner Nelson Raposo Bernardo handles a broad practice, which spans M&A, banking and finance, capital markets, project finance and private equity. Júlio Martins Júnior, who excels in the sale and acquisition of shares and assets, has been particularly busy advising on privatisations in the aviation sector.Practice head(s):
Ana Cláudia Rangel; Nelson Raposo Bernardo; Júlio Martins Júnior
Testimonials
‘Raposo Bernardo is unique in Angola for many reasons: it has a level of service with top European standards, a very sophisticated team, used to large international transactions, and always available to assist its clients.’
‘Nelson Raposo Bernardo and Ana Cláudia Rangel are both incredible lawyers, the best I know. When it comes to important and complex matters, Nelson Bernardo is the lawyer we turn to. There is no other like him. He has vision, sophistication, insight, and experience in international financing. Cláudia Rangel is amazing. I would highly recommend her for matters in Angola. She assisted us throughout some very difficult times with her legal expertise, kindness and compassion.
‘The leading position of this law firm is undeniable in the Angolan market. The leading individuals at the firm are Ana Cláudia Rangel and Nelson Raposo Bernardo. Ana Cláudia is a top lawyer, completely involved in every step of the projects, always available and very intelligent. Nelson is the best of the best, very clever, pragmatic and strong academically. A strategist for major operations.’
‘When we selected Raposo Bernardo as the law firm to support our activities in Angola, we made a very careful selection and the ability to handle complex and sophisticated matters was one of the main criteria of choice. The team goes beyond others in terms of its in-depth analysis of matters. They do the research that others don’t do.’
‘The individuals that stand out are Nelson Raposo Bernardo, Ana Cláudia Rangel and Júlio Martins Júnior. Nelson Bernardo is well known for his experience handling major transactions in Angola. I have worked with many prestigious lawyers worldwide, but it is rare to find a lawyer like Nelson who is very complete and skilled in almost every practice area and business sector. Ana Cláudia Rangel is an experienced lawyer, very pragmatic, extremely efficient and very clever. Júlio Martins Júnior is very skilled and delivers the best results. He is considered one of the best lawyers on the ground.’
‘What makes Raposo Bernardo unique is its excellent client care and irrepressible level of responsiveness. The firm is very experienced in major transactions, always finding solutions to complex matters. Its lawyers clearly understand the Angolan market and know what should be done to achieve a successful outcome.’
‘Nelson Raposo Bernardo is a top lawyer that always surprises us with his solutions and alternative legal structures in our most complex projects. He can always give us a step ahead of what might happen in a given situation. Ana Cláudia Rangel is extremely competent and an excellent support for our local activities. She is always well informed and extremely proactive in making us aware of the new legal rules and local practices. She has extensive experience and has become an important support for us.’
‘What makes Raposo Bernardo’s practice unique is a combination of several factors that are difficult to find in another law firm: the client is in the centre of all, practical sense, truly specialists in finding solutions and solve complex problems, highest sophistication in all transactions and a team with a profound knowledge of the laws in Angola. A brilliant team.’
Work highlights
- Advised a client on a global financing of integrated infrastructure projects involving water supply, wastewater treatment and municipal solid waste.
- Acted for a client in an important private investment in public equity transaction to raise $360m to develop public infrastructure projects.
- Assisted a client with the purchase of 15% participation rights in an oil exploration block in a global investment of around $680m.
Mozambique > Foreign law firms
Raposo Bernardo is a popular choice for large international financial institutions and development banks seeking assistance with investment transactions in Mozambique. The firm is active in a wide range of sectors, most notably aviation, infrastructure, oil and gas, energy and insurance. Noted for her track record in handling corporate matters, M&A and financing deals for major financial institutions, Joana Andrade Correia leads the group alongside Manuel Esteves Albuquerque, who heads the real estate and construction practice. Edson Santos, who is the firm’s Mozambique local partner, has significant experience advising on investment plans and licensing matters.Practice head(s):
Joana Andrade Correia; Manuel Albuquerque
Testimonials
‘The level of service of Raposo Bernardo is the best and the responsiveness is impressive. We are very impressed by its approach and the way it solves our problems. We could not rate the team more highly. In terms of individuals, Joana Andrade Correia has deep knowledge of the Mozambican market.’
‘We thank Joana Correia for her in-depth analysis of our issues. We have total confidence in the quality of the services provided. Prompt responses.’
‘I highlight Manuel Esteves de Albuquerque, who is a highly skilled professional, very competent and who has a responsible approach to business, always delivering the desired results.’
‘Raposo Bernardo has a fantastic team in Mozambique.’
‘The lawyers of Raposo Bernardo with whom we work with are all superb. I cannot recall any lawyer that had failed or disappointed us for any reason. On the contrary, they are all very experienced and skilled, always delivering our projects and meeting our requirements.’
‘Joana has a well-established reputation for innovative thinking. We always feel that she provides us the confidence we need to act decisively. She has many years of experience acting for major players in the market on major domestic and cross-border transactions.’
‘Joana Andrade Correia is the individual I must emphasise, she is the main partner who leads the Mozambican practice and she is a top leading lawyer that leads a top team. She is an excellent lawyer. Very attentive and solicitous.’
‘The individuals that stand out for their top quality and outstanding performance are Joana Andrade Correia and Manuel Esteves de Albuquerque. Joana Andrade Correia is the leader of the Mozambican practice of Raposo Bernardo and is our primary and daily contact. With Joana we always feel she prioritises us as a client and does everything in her power to help our company to achieve our objectives. Manuel is the type of lawyer that never fails. He is always well prepared for everything we ask.’
Work highlights
- Advising a client on the negotiation and contracts for a $325m loan for the construction of a water treatment plant and construction of the distribution network.
- Acted for a client in a major infrastructure project for the construction of the expansion of a seaport and a large-scale cargo and container terminal, with a total value of $485m.
- Assisted a client in a high and multifaceted structure finance transaction for the acquisition of a fleet of commercial aircraft for leasing at a value of $235m.
Raposo Bernardo > Firm Profile
Raposo Bernardo is a full service law firm recognized for its ability to combine the strength of advocacy tradition with the most modern and advanced technology, the aim being to provide the greatest benefit to our clients.
We believe that in order to provide top level legal support it is essential that our lawyers, in addition to high technical skills and an in-depth knowledge and understanding of our clients’ activities and projects, also have a sharp sensitivity to their specific way of conducting business.
The cooperation culture existing between all members of our teams is the same cooperation culture we maintain with our clients. This spirit of collaboration and closeness makes it possible to create strong and trusting relationships, and thus achieve the best outcome. It is also with this purpose in mind we specialize in the matters, projects and the specific activities of each one of our clients.
We are aware of the clients’ needs and what they value most. We do everything in order to exceed their best expectations. That is why we differentiate by making available specific and individualized solutions thus guaranteeing that clients can gain the best benefit from our services. That being the case we make some important commitments such as each client having more than one partner coordinating their issues, and the guarantee of maintaining the same team during the execution of a project without rotation and changes that could harm the continuity and execution of the work. We also know that our clients like to benefit from our services in different jurisdictions. That is why we have put in place a very advantageous system allowing the benefiting of conditions practiced in the jurisdiction with the lower value, independent of the jurisdiction in which the client requests our services.
We maintain permanent and intense internal training and refresher training, which we believe is essential so that our teams are always at the forefront of the most advanced and sophisticated practices in the international legal market.
With full independence we keep working relations with law firms all over the world, and those partnerships provide services for the benefit of our clients’ projects.
After more than 25 years we renew our commitment to combine experience and tradition with innovation, modernity and sophistication through pragmatic advice that adds value for our clients. We always maintain the same ability to respond fast and rigorously and with a culture of full availability and cooperation.
Focus in tailor-made service: For our firm the client is at the heart of our work. To achieve the clients’ satisfaction when dealing with its matters is one of our main objectives. To exceed its best expectations is one of our main goals. That is why we maintain a very close relationship with all our clients and try to know in detail their activity and the market in which they act.
Quality and rigour in the services provided: We provide our clients with top quality services and for that purpose we work with the utmost rigour. The results provided to our clients are the best indicator of this. We are fully aware that the speed of an answer is essential and we are used to working under time pressure and to anticipate the agreed deadlines.
Innovation to the benefit of the clients: Apart from the tradition we are proud of, we seek the most innovating procedures and solutions for the benefit of our clients. For this purpose we permanently invest in training and in technology in order to increase the efficiency of our services.
Professional ethics: All our procedures, practices and culture are based in transparency and ethics. An ethical attitude and behaviour is essential in order to meet clients’ expectations and to ensure the quality of our services. The same ethics are always present in the relationship with our colleagues and the market in general.
Global services: We provide specialized services in all areas of law to all the industry sectors. We also provide services for several other jurisdictions, especially for Portuguese-speaking African countries, either through our network of local partners or our specialized desks.
Diversity and inclusion: We provide legal services with pleasure and for pleasure. We can´t be any different. That is why we need a well-being environment that is at the same time stimulating and non-discriminating. We are a law firm exempt of any type of discrimination. Nevertheless we develop programs and initiatives promoting diversity and inclusion.
Social responsibility and pro bono: We are strongly committed to our social environment. We are aware that everyone will benefit if we have a positive social environment. That is why we do everything within our means to share part of what we receive from the community and try to involve ourselves in pro bono and social responsibility activities.
Main Contacts
Department | Name | Telephone | |
---|---|---|---|
Managing Partner | Nelson Raposo Bernardo | lisboa@raposobernardo.com | +351 213 121 330 |
Lawyer Profiles
Photo | Name | Position | Profile |
---|---|---|---|
Ms Joana Andrade Correia | Partner, Co-head of the Corporate law and M&A department, specialized in corporate… | View Profile | |
Ms Mafalda Contumélias Batista | Mafalda Contumélias Batista has 15 years of experience and heads the Insurance… | View Profile | |
Mr Manuel Esteves Albuquerque | Senior associate | View Profile | |
Ms Ana Cláudia Rangel | Head of the Litigation and Arbitration Department, specialized in civil procedural law,… | View Profile | |
Mr Nelson Raposo Bernardo | Nelson Raposo Bernardo is the managing partner and head of the banking… | View Profile |
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ESG Due diligence in M&A Transactions
ESG factors
Environmental, social and governance (ESG) factors are increasingly considered in M&A decision-making and strategy, as investors use ESG criteria to assess risks and to identify value creation opportunities. ESG has clearly become a trend in an international context.
While not a new phenomenon, ESG issues are becoming more prominent and influential in decision making, from board level and down across a range of sectors and industries. Pressure is emerging from multiple angles – regulation, investors and communities – to have a proactive approach to these issues.
In addition, a company’s ESG credentials are becoming increasingly relevant. They can have an impact on a selection of factors, such as ability to attract finance, employee satisfaction and morale, a company’s growth opportunities, customer retention and growth, outcome of project bids, etc.
Consequently, assessing an organization’s ESG performance and identifying current and potential risks and opportunities is an important step in ensuring you are making well-informed investment and strategic decisions.
Furthermore, financiers are also increasing their attention on ESG issues. The expectations would be that financiers may come specifically requiring purchasers to have conducted ESG due diligence before providing financing.
Proactively, investors, employees, customers, regulators, and other stakeholder are progressively holding companies accountable for their ESG practices like those relating to climate change and social equality. At the same time, a promptly evolving regulatory and legislative landscape is upping the chances to proactively manage these risks and be more transparent through ESG reporting which are voluntary so far.
In fact, while some companies do disclose information about climate risks, for instance, there is no global standard for how those risks are measured or reported. As a result, the facts can be inconsistent, subjective, and difficult to compare between companies. But things are starting to change. Investors have been voicing concerns about sustainability for several decades. And now they have translated their words into action.
Overall, there is an ever-increasing expectation that the business community is doing its part to meet sustainability goals and show corporate social responsibility.
In Portugal, for example, since the implementation of Directive No 2014/95/EU of the European Parliament and the Council by Decree-Law 89/2017, certain large companies which are public interest entities are obliged to disclose non-financial information relating to social, environmental and corporate governance areas. In this regard, the Portuguese Securities Market Commission took a very important step this year in promoting a reporting model for the fulfilment of the duty to disclose non-financial information by the issuing companies admitted to trading on a regulated market. Although it is a model of voluntary participation, it represents a very significant development for the standardization of the disclosure of information regarding existing legal duties.
Yet, while regulation of some countries appears to be moving faster, in others seems to be waiting for further developments and are moving much slowly.
Aligned with ESG concerns, there is the compliance function which is a relevant governance function that can add structure and controls to help establish consistent, repeatable processes for handling and reporting crucial ESG data. That is to say that compliance departments can develop procedures for third-party verification and identify other potential risks, such as gaps in what is reported. Without a strong governance mechanism in place, any ESG efforts are likely to fall short.
A growing number of banks have committed to align their lending and investment portfolios with net-zero emissions by 2050. The Net-Zero Banking Alliance currently includes 55 banks from 28 countries.
This shift will change the way investors are engaged with companies—and the way corporate executives view sustainability. The internal discussions between CFO, CEO and ESG teams will be merged into one hardheaded conversation about material ESG issues. When it becomes clear that the people who decide whether to buy or sell a company’s stock have assumed ESG into their calculations, the business leaders will be forced to do the same within their companies.
This explains why this is a moment where we are watching most of the investment leaders describing meaningful steps in their firms to integrate sustainability issues into their investing criteria. ESG issues have become much more important as long-term investors. The analysis of issues such as climate risk, board quality, or cybersecurity in terms of how they impact financial value in a positive or a negative way is becoming a daily concern. The network Principles for Responsible Investment (PRI) which is supported by the United Nations promoting responsible investments is a good example of the impact of those concerns. As of the year 2020, PRI was the leading sustainability initiative with more than 3000 signatories. According to the 1st principle of PRI, signatories will incorporate ESG issues into their investment analysis and their decision-making processes.
These concerns are not innocent since there are financial risks associated with ESG which have several facets: reputational damage and noncompliance both can have financial consequences for organizations. In addition, ESG has become an emerging factor in corporate valuations, ratings, and access to capital.
We expect to see ESG-related regulation increase this year across the business world. The focus will remain on disclosure and reporting requirements, but with a developing trend towards “double materiality”, requiring businesses not only to consider ESG risks to their businesses but also to report on the risks their activities might pose to people and the planet.
We also expect to see changes in due diligence performances in a way that themes such as obligations on businesses in relation to human rights and environmental risks in their businesses and supply chains become mandatory and a factor of exclusion.
Due Diligence (DD) process and integration of ESG into this process
A standard DD is usually conducted to:
- confirm and verify the information that was brought up during the deal or investment process;
- to identify potential defects in the deal or investment opportunity and thus avoid a bad business transaction;
- obtain information that would be useful in valuing the deal;
- to make sure that the deal of investment opportunity complies with the investment or deal criteria.
A proper due diligence is a key to secure the position of the purchaser in a share purchase transaction. But not only allows to buyer to feel more comfortable with its expectations regarding the transaction but also benefit the seller, as going through the rigorous financial examination may, in fact, reveal that the fair market value of the seller’s company is more than what was initially thought to be the case. Therefore, it is not uncommon for sellers to prepare due diligence reports themselves prior to potential transactions.
In other words: the due diligence helps investors and companies understand the nature of a deal, the risks involved, and whether the deal fits with their portfolio. Essentially, undergoing due diligence is like doing “homework” on a potential deal and is essential to informed investment decisions.
When it comes to the ESG aspects, it is possible to explore existing investment stages and include it in different manners. For example, negative screening excludes targets companies from specific sectors or for ethical reasons.
Nevertheless, the best way and complete sustainable investment would be the full integration of ESG factors throughout the investment process. But this is still an ongoing process that is not yet followed by investors as a rule.
The main purposes of a ESG DD would be to understand the risks profile and exposure of the target company, understanding associated ESG risks; also to find any red flags relating to the issues revealed during the DD process and to identify and analyze any risk mitigation measures.
Crucially, ESG due diligence should be seen as a step beyond the acquisition, helping the purchaser to incorporate the target company into its business and ensure the complex risks associated with ESG issues are identified and minimized before significant reputational damage or financial liabilities grow.
As a remark we may say that although the DD process has included some health and safety as well as environmental issues for the last 25 years, the review of ESG factors in DD processes has only started to increase in the last 4 or 5 years. This change is due to higher demands and expectations from the stakeholders and general concerns about climate and increasing natural resources prices.
But more important than this, is the fact that ESG DD can be used to measure how the target company creates its value and whether it is sustainable. Furthermore, by performing due diligence, the investor would be able to foresee the remedies post-closing it may implement to reduce risks discovered during the due diligence scrutiny.
Another important aspect to highlight is that ESG matters will be weighted equally in ESG DD process. In fact, among the three ESG factors, the environmental risks are still considered as the primary issue. However, social and governance factors are also becoming more critical, especially in emerging markets. Even so, the importance of ESG DD and scope are highly dependent on the transaction size, the sector and location of the transaction parties, and the target’s products or services.
It cannot be denied the importance of performing an ESG due diligence prior to entering into M&A transaction bringing great benefits to investors. Usually, the aspects considered in this particular type of DD are related to the target company’s product impact and liabilities, management of supply chains, the target’s business operation ethics and governance issues.
Research shows that including ESG factors may positively contribute to financial success of M&A transactions. Usually, an M&A transaction process itself contains risks for the investors, such as a risk of wrongful calculations regarding price valuation or losses caused by terminated or withdrawn transactions, leaving the investors with unnecessary costs. At the same time, the investor loses the benefits it hoped to gain from the transaction. M&A transaction research findings have indicated that performing ESG DD may reduce these risks.
Representations and warranties
Usually, the most common used Representations and warranties on ESG aspects reflected on the SPA are related to (i) accomplishment of environmental legislation; (ii) possession of all necessary permits to carry out the operations; (iii) statement of the seller that is not a party to any environmental court claims; (iv) and has not caused any toxic or hazardous discharges to the soil, ground, and water and; (v) and has no obligations to remedy toil at any site. However, the SPA warranties will not provide the purchaser with full protection, because they are usually in force for a limited period. Some of the main issues related to environmental damages may be hidden for an extended period. Thus, it is crucial that the most essential environmental warranties are deemed “fundamental warranties”, which remain effective for a more extended period compared to the “basic” warranties.
Valuation practices
During a ESG due diligence and in the event ESG due diligence findings indicates poor ESG performance this may affect the target company value, which in turn may reduce the purchase price payable for the target company in a share purchase transaction. If the ESG performance is poor compared to an investor’s expectations, some investors may be up for a challenge to even the distance between the targets and the investor’s standards which could increase the target’s value at the time of investor’s exit. On the other hand, in cases where ESG DD findings indicate good ESG performance, this is usually already reflected in the target’s valuation and may lead to a situation where the investor purchases a company worth more than the original valuations show.
In resume: advantages of a ESG due diligence
The advantages of an ESG due diligence are very significant allowing the investor to secure its interests in the share purchase transaction through contractual protection mechanisms included in the Share purchase Agreement (SPA). Representations and warranties, specific indemnities, and conditions precedent clauses based on the ESG risks revealed during the ESG DD process are just some of those mechanisms. Naturally, the ESG DD findings may impact the purchase price payable for the target or payment terms under the SPA. Thus, ESG DD is essential during the negotiation phase of a transaction as material ESG findings can impact target company valuation. The purchaser should then ensure that the purchase price payable for the target company is reduced if the target’s poor ESG performance could lead to monetary penalties post-closing of the transaction, of which the investor could be liable. Such penalties may arise due to non-compliance with applicable regulations and may lead to the increased operational cost of the target company in the future, or negatively affect the terms of the target’s supplier agreements during the investor’s ownership stage or even company’s reputation on a complete and whole scenario. In the case of reputation risks those could affect the financial performance of the target through lower sales or reduced customer loyalty. Furthermore, effects on the share price at the time of investor’s exit shall be evaluated as ultimately any potential loss will be to the investor’s detriment.
Risk management is particularly relevant in the cases when the investor comes from another country and is not aware of the local regulations and operational standards. Thus, an ESG DD process in this kind of M&A transactions even more beneficial to the investor due to higher returns during the ownership stage as well as higher selling price at the time of the investor’s exit. Higher returns since there have been lower capital costs of the target. Based on the ESG DD results, the investor will be able to evaluate the target’s potential for future growth. While ESG DD increases the investor’s costs at the beginning of the investment stage, long-term benefits in the form of improved risk management and target’s operations may outbalance the initial costs, provided that the investor does not perform an exit shortly after its investment and acquisition.
Contributors: Commercial, corporate and M&A department of Raposo Bernardo
DUE DILIGENCE IN PROJECT FINANCE
At a time where the Programa de Recuperação e Resiliência (Recovery and Resilience Program) the nationally applicable program until 2026 in order to address the reforms and investments aimed at restoring sustained economic growth and supporting the goal of convergence with Europe over the next decade is in its implementation phase; at a time where there is a strong purpose of modernizing a number of key infrastructures and at a time where the transition to a greener economy and society presents important opportunities of medium and long-term investment it is even more relevant to address once again the importance of project finance as a key financing source and of due diligence within the scope of project finance.
Over the next few years Portugal will have to embrace a development strategy that requires intensive capital investments and consequently accessing to important financing sources.
Considering the nature of the of the programmed investments it is only natural to believe that project finance will be a central financing resource in the Portuguese market in the years to come and considering the importance of due diligence in the project finance operations, this will be a trendy subject also in the next few years.
PROJECT FINANCE
Getting back to basics it is relevant at this stage to try to identify the project finance main characteristics and its importance as a financing resource of long term investments in infrastructure and other significant investments in other areas.
According to many authors project finance operations can be identified by a number of common characteristics, among which we can identify the following ones:
- a long term investment operation, most often in large infrastructures of different nature, such as airports, roads, railway network, energy production, hospitals, water or energy supply, etc., requiring large investments;
- the medium/long term financing is the main financing source and it prevails over equity in ratios that usually vary between 70%/30% to 90%/10%;
- the reimbursement of the financing relies on the cash flows generated by the project;
- the project is developed or carried out by a special purpose vehicle (SPV) incorporated especially for that purpose by the project sponsors; this SPV usually has a very limited corporate purpose and a very restricted activity usually limited to the execution of the activities connected to the project;
- all the project is based on a model that is the project’s expected case, determined by using the assumptions that the project team considers are most likely to occur. This model must also consider the evolution of the different variables that may impact the project not only regarding its execution and costs but also regarding its forecasted revenues.
Because project finance largely depends of the income stream of the project for the repayment of financing, the reliability of the project’s model and the determination of the risks to which a given project is subject to are paramount in project finance.
It is also important to bear in mind that project finance implies a web of agreements between different entities – sponsors, lenders, the different agents, Engineering Procurement and Construction (EPC) companies, Operation and Maintenance (O&M) entities, etc. – each one having a specific role in the structure of the project but each one also depending on the fulfilment by the others of their undertakings.
The evaluation of the soundness and reliability of each one of those entities is also essential to the project.
PROJECT RISKS AND DUE DILIGENCE
When analysing the case in which relies the project finance operation, as well as the entities that will take part in the project, the lenders and other relevant entities conduct a due diligence in order to try to determine, assess, the risks to which the operation is subject as well as to analyse the soundness and reliability of each one of the participants in the project.
These projects’ risks appraisals are, in this context, multidisciplinary evaluations of, among others, technical, legal, financial and environmental aspects of the projects aimed at detecting circumstances or events that may negatively impact the project thus leading to its total, or partial, failure, ultimately meaning, the impossibility of generating the cash flows required in order to reimburse the financing granted within the forecasted deadlines.
It is therefore easy to understand the key importance of due diligence in any project finance operation.
Having established the importance due diligence plays in project finance operations, we believe it could also be of interest to try to identify which would be the most common risks to which the project finance operations can be exposed to.
Diane Desierto, in her text Due Diligence in World Bank Project Financing, identifies the following risks:
- completion risks;
- operating risks;
- supply risks;
- currency risks; and
- political risks
among the many risks that usually affect international projects.
Like in any other categorization, other authors identify different risks, or use different names for identifying identical risks, or establish different categories of risks.
It is therefore common to come across with risks identified such as market risks, contractual risks, authorizations risks, offtake risks, etc. Despite all the efforts made in order to systematize project finance operations it should be kept in mind that each project has its own characteristics, each project has its own specificities and is, consequently, affected by risks of its own that despite being similar to the risks found in other projects may impact the different projects differently.
As a consequence, the due diligence to be conducted on a project must be a “tailor made” solution for that project. It cannot follow the model “one size fits all”, because it can lead to a situation where specific risks of the project are not identified and other risks may be undervalued or overvalued thus affecting the risk perception of the lenders.
It is also important to bear in mind that times change and issues that a few years ago weren’t perceived as a relevant risk for a given project may acquire a completely different consideration, due to social changes meanwhile occurred.
Nowadays risks resulting from environmental or social effects of the projects are increasingly gaining ground in projects due diligence.
It is not uncommon that lenders, particularly multilateral institutions but also banks and other financial institutions, put an increased care in assessing the environmental, social and governance of the projects, thus trying to identify, mitigate or avoid the heavy negative burden these issues currently have and are perceived and evaluated by local communities and the general public, as well.
It is not uncommon that due diligence includes the assessment of environmental aspects such as the environmental impacts of the projects to local communities, the impacts to the protection, conservation or restauration of natural habitats, or the protection to existing ecosystems. At a time where Portugal is at the starting line of the lithium exploration and that lithium exploitation will most certainly involver project finance operations, these concerns and risks will become even more present in projects’ due diligence.
Along with the environmental aspects of the projects, and as already stated, the social aspects of the projects are also becoming more frequently under assessment by means of the due diligence.
Lenders are becoming more concerned about the effects of the projects on local communities, the way projects impact the existing way of life, the local economic structure, local businesses and economic activities, the way it affects the well-being of the impacted local communities and the well-being of the projects’ employees.
These types of risks are not easy to assess and usually involve long consultations with authorities, with civil society organizations and even with the affected communities. These consultations are time and cost consuming thus converting the due diligence process in a lengthy, complex and expensive process.
When these types of risks have been identified and resourcing once again to Diane Desierto in the above-mentioned text, she establishes a mitigation hierarchy when adverse environmental and social impacts are found in projects financed by the World Bank. Said hierarchy is as follows:
- Anticipate and avoid risks and impacts;
- Where avoidance is not possible, minimize or reduce risks and impacts to acceptable levels;
- Once risks and impacts have been minimized or reduced, mitigate (which may include measures to assist affected parties to improve or at least restore their livelihoods as relevant in the particular project setting); and
- Where significant residual impacts remain, compensate for or offset them, where technically and financially feasible.
It is our opinion that this hierarchy can be adopted regarding any project, not just the ones financed by the World Bank, and also regarding any type of risk, not only regarding environmental and social risks.
In fact, these are the mitigation strategies to be adopted in any project when the due diligence results confront sponsors, lenders and other relevant parties, with the projects’’ risks with a relevant impact in the project, namely the ones that may affect different stakeholders, especially the local communities.
From a legal perspective the due diligence also allows lenders and other parties to identify the material aspects and especially the material agreements to the project, meaning, those aspects or agreements that may have an impact on the design of the project, on the construction of the project, on the performance of the project, on the maintenance of the project, on the revenues of the project, etc., and that cannot be easily and timely replaced by other agreements under similar and comparable terms.
As it’s easy to imagine, material agreements are subject to stricter conditions and usually require the intervention of the lender (or lenders) as a party to those agreements thus allowing lenders, for example, to step-in in case the project comes into difficulty.
This right of the lender to interfere with contract relations of the project is an important tool to revitalize off routed or stalled projects and can only be correctly anticipated and regulated if the situations allowing triggering it are properly identified in the due diligence conducted to the project.
This requires that drafts of the material agreements are also subject to analysis in the due diligence, particularly in the case of non-operating projects. Having the opportunity to previously analyse the drafts of the material agreements will allow the lender to have an intervention in the negotiation of those agreements and consequently mitigate any of the eventual risks that may have been identified in the due diligence.
In the case of operating projects, or projects close to the operation phase, the possibilities of having any intervention in the negotiation of the material agreements drafts are reduced or even non-existing. This will require a different modus operandi by the lender that must secure its rights under the project via other agreements, namely the financial agreements that in this situation will have an even more important role, regarding the mitigation of the project’s risks.
WHAT RISKS?
Despite all the time and efforts put into the due diligence and the experience of the involved parties- legal, financial and technical teams – it may well be true that not all risks are identified, or are identifiable, by the due diligence.
It is not difficult to imagine that circumstances such as the COVID-19 pandemic or the ongoing war in Ukraine, were not foreseeable five or ten years ago and they can seriously affect either operating or under development projects.
And please don’t consider that this is just a problem for the lenders. Shareholders are also interested in properly identifying the risks of the project, lenders and shareholders’ interests are (or should be) aligned, because the goal is to have an operating project, performing according to the base model (or exceeding the results of the base model), thus freeing the resources required in order to repay the financing and the resources necessary to remunerate the equity.
However, sponsors are usually more willing to accept risks in order to maximize the return on their investment and lenders usually have a more conservative approach, when dealing with risks’ acceptance, because they are more interested in the repayment of the financing and in the payment of interests and fees, without any disturbances or unexpected events that may impair the achievement of those purposes.
Considering that a project finance operation is developed or carried out by the special purpose vehicle (SPV) incorporated by the project sponsors; and that this SPV usually has a very limited and very restricted activity usually limited to the execution of the activities connected to the project, it is quintessential for the project backer to achieve a correct allocation of the risks.
The main purpose of risk allocation in a project should be to allocate a certain risk to the party more suited (because of its experience, technical capacities, etc.) to deal with that risk leaving for the special purpose vehicle only very limited or residual risks.
From the lenders’ perspective this risk allocation strategy is essential because risks which fall on the special purpose vehicle are, in the final analysis, risks which will fall on the lenders.
Regarding the construction and completion risks, in general terms, lenders will require that the cost of construction, the completion of the project and the performance of the project are guaranteed.
Regarding the operation risks, in general terms, lenders will seek that the financial model (namely in what concerns the revenues) is met and that they are protected against adverse changes in the operation costs that may negatively impact the forecasted revenues, which are the main resource (if not the only one) for the repayment of the financing.
Political and regulatory risks are frequently and obstacle in operations in developing countries. These risks can somehow be mitigated in projects involving governmental authorities with the direct intervention of the governments in the relevant agreements in order to provide adequate and sufficient guarantees to the lenders as to the occurrence of material changes in the law. In other projects multilateral institutions or commercial insurers will be open to share part of the risks and to “secure” the lenders’ interests. However, some countries involve such a high risk that developing any project finance in those jurisdictions is virtually impossible because no lender will accept to be exposed to such levels of risk.
In what concerns force majeure and change in law, lenders usually will defend that the repayment of the debt shall maintain even when force majeure events occur or when there is a change in law. As we are all aware off the concept of force majeure is that a party shall not be liable for any default if the breach results from a circumstance beyond that party’s control. Because the project is subject to a web of different contracts, of different nature, involving different parties, many times of different nationalities, subject to the laws of different jurisdictions, it is important to safeguard that force majeure provisions are consistent in the different agreements of the project, thus avoiding situations where force majeure will apply to one agreement but not, or at least not to the same extent, to other agreements related to that agreement.
As already mentioned in previous paragraphs, political risks are subject to commercial insurance. However, these are not the only risks of the project that must be insured. We dare to state that an extensive insurance coverage that includes not only most of the traditional risks, such as for example fire, floods, earthquakes, storms and any similar risks; but also other risks of the specific project is essential to any project. A characteristic common to most of the projects, if not to all of them, is that lenders will require the insurance indemnities to be paid to project bank accounts controlled by the lenders, thus assuring that those proceeds shall result to the benefit of the project and not to the benefit of specific parties to the project.
As already addressed in this text, the environmental and social impact of the projects is becoming a core aspect of concern to financial institutions. In this regard expert reports identifying the existing (or the non-existence) of social and environmental impacts of the project will be required and when existing specific undertakings regarding the mitigation of those effects will be imposed on the sponsors.
Lenders will also want to address and guarantee that equity contributions will be timely made and that the level of those contributions will be adequate, namely, to the risks perceived by the lenders in the project. This risk perception will definitely impact the debt-to-equity ratio of the project.
Especially in situations where new technologies are used, lenders will want to have guarantees from the relevant parties (technology suppliers, shareholders, etc.) against any delays, underperformance or cost increased associated to the use of a new technology. These guarantees are usually paired with demanding completion tests to be conducted before completion guarantees are released.
These are just some examples of the risks usually present and addressed in project finance operations. There are many other risks we could highlight. Many of those issues could be common to several types of projects but, as already stated, each project has its own specificities and each one must have a specific and detailed risk assessment.
The sophisticated and demanding process of assembling a project finance operation is considered by several authors as a slow, complex and expensive method of financing, namely when comparing it with corporate finance.
To the contrary, other authors consider that credit appraisal of an individual project is sometimes more favourable than a credit appraisal of the project sponsor or sponsors and a more attractive risk profile will normally result in more favourable interest rates other credit related costs.
A detailed due diligence and risk assessment conducted by experimented legal, financial and technical advisors, conducted at the early stages of the project is an essential feature of project finance operations. We would dare to state this is a view shared by everyone.
Not participating in any project without a careful risk assessment by means of a due diligence is essential for lenders and sponsors, but also to each and every other party involved in the project.
Project finance is the result of a combination of different interests bound by a common interest – the success of the project’s case model and due diligence has an important role in the achievement of this goal.
Contributors: Projects and project finance department of Raposo Bernardo | please contact lisboa@raposobernardo.com
THE NEW ASSET MANAGEMENT LEGAL REGIME
The new Asset Management Regime came into force on May 28th, 2023, with a period of 180 days for SGOIC (Sociedades de Gestão de Organismos de Investimento Colectivo – Collective Investment Management Companies) and OIC (Organismos de Investimento Colectivo – Collective Investment Undertakings) to adapt to the criteria of the new legal regime. This adaptation period is still running and will end on November 24, 2023.
Published by Decree-Law no. 27/2023, of April 28th, this new legal regime adopts a common regulatory framework for Collective Investment Undertakings and regulates in a unitary manner the matters that were dispersed throughout the General Regime of Collective Investment Undertakings (RGOIC), and the Legal Regime of Venture Capital, Social Entrepreneurship and Specialized Investment (RJCRESIE). The new legal regime also responds to the need to promote the alignment of national law with European Union law, resulting from the changes that the latter has been undergoing.
When approving the diploma under analysis, the Government announced the objective of pursuing a more harmonized, coherent, and uniform regulatory policy, which promotes the effectiveness of supervision and the competitiveness of the sector, adopting solutions more aligned with European Union law, considering that this is a particularly relevant element, as market operators increasingly compete in the integrated context of the European Union’s internal market.
The pursuit of the principles of economy and legislative simplification was also part of the objectives of the national legislator, therefore, as the activity of collective management is subject to principles and rules that tend to be common, regardless of the nature of the organizations, it considered as advantageous to unify and systematize these common references, ensuring greater coherence and regulatory harmonization. This legislative initiative also aims at promoting a more favourable business environment, capable of providing incentives for investment, company capitalization and sectoral consolidation.
When addressing some of the essential aspects of the Asset Management Legal Regime, it is worth highlighting:
OIC (Collective Investment Undertakings)
OIC are institutions whose purpose is to collectively invest capital obtained from investors in accordance with a previously established investment policy.
The OIC are defined by reference to the collection of capital from investors for application in accordance with an investment policy, and it is foreseen, in accordance with Directive 2009/65/EC, that UCITS (Undertakings for Collective Investment in Transferable Securities) are still subject to the principle of risk diversification.
Types of OIC under the new legal regime
The new Asset Management Regime foresees the existence and regulates two types of OIC:
- The OICVM (Organismos de Investimento Coletivo em Valores Mobiliários/ UCITS – Undertakings for Collective Investment in Transferable Securities), and
- The OIA (Organismos de Investimento Alternativo/ AIU – Alternative Investment Undertakings)
The OICVM open undertakings:
- The sole purpose of collectively invest the capital obtained from the public in securities or other liquid financial assets provided for in the Asset Management Legal Regime and which comply with the limits set out therein; and
- Whose participation units are, at the request of their holders, redeemed or reacquired, directly or indirectly, at the expense of the undertaking. These requests may be refused whenever the participation units are traded on a regulated market or in multilateral trading systems and their price does not deviate significantly from its net asset value.
OIA correspond to collective investment undertakings not covered by the previous definition and whose purpose may consist of:
- Investment in real estate assets, the real estate OIA.
- Investment in venture capital, the venture capital OIA.
- Investment in credits, the credits OIA credits; and
- Investment in securities or other financial or non-financial assets, including assets allowed for the types of OIA mentioned in the previous paragraphs.
In other words, this new legal regime reduces the types of OIA admitted in the laws it revoked, reducing them to three essential types – real estate, risk capital and credits OIA– and a residual category.
It is also worth noting that the Asset Management Legal Regime determines that real estate assets are considered, for the purposes of the investment activities provided for in paragraph a. above, in addition to real estate, participation units in real estate OIA and shareholdings in real estate companies.
The nature of the OIC
OIC are autonomous assets and can take the contractual form, an investment fund, or a corporate form – a collective investment company.
OIC in corporate form can be self-managed or hetero-managed if they appoint a third entity to ensure their management.
These undertakings can be open or closed, depending on whether the number of parts – participation units or shares – in circulation is variable or fixed.
Open OIC participation units can be subscribed and redeemed at the request of participants, as provided for in the incorporation documents.
The holder status results from the acquisition of securities representing a fraction of the OIC’s under contractual or corporate form assets in.
The units correspond to securities issued by OICs under contractual form, while those under corporate form issue shares because they adopt the form of public limited company.
Regardless of the form of the OIC, the securities representing its parts are necessarily book-entry and have no par value.
The initial acquisition is made by means of subscription, which involves payment of the respective subscription value.
In the open OIC the subscription value is fully paid up and in other undertakings it can be fully or partially paid up, depending on what is established in the incorporation documents.
OIC may have a fixed or indefinite duration, depending on what is established in the respective incorporation documents.
In closed OIA with an indefinite duration, the respective incorporation documents shall provide for the negotiation of their units within three years of the incorporation date.
The Management Company
The activity of OIC is supported by the activities of a set of entities with different but, however, complementary functions.
Among these entities, the management company, the depositary, and the marketing entities stand out.
All these entities are bound by the duty to act in the exclusive interest of the unit holders, that are the holders of collective assets.
The new legal regime simplifies the list of entities that can carry out collective asset management activities.
The legal regime that was previously in force provided for four types of management companies: collective investment undertaking management companies (SGOIC), venture capital companies (SCR), social entrepreneurship companies and venture capital funds management companies, and included additionally the role of venture capital investors, as well as the possibility of regional development societies carrying out the activity.
Under the new legal regime, the types of eligible management companies are only two: collective investment undertakings management companies – SGOIC and venture capital companies – SCR.
This classification is based on the difference in the scope of activity of each type of management company. Consequently:
- SGOIC can carry out OICVM and OIA management activities, but cannot, however, exclusively manage risk capital OIA.
- SCR can only manage OIA and must necessarily manage at least one risk capital OIA and cannot mostly manage real estate OIA.
Start of activity of Management Companies
Under the terms of the legal regime in force, the start of activity of any management company depends on authorization from the Securities Market Commission (CMVM).
The new decree-law establishes two regimes for accessing the activity depending on the purpose and size of the management company.
The first one, a simplified regime for accessing and exercising OIA management activities, for small size management companies.
According to the Asset Management Legal Regime, OIA management companies are divided into large and small management companies, depending on whether or not the assets under management exceed the following amounts:
- (euro) 100,000,000 and include assets acquired using leverage.
- (euro) 500,000,000 and do not include assets acquired using leverage and in relation to which there are no reimbursement rights that can be exercised during a period of five years from the date of the initial investment.
The small size OIA Management Companies
Small size management companies are subject to a simplified authorization procedure, by reference to the regime applicable to OICVM and large size management companies.
The CMVM has a decision period of 30 days, in which it carries out an ex-ante analysis of the suitability of the members of the management body.
The minimum initial capital requirement for a small size management company is (euro) 75,000, and the company is required to establish an additional amount of own funds of 0.02% of the amount by which the overall net value of the portfolios under management exceeds (euro) 250 000 000.
Its organizational requirements are subject to subsequent analysis by the CMVM, in accordance with general principles and proportionality criteria.
Finally, the appointment of a depositary is not required for OIAs managed by this type of management companies, when dealing with OIAs aimed exclusively at professional investors.
Management Companies of OICVM and large size OIA
The regime for starting activity of OICVM and large size OIA management companies is also adjusted, notably by reducing the deadline for the CMVM’s authorization decision.
The new legal regime establishes a decision period of 90 days, extendable for 30 days, whereas the previous regime provided for decision periods that could extend up to 6 months.
The basic requirements of authorization requests were also adjusted in line with the provisions of European Union law.
The basic requirements for OICVM and large size OIA management companies essentially correspond to the requirements set out in the previous legal regime.
This type of management companies adopt the form of a public limited company, have central and effective administration in Portugal, a minimum initial capital of at least (euro) 125.000 or, if they carry out the activity of registering and depositing financial instruments, (euro) 150.000, the members of the governing bodies and qualified unit holders meet the suitability requirements, and these companies have a top management team with at least two people.
The authorization for the management company to starting its activity defines the scope of the activity that it can carry out, in accordance with the types set out in the legal regime. The management company may, upon authorization, be authorized to manage OICVM, OIA or both. Additionally, depending on the type of OIC it is authorized to manage, it may also be authorized to carry out additional activities regulated by Directive 2014/65/EU.
OICVM and large size OIA management companies may carry out cross-border activity in the European Union under the right of establishment and freedom to provide services, by complying with the notification procedure provided for in the new legal regime, as foreseen in Directive 2009/65/EC and Directive 2011/61/EU.
For this purpose, the management company shall communicate to CMVM, accompanied by the required information, its intention to establish a branch in another Member State or act under the freedom to provide services.
Said information shall be forwarded by CMVM to the supervisory authorities of the hosting Member States, and the CMVM may refuse to forward the information in certain situations, duly substantiated.
Likewise, a European Union management company may also carry out activities in Portugal under the right of establishment and freedom to provide services under identical terms to a national management company, upon compliance with the aforementioned notification procedure.
Prudential supervision of the management company is always ensured by the authority of the home Member State. The new legal regime also establishes the requirements for a management company from a third country to carry out activities in Portugal.
The management company plays a key role in the development of the activity of the OIC and is therefore subject to a demanding framework of fiduciary duties to act in the exclusive interest of the unit holders. The management company manages the investment and risk of the OIC, and is also responsible for its marketing and administration, providing a set of administrative services. The OIA management company can also provide a range of additional services related, namely, to facilities management or property administration, as well as specialized advice.
Duties of the management company
The management company acts in the exclusive interest of the unit holders, carrying out its functions in accordance with reinforced standards of conduct, namely honesty, equity, care, diligence and competence, and is also subject to the duty of secrecy.
As part of its general duties, the OICVM management company integrates sustainability risks into the scope of its activities.
The management company must give precedence to the interests of unit holders over any other interests, whether its own or those of related entities, and must also ensure equitable treatment of unit holders.
The OIC management activity is remunerated by means of a management fee.
The calculation formula of the management fee is defined advance, in the OIC’s incorporation documents, and may include a variable component resulting from the performance of the OIC.
In addition to the management fee, other costs and charges attributable to the OIC are subject to adequacy criteria taking into account the principle of sound and prudent management. The management company cannot charge or impute to the OIC or the unit holders any costs that are not due and are not provided for in the incorporation documents.
The management company may subcontract its functions but for that purpose must inform the CMVM in advance. Subcontracting cannot compromise the effectiveness of the management company’s supervision, nor its ultimate responsibility for managing the OIC.
The management relationship is, by nature, a long-term relation that remains, as a rule, for the duration of the OIC.
In certain situations, the management company may be replaced in its functions, provided that the incorporation documents provide for this possibility. Said provision is an essential requirement of the replacement, as this circumstance represents a significant change in the assumptions underlying the investment in that specific OIC.
The replacement of the management company of an open OIC depends on authorization from the CMVM and, in the case of other OICs, is subject to subsequent communication to the same supervisory entity.
Information duties
The incorporation documents are, depending on the type and nature of the OIC, the prospectus, the management regulations, the document with fundamental information intended for investors, the information for OIA investors addressed exclusively to professional investors and, in the case of a collective investment companies, the articles of association.
The preparation of a prospectus is required for open OIC, whether OICVM or OIA, and it shall include the management regulations and, in the case of OIC under corporate form, the articles of association.
OICs are also required to prepare and disclose accounting documents.
The OICVM shall prepare and disclose annual and half-yearly reports in accordance with the model set out in an annex to the new Asset Management Legal Regime, respectively, within four and two months from the end of the reference period.
The OIA shall only prepare and disclose an annual report within five months from the end of the reference period.
The minimum content of OIA reports and accounts follows directly from European Union regulations.
The information regarding the OIC that must be published under the regime in force, is disclosed through the CMVM information system.
Without prejudice to other disclosure requirements provided for in the new legal regime, the prospectus, the management regulations, the fundamental information intended for investors, the information for OIA investors aimed exclusively at professional investors and the latest annual and half-yearly reports and accounts and mandatorily subject to disclosure.
In addition to the duties of informing the public and unit holders, the OICs and their respective management companies are subject to information duties towards CMVM, for the purposes of supervising and monitoring compliance with the rules that govern their activity.
In particular, the management company must communicate to CMVM any relevant facts relating to the collective investment undertaking that affect its functioning or significantly affect its assets. Whenever it deems necessary to protect the interests of investors, CMVM may determine that these facts are to be publicly disclosed.
These are some of the relevant aspects of the Asset Management Legal Regime that recently came into force.
We call your attention to the fact, as we had the opportunity to highlight previously, that the deadline for adapting to the new regulations runs until November 24th, 2023.
Our Firm’s Banking and Finance Department is at your disposal to support you in this adaptation process and to clarify any doubts it may raise.
Contributors: Banking and finance department of Raposo Bernardo | please contact lisboa@raposobernardo.com
DATA PROTECTION IN PORTUGAL
APPLICABLE LAW
The personal data protection regime currently in force in Portugal is based on Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC, commonly known as the General Data Protection Regulation or GDPR.
This Regulation is complemented by Law no. 58/2019, of 8 August and by Law no. 59/2019, of 8 August and by Law no. 41/2004, of 18 August. These diplomas, which constitute the backbone of the legal regime in force in Portugal, are also complemented by scattered legal and regulatory provisions.
This regime aims to protect individuals in relation to the processing of personal data, protection that constitutes, for the lawmaker, a fundamental right of individuals.
We cannot forget that, in Portugal, this fundamental right is constitutionally enshrined, as article 35 of the Constitution of the Portuguese Republic, entitled “Use of information technology” establishes that:
- All citizens shall have the right to access computerized data concerning them, being able to demand their rectification and updating, and the right to know the purpose for which they are intended, in accordance with the law;
- The law shall define the concept of personal data, as well as the conditions applicable to its automated processing, connection, transmission and use, and guarantees its protection, namely through an independent administrative entity;
- Information technology shall not be used to process data relating to philosophical or political beliefs, party or union affiliation, religious faith, private life and ethnic origin, except with the express consent of the holder, authorization provided by law with guarantees of non-discrimination or for processing of non-individually identifiable statistical data;
- Access to third party personal data is prohibited, except in exceptional cases provided for by the law.
As can be observed, the Constitution does not just enshrine a fundamental right to the protection of personal data, requiring ordinary law to define the terms under which citizens can access computerized data concerning them and the terms under which they can demand rectification. and updating, as well as exercising the right to know the purpose for which they are intended. The Constitution also requires that ordinary law defines the terms under which data subjects will provide the necessary consent to the processing of data relating to philosophical or political beliefs, party or union affiliation, religious faith, private life and ethnic origin and that ordinary law defines the concept of personal data, as well as the conditions applicable to its automated processing, connection, transmission and use, and guarantees its protection.
The constitutional norm constitutes a true and extensive specification for the ordinary legislator, who saw his task substantially facilitated as the European Union adopted a Regulation (the GDPR) that also regulates all these matters.
The constitutional text also determines the existence of an independent administrative entity aimed at supervising the right to data protection. This administrative entity is the Comissão Nacional de Protecção de Dados, commonly known as CNPD.
Under the terms of the law, this entity is responsible for supervising and controlling the personal data protection regime, being for the purposes of the GDPR the national control entity. Among the powers granted to the CNPD, it is worth highlighting the power to monitor compliance with the provisions of the GDPR and other legal and regulatory provisions relating to personal data protection and the rights and guarantees of data subjects, and to correct and sanction their breach.
In this context, the CNPD has investigative and sanctioning powers, and is responsible for instructing and deciding processes regarding faults to comply with the GDPR and other data protection legislation.
Once the main applicable laws are known and the entity that controls their application has been identified, it is now necessary to identify some of the essential concepts regarding the processing of personal data.
WHAT DOES “PERSONAL DATA” MEAN?
Personal data is information relating to an identified or identifiable natural person, the “data subject”. An identifiable natural person is considered to be a natural person who can be identified, directly or indirectly, in particular by reference to an identifier, such as a name, an identification number, location data, electronic identifiers or one or more specific elements of the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person.
Personal data are, for example:
- name and surname;
- the home address;
- an email address consisting of name.surname@company.com;
- the number of an identification document;
- an IP address (internet protocol);
- data held by a hospital or doctor, which allows a person to be unequivocally identified.
On the contrary, the following shall not be considered as personal data:
- an email address consisting of info@company.com or office@company.com;
- anonymized data.
THE PARTIES INTERVENING IN DATA PROCESSING
As already stated, the person to whom the personal data refers is the data subject.
The natural or legal person, public authority, agency or other body that, individually or jointly with others, determines the purposes and means of processing personal data is called the “controller”.
It is this person – usually a company or public entity – who is responsible for the set of obligations aimed at protecting personal data.
We also think it is useful to convey what should be understood as “Data Processing”. “Processing” means any operation or set of operations which is performed on personal data or on sets of personal data, whether or not by automated means, such as collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction.
We can thus identify two main subjects in the personal data processing relationship: the data subject and the controller; an object – personal data – and an activity – data processing.
This processing relationship is, as already mentioned, subject to a set of rules, designed to ensure that personal data are processed in a lawful, fair and transparent manner; that are collected for specific, explicit and legitimate purposes and cannot be further processed in a way that is incompatible with those purposes; that they are adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed; that they are accurate and updated whenever necessary, and all appropriate measures must be adopted so that inaccurate data, taking into account the purposes for which they are processed, are erased or rectified without delay; which are stored in a way that allows the identification of data subjects only for the period necessary for the purposes for which they are processed and which are processed in a way that guarantees their security, including protection against unauthorized or illegal processing and against its accidental loss, destruction or damage. The controller shall adopt the appropriate technical or organizational measures for those purposes.
THE EXERCISE OF RIGHTS BY THE DATA HOLDERS
The “set of specifications” for data controllers are demanding and this has been proven in practice. There are countless cases in which the intervention of national data protection authorities has been required and this also results from the increasing visibility of the data protection issues, which has given rise to a growing number of complaints by data subjects when they consider that their rights have been breached. However, many of these complaints indicate a high lack of knowledge on the part of data subjects, those complaints have no grounds and end up being archived without any action being taken. Even so, they still cause some constraints and involve some work for those responsible for the controllers and their teams, particularly their legal teams.
Other complaints are accepted by the administrative authority, requiring a defence from the entity concerned both in the administrative phase of the process, and in its judicial challenge, if the administrative phase concludes with the application of a sanction not accepted by the targeted entity.
We must bear in mind that the amounts of applicable fines are, in many cases, extremely high and that, in the most serious and visible cases, national authorities have chosen to make a dissuasive example of them by applying high penalties.
Regarding the exercise of the corresponding rights by data subjects, particularly next to the controllers, the CNPD has been informing the following:
- The exercise of rights shall be free.
- The rights are exercised with the controller, preferably through the specific channel indicated in their privacy policy or in equivalent notice.
- The data subject must be accurately identified and shall be able to its identity when exercising the rights, but it shall not have to provide more personal data than those processed by the controller, within the scope of a contractual relationship, for example.
- The data subject must keep proof that it has filed a request to exercise its rights.
- The controller must facilitate the exercise of rights.
- Responses to the data subject must be provided concisely, in clear and simple language.
- Data subjects must obtain a response within one month from the date on which their request is received.
- This period can also be extended for another two months, if necessary. If so, the controller shall inform the data subject of this extension, justifying the delay of the initial deadline.
- If the data subject’s request is made by electronic means, the response must be given, whenever possible, by electronic means.
- The exercise of the data subject rights cannot harm the rights and freedoms of third parties.
- The controller may refuse to comply with a request when it appears to be manifestly unfounded or excessive, particularly due to its repetitive nature. In these situations, the controller may also require payment of a reasonable fee to cover the inherent administrative costs.
SOME OBLIGATIONS OF THE CONTROLLER’S OBLIGATIONS
The obligations imposed on data controllers is so vast that it would be impossible to address them all in a text like this.
Therefore, and in light of what is done by the CNPD, we will only refer to a small set of obligations that, for different reasons, give rise to an interaction with the aforementioned administrative authority and which, also for this reason, are of the greatest relevance.
Firstly, we refer to the obligation to record processing activities, foreseen in article 30 of the GDPR.
Each controller and, where applicable, the controller’s representative, shall maintain a written record (which includes the electronic format) of processing activities under its responsibility. That record shall contain the following information:
- the name and contact details of the controller and, where applicable, the joint controller, the controller’s representative and the data protection officer;
- the purposes of the processing;
- a description of the categories of data subjects and of the categories of personal data;
- the categories of recipients to whom the personal data have been or will be disclosed including recipients in third countries or international organisations;
- where applicable, transfers of personal data to a third country or an international organisation, including the identification of that third country or international organisation and, in the case of transfers referred to in the second subparagraph of Article 49(1), the documentation of suitable safeguards;
- where possible, the envisaged time limits for erasure of the different categories of data;
- where possible, a general description of the technical and organisational security measures in place.
Without prejudice to the fulfilment of this obligation being imposed by the GDPR, we have verified that the preparation of this record has allowed companies to become more aware of all the processing activities they carry out, many of which were not adequately perceived, and has allowed to eliminate some processing activities that were unnecessary and concentrating efforts and resources on those processing activities that are actually important for the business activities carried out.
The preparation of the record of processing activities has, from a practical point of view, been an important aid for companies in reorganizing their processing practices and activities.
Regarding the obligation to appoint a Data Protection Officer (DPO), an obligation on which we have been consulted several times, it should be clarified that this appointment is only mandatory in some cases. For companies, this obligation only exists when they process sensitive data or data relating to criminal convictions and infractions, on a large scale or when they carry out large-scale processing relating to the regular and systematic control of data subjects.
The DPO does not require professional certification for this purpose and regardless of the nature of their legal relationship, they carry out their functions with technical autonomy vis-à-vis the entity responsible for the processing.
The CNPD does not specifically assess whether a data controller must appoint a DPO. It is the controller who is responsible for assessing, in each situation, whether the data processing carried out by the organization requires the appointment of a DPO. However, the CNPD will not fail to apply the corresponding sanction if it is called upon to assess a situation of lack of appointment of a DPO, when this appointment would be mandatory.
The appointment of the DPO must be registered with the CNPD, by filling out a specific form.
It is also important to bear in mind that different companies can share the same DPO, either because they belong to the same business group, or because they belong to associations or other bodies representing companies that have chosen to appoint a common DPO. It should be noted that, if the company belongs to an international group, the DPO that is in another EU Member State can be shared.
Another important obligation of data controllers, which translates into a need for interaction with the supervisory authority, is the impact assessment on data protection.
Some data processing activities, due to the volume of data that are processed and the nature of the data that are processed, particularly if they belong to categories of sensitive data (health data, biometric data, data that reveal racial or ethnic origin, political opinions, among others) or when profiles have been defined and, as a result, automated decision-making is carried out, require (before beginning) a prior assessment of the impact that these processing activities may have.
The objective of this assessment is to identify the risks of the intended processing activities and to identify the measures that allow mitigating those risks.
If, despite the mitigation measures that may have been identified, the processing is considered to pose a high risk to the rights and freedoms of individuals, the controller must prior consult with the CNPD.
This obligation is an exception to the paradigm introduced by the GDPR which, from a prior authorization regime, now enshrines an a posteriori supervision regime, which allows, as a rule, processing activities to be continued without the need for any prior authorization by part of an administrative supervisory authority.
Once again, these impact assessments have an important practical effect, raising awareness among entities, and their employees and managers, about the data processing activities they carry out, their effects and their actual need.
A final obligation, one that involves close interaction with the CNPD, is the obligation to report data breaches – the obligation that everyone will want to avoid.
In the event of a security breach that causes, accidentally or unlawfully, the unauthorized destruction, loss, alteration, disclosure, or access to personal data transmitted, preserved or subject to any other type of processing, likely to constitute a risk to the rights and freedoms of data subjects, the controller is obliged to report such incidents within a maximum period of 72 hours after becoming aware of them.
This report is made online, using a specific form provided by the CNPD.
There are several elements of information that must be provided, particularly those relating to the nature of the incident, the type of data accessed, the number of data subjects affected, whether and how they have already been informed about the incident, what are the measures that were implemented by the controller, among many others.
The moment of reporting a data breach can also be used by the controller as a moment to revisit the security measures it has in place, to assess whether they are adequate or whether, alternatively or in a complementary way, other measures should be adopted.
The regime applicable to the processing of personal data is a demanding regime that involves an enormous effort of self-evaluation. We are all aware of the self-forgiveness we have in evaluating ourselves and our processes. Therefore, the moments when we must comply with a certain type of reporting/information obligations are of the greatest relevance. Those are moments when we necessarily must pause and consider, to properly assess the methods and procedures adopted.
This rigor will be an important ally in complying with data protection laws and regulations!
Contributors: Data Privacy and Data Protection department of Raposo Bernardo | please contact lisboa@raposobernardo.com
THE PORTUGUESE REAL ESTATE MARKET
The construction and real estate sectors have historically made a high contribution to Portugal’s GDP.
The general perception is that the country is an attractive destination for investment in these sectors.
Until recently, its main cities offered average prices per square meter significantly lower than the average prices per square meter of the main European and world cities, and its tourist areas, especially in coastal areas, also had very competitive prices and quality. Let us not forget that Portugal has been gaining increasing notoriety as a tourist destination and the second home market in the country has been highly sought after by foreigners. The short-term rental market for tourism (Alojamento Local) has also seen notable growth in recent years.
These factors, associated with the quality of life, cosmopolitanism, climate, its relative proximity to central Europe, the social peace that exists in the country, its gastronomy, its history, as well as many other factors, have constituted an important attraction factor for investors in the real estate and construction markets in Portugal.
This external demand is associated with an important internal demand since, traditionally, and due to policies encouraging the acquisition of their own home, the Portuguese usually favour the purchase of their permanent home over renting a house.
Even though, in global terms, the development figures for the construction and real estate market are quite positive, we cannot fail to point out that the country is quite asymmetrical. The coastal areas, close to the two large cities – Lisboa and Porto – and the main centres of tourist development, in the Algarve, on the Alentejo Coast and on the coast north of Lisbon, have seen enormous development and growth, in contrast to a rural interior, each increasingly deserted and which, with a few exceptions, does not seem to keep up with this growth and investment attraction pace.
The interest rates increase (with a clear impact on property acquisition costs) and the increase in rents (the result of years of distrust among tenants and owners regarding the stability of the rental market and the legal regime that supports it and, in recent times, due to the inflation rate increase (the main reference for updating rents)) have in recent times constituted an increasing difficulty in accessing housing for lower-income classes and, also, for increasingly larger segments of the middle class.
In order to counterbalance this environment, the Government has been adopting a set of measures that favour the housing market, which are not always consensual and which have involved, for example, limiting rent increases, limiting the installation of new units of Alojamento Local, especially in locations with greater scarcity of rental offer, in the deferral of payment of part of the interest on loans for the purchase of permanent housing.
Without prejudice to the foregoing, we believe it would be useful to present the general outline of the regimes for purchasing property and renting residential property in Portugal, considering the interest in both types of transactions shown by clients in recent times.
Property purchase in Portugal
Buying property in Portugal can be achieved under two essential forms:
– asset purchase
– purchase of the SPV owning the asset
The purchase of a real estate asset begins with its identification. In Portugal there are many real estate agents, who must be licensed with IMPIC (the construction and real estate market supervision authority), making it possible to consult the database of licensed agents. As a rule, especially in the case of purchasing real estate for housing, the mediator’s commission is paid by the seller.
Depending on the type and purpose of the transaction, especially in transactions of a more complex nature, after identifying the property, a memorandum of understanding or letter of intent may be signed, which allows the parties to move forward with the negotiation at the same time as the buyer evaluates specific details of the property, namely those regarding its licensing, urban planning issues, registration and other legal aspects, maintenance, etc.
In this type of documents, it is common to insert clauses that prevent the seller from negotiating with other potential interested parties while the memorandum or letter of intent is in force.
In the case of transactions that involve the purchase of a SPV it must also be subject to due diligence.
If the buyer’s interest in the property remains after the due diligence carried out (or even in cases where no type of due diligence has been carried out), it is common to sign a purchase and sale promissory agreement.
This type of agreement, essential for example in the transaction of properties still under construction, establishes a set of obligations for both contracting parties and may also provide for the conditions to which the definitive transaction is subject.
Once again, the complexity of the promissory agreement depends largely on the specific aspects of the transaction in question, but it is possible to immediately point out a set of aspects that are necessarily foreseen in this type of instrument.
For example:
- Fulfilment of payment obligations by the buyer – with the conclusion of the agreement, it is customary to pay a deposit (which the buyer may lose in the event of breach of contract attributable to him), as well as schedules for reinforcing this deposit, especially in the case of properties under construction, in which these reinforcements shall be paid as construction progresses and as long as certain conditions are met by the seller.
- The fulfilment of certain obligations by the seller, such as guaranteeing the exercise of the right of preference to whoever benefits from it, obtaining certain registrations, licenses, authorizations that are necessary for the transaction, carrying out certain renovation or conditioning work on the property, etc.
- Among the most common conditions precedent for the transaction to be completed are: that no holder of the right of preference exercises it, the buyer obtaining bank financing, the completion of construction work within the stipulated deadlines.
The promissory agreement also establishes the deadline for executing the definitive agreement.
As already stated, many property transactions, especially those carried out by national citizens, benefit from bank financing.
Normally, this financing takes place through a mortgage guaranteed loan, in which the property constitutes a guarantee for the fulfilment of the obligations arising from the loan agreement for the borrower. Transactions involving mortgage guaranteed loans are, without much doubt, the most common in Portugal, especially in the situation of acquiring permanent housing.
The amount of the loan to be granted is, obviously, subject to the appraisal of the property.
Although the sales value is typically agreed between the parties, ultimately defined by the seller, in transactions resourcing to bank financing the value of the appraisal carried out by the bank is essential to determine the granting of the loan and its amount.
The completion of a real estate transaction requires that buyers, even foreigners, have a tax identification number (NIF) assigned by the Tax Authority. This NIF is essential for paying taxes and fulfilling other tax obligations, for example of a declaratory nature, relating to the property.
As we have already had the opportunity to point out, there is a set of documentation relating to the property that must be analysed and confirmed by the purchaser.
Among these documents we highlight the following:
Caderneta Predial – Document issued by the Tax and Customs Authority containing data relating to the tax status of the property, namely its description, its value for tax purposes, etc.
Land Registry Certificate – Document issued by the Land Registry Office that contains information about the location and composition of the property, the identification of the respective owners, as well as the existence of burdens and charges that affect the property.
Use Permit – document issued by the Town Hall that indicates the permitted use for a given building or unit: housing, or non-housing purposes (commerce, services or industry). This document is issued at the conclusion of the construction process, and therefore also certifies that a given property meets all legal requirements (safety against fire risks, healthiness, habitability, for example).
Energy certificate – Document issued by the National Energy Agency, which records the energy efficiency of the property.
Property technical sheet – Document that indicates the main technical and functional characteristics of the property.
Declaration of no debt to the condominium – this document guarantees that there are no debts to the condominium, when the property is a unit in this type of real estate development. In this regard, it is worth noting that, when purchasing a unit, the condominium regulations must be analysed and, if the property is part of a tourist development, the rules that regulate that specific development must be analysed as well.
The definitive property purchase agreement may be concluded through a deed executed before a notary or through an authenticated private document formalized before, among others, a lawyer.
Typically, the documentation required to formalize the transaction documents is as follows:
- Identification and tax identification documents of the parties involved;
- Land registry certificate;
- Caderneta Predial issued by the Tax and Customs Authority;
- Use permit (in the case of properties built after August 1951);
- Property Technical Data Sheet (if the use license was issued after 03/30/2004);
- Energy Certificate;
- Proof of IMT (tax on immoveable property transactions for valuable consideration) payment;
- Documents waiving the pre-emption right (when applicable);
- Statement of no debts to the condominium (when applicable).
Among these documents is the proof of IMT payment.
The IMT is the tax usually levied on property transactions and is calculated over the value of the transaction or, alternatively, the value of the property for tax purposes, whichever is higher.
The IMT calculation varies according to the value of the property, its location, and its purpose. The tax must be paid before the transaction and proof of payment is part of the completion documents, as already mentioned.
In addition to IMT, there are other taxes relating to the ownership and transaction of real estate.
First of all, IMI – this tax is an annual tax, calculated on the taxable value of properties. The definition of IMI rates is annual and made by the municipality where the property is located, which stipulates a rate within a range defined by the IMI Code. Currently, this range is between 0.3% and 0.5% for urban properties already appraised under the terms of the IMI Code, and between 0.5% and 0.8% for the remaining urban buildings.
Capital gains generated by the sale of properties will also be taxed under income tax (IRS or IRC, depending on whether the taxpayer is a natural or legal person).
The transaction will also give rise to the payment of Stamp Duty – a tax that falls on acts and contracts – particularly if it is concluded by public deed and the transaction involves bank financing.
These are, in necessarily very broad terms, some of the essential aspects relating to the sale and purchase (and ownership) of immoveable properties.
Property rental
The property rental legal regime in Portugal is a complex regime, therefore difficult to summarize in the limited space we have.
The lease agreement is the contract by which one of the parties (landlord, usually the owner of the property) undertakes to provide the other (tenant or lessee) with the temporary enjoyment of an immovable property, through periodic monetary payments (rent).
The lease agreement of urban properties may be for housing or non-housing purposes (for example, commercial purposes) and may also be of short duration for tourism purposes. The latter should not be confused with Alojamento Local, a specific regime for the tourist exploitation of properties.
The lease agreement must be concluded in writing, under penalty of nullity. It is customary to certify the signatures of the contracting parties.
In addition to the landlord and tenant, any guarantors, if any, will also be a party to the agreement.
Usually landlords, before signing the agreement, ask tenants for proof of their income and for tenants to ask landlords for documentation relating to the property, such as an updated land registry certificate and caderneta predial, the use license, the energy certificate, or other relevant documents within the scope of the agreement.
It is natural for landlords to ask for a deposit (which usually consists in a number of rents in advance) as a guarantee of compliance with the agreement and of repair of any damage to the property upon delivery following the contract termination.
As we have already explained, the lease agreement must be concluded in writing and does not require any additional formalities, except if it is concluded for a period of more than 6 years, in which case it will be subject to registration.
The lease agreement must include:
- Identification of the parties (landlord, tenant and guarantors (if any))
- The location of the property
- The date and number of the use permit and energy certificate
- Description of the property
- The purpose for which the property is rented
- The duration of the agreement
- The amount of the rent, the payment method and how it can be updated
The agreement must also provide for possible guarantees; in the case of housing rentals, the most common guarantees are the advance payment of rent and the existence of a guarantor, but they could also be bank guarantees or other types of guarantees that the parties consider appropriate.
It is also common for the agreement to provide for rules applicable to its renewal, or opposition to it, whether and under what terms it may be terminated, rules relating to the maintenance and conservation of the property and how to return it at termination. It must be borne in mind that the termination of lease agreements for housing purposes is subject to an imperative legal regime. In agreements for non-housing purposes there is greater freedom for the parties to define these rules.
Regarding the updating of rent, in housing agreements, takes place each year in accordance with the index published annually by the Government, which considers the values of inflation.
The general rule is that the tenant cannot transfer its contractual position or sublet the property without the landlord’s prior consent. If the property is sold, the landlord’s contractual position is transferred to the new owner. In this regard, it is important to note that, in certain circumstances, the tenant will enjoy the right of preference when the landlord sells the property.
When the leased property is a family home, the law confers certain rights on the tenant’s spouse, for example upon termination of the agreement, in the event of divorce, etc.
It is also important to bear in mind that lease agreements are subject to registration with the Tax Authority, with a set of obligations regarding the issuance of rent receipts, declarative obligations and others of a tax nature that must be carefully evaluated and considered before concluding any such agreement.
Last minute
Like in many other countries, Portugal has been experiencing a huge shortage of affordable housing in recent years, for the lower income classes and even for some segments of the middle class, in the main urban centres and its outskirts.
This shortage occurs both in properties for sale and in properties for rental.
There are many causes identified for this situation, some that have been going on for many years – such as the lack of harmonious development of the national territory, which has led to a concentration of the population on the coastal strip and, especially, near the large centres – and more recent ones, such as the increase in interest rates, the increase in inflation, the decrease in the number of homes built or under construction or, allegedly, the increase in demand from foreign investors willing to pay higher prices per square meter.
There is no true consensus on the causes that give rise to the existing situation, nor on the solutions for it.
However, everyone seems to agree that there is a problem.
In an attempt to address this problem, the Government has been presenting a set of measures aimed at resolving the so-called housing crisis.
Not all of these measures are consensual, nor have they been in force long enough for their effects to be measured.
These measures consist, for example, of the possibility of converting commercial properties to housing use, without the need to review land use plans or use permits.
Steps are also being taken towards simplifying licensing procedures, speeding up construction projects.
A program was created, aimed at increasing landlords’ confidence in the rental market, through which the State leases properties to owners, to sublease them to tenants who meet certain requirements.
Limits were also introduced on the granting of new alojamento local licenses in certain areas of the country – new licenses will only be granted in rural areas – and a system of incentives will be created for the transfer of properties under alojamento local arrangements to rental.
The end of the so-called Golden Visas (residence permit for investment) for real estate investment is another measure that has been approved to which can be added several other measures that it would be tedious to list here.
What can be taken for granted is that legislation relating to the real estate sector has undergone, and will probably continue to undergo, many and, in some cases, profound changes.
For that reason, any property owner or investor who intends to purchase a property in Portugal should be particularly attentive, actively monitor legislative changes that occur and, above all, seek advice from qualified professionals, especially lawyers, regarding how these changes may concretely affect its situation or plans.
Contributors: Real Estate and Construction department of Raposo Bernardo | please contact lisboa@raposobernardo.com
NEW PARADIGMS IN TRANSPORT (STRUCTURES, SAFETY AND SPEED. INTERMODALITY)
CONTEXT
The transportation sector in Portugal is composed of a wide variety of transportation modes, including road, rail, air, maritime, and river transport. The country has a highly developed transportation network that connects major cities and regions, both on the mainland and in the autonomous regions of the Azores and Madeira.
Regarding road transport, Portugal has an extensive network of roads that connects the country to other European nations and also offers a wide range of public transportation services, including buses, trains, and metros. Road transport is responsible for a large part of the freight transport in the country.
Rail transport is also an important part of the transportation sector in Portugal. The country has a high-speed rail network that connects major cities and regions of the country, in addition to offering international services to other European countries. Rail transport is a popular option for longer trips within the country, as it is a more environmentally friendly and economical alternative to road transport.
Air transport is another important part of the transportation sector in Portugal. The country has several international airports that connect the country to other parts of the world, with special emphasis on the airports of Lisbon, Porto, Faro, Madeira, and Azores.
Maritime and river transport are also an important part of the transportation sector in Portugal, especially due to the country’s geographical position on the Atlantic coast. The country has several important maritime ports, which are responsible for the transport of goods, as well as being a popular destination for cruises. River transport is less developed, but there are some routes that connect the country to other regions.
In terms of regulation, the transportation sector in Portugal is regulated by the Ministry responsible for the transportation area, as well as by the Mobility and Transportation Authority. As the country is also a member of the European Union, it is naturally subject to various European regulations and guidelines in the transportation sector.
MAIN TRENDS IN THE SECTOR
The transportation sector is one of the main pillars of the Portuguese economy, playing a significant role in trade and mobility for both Portuguese citizens and foreign visitors. In recent years, the sector has undergone various changes and evolutions, from vehicle electrification to the emergence of new mobility solutions. We will now identify the current trends in the transportation sector in Portugal:
1. Vehicle Electrification
One of the most notable trends in the transportation sector in Portugal is the electrification of vehicles. Portugal has been one of the leading countries in adopting vehicle electrification, with tax incentives and a wide and accessible charging network. In 2021, over 20% of the new vehicles sold in Portugal were electric or plug-in hybrids, which is one of the highest rates in Europe. Vehicle electrification is not only a trend in Portugal but also worldwide, due to environmental concerns and CO2 emission reduction goals. The trend is that more and more vehicles will be electrified in the coming years.
2. Sustainable Urban Mobility
Another important trend in the transportation sector in Portugal is the pursuit of more sustainable solutions for urban mobility. Portuguese cities have been working on solutions to reduce private vehicle traffic, make cities more pedestrian and cyclist-friendly, and promote the use of public transportation and electric vehicles. Lisbon and Porto, in particular, have been pioneering cities in sustainable urban mobility initiatives, including the expansion of the metro system, the creation of bike lanes, and the promotion of electric vehicle usage.
Among the sustainable urban mobility trends that are gaining momentum, the following deserve special attention:
- Bicycles and bike lanes: Bicycles are becoming increasingly popular as a sustainable urban transportation mode. Many cities are investing in bike lanes to make the streets safer for cyclists, in addition to implementing bike-sharing systems.
- Public transportation: Public transportation is one of the most sustainable forms of urban mobility. Many cities are investing in more efficient and sustainable public transportation systems, including the use of electric buses.
- Electric cars: Electric cars are one of the most promising solutions for sustainable urban mobility, as they do not emit pollutants and do not rely on fossil fuels. Many cities are incentivizing the use of electric cars through policies and charging infrastructure.
- Sharing solutions: Such as car sharing and ride-hailing systems, are gaining popularity in many cities. These solutions can reduce the number of vehicles on the roads, making urban mobility more efficient and sustainable.
- Multimodal transportation: The use of different modes of transportation in a single trip, known as multimodal transportation, is already a reality in Portugal.
3. Use of technology
The transportation sector in Portugal has been influenced by technological innovations, from transportation apps to satellite navigation systems and fleet monitoring systems.
The use of technology has allowed transportation companies to improve the efficiency of their operations, reduce costs, and enhance the customer experience. Additionally, the use of data and artificial intelligence has helped transportation companies optimize their routes and offer better services to customers.
4. New transportation solutions
The transportation sector in Portugal may benefit from new mobility solutions in the coming years. For example, the University of Coimbra has a project for an autonomous vehicle being developed for public transportation. Additionally, delivery drones and air transportation solutions may become more common in Portugal, especially for freight transportation.
5. Regulations
The Portuguese government has implemented various policies and regulations to drive sustainability and efficiency in the transportation sector. For example, Portugal is one of the leading countries in Europe in terms of tax incentives for electric vehicles. Additionally, the country has implemented regulations to reduce CO2 emissions from vehicles and improve the energy efficiency of buildings and public transportation.
POSSIBLE EVOLUTIONS IN THE TRANSPORTATION SECTOR IN PORTUGAL
While current trends provide insight into what is currently happening in the transportation sector in Portugal, it is important to remember that the future is uncertain. However, it is possible to point out some possible evolutions that may positively affect the transportation sector in the coming years.
- Mass adoption of electric vehicles
It is likely that the use of electric vehicles will continue to grow in Portugal in the coming years, considering the various incentive policies implemented, including subsidies for the purchase of electric cars and the expansion of the charging network. Additionally, battery technology may continue to evolve, making electric vehicles more accessible and more attractive to consumers.
- Integration of different transportation modes
A possible evolution in the transportation sector in Portugal is the integration of different modes of transportation, such as bicycles, public transportation, and private cars. This integration can be promoted through apps that offer a multimodal transportation experience, allowing users to plan and pay for their trips across different transportation modes. Additionally, the Portuguese government may implement policies that encourage the use of public transportation and shared vehicles.
- Increase in Sustainable Mobility
It is likely that Portuguese cities will continue to seek solutions to improve sustainable urban mobility, with a reduction in private vehicle traffic and an increase in the use of public transportation, bicycles, and electric vehicles. Policies may be implemented to encourage the construction of more bike paths and the promotion of bike use as a means of transportation. In addition, there may be more investment in public transportation to make it more accessible and efficient.
- Use of Advanced Technologies
Transport companies are likely to continue investing in advanced technologies such as artificial intelligence and data analysis to improve the efficiency of their operations and offer better services to customers. In addition, new mobility solutions may emerge, such as autonomous vehicles and drones.
CHALLENGES OF THE TRANSPORT SECTOR IN PORTUGAL
The transportation sector in Portugal also faces significant challenges. Like in other European countries, the transportation industry has high demand and is expected to continue to grow. Estimates suggest that passenger transport will increase by 42% and freight transport by 60% by 2050. While this is good news for the economy as a whole, it also presents significant challenges to the transportation network and the environment. Current limitations in processing capacity are already putting pressure on the sector, leading to increased costs for citizens and businesses, negatively impacting economic growth.
Experts have noted that solutions to these structural challenges must also address environmental issues, especially in reducing greenhouse gas emissions. Climate change is currently one of the biggest challenges facing the transportation sector in Portugal, and established environmental targets should not be overlooked. The transportation sector is a significant contributor to greenhouse gas emissions, and reducing emissions and making the sector more sustainable is a major challenge. The adoption of more efficient and sustainable transportation technologies, such as electric vehicles and low-carbon public transportation, can help reduce environmental impacts while creating opportunities for sustainable and inclusive economic growth.
These are challenges that must be faced with a consistent and diversified strategy, taking into account the new socioeconomic framework and technological developments.
The transport sector is a crucial part of the global economy, enabling the movement of goods and services and connecting people to job opportunities, education, and other resources.
Transportation relies on infrastructure such as roads, bridges, ports, and airports. Inadequate infrastructure can also negatively affect transport efficiency, increasing logistics costs, and affecting business competitiveness.
Transportation safety is also a major challenge in Portugal. The adoption of safety technologies such as proximity sensors and speed control systems can help reduce the number of traffic accidents and improve transportation safety.
In addition to all of that, there is also the challenge of financing and investment. These are fundamental aspects to ensure the efficiency and sustainability of the sector. However, it is often difficult to secure sufficient financing and investment to meet the sector’s needs. Therefore, the search for new sources of funding, such as public-private partnerships and investments in innovative transportation technologies, can help address this challenge.
THE IMPACTS OF THE WAR IN UKRAINE ON THE TRANSPORT SECTOR IN PORTUGAL
The crisis in Ukraine has also impacted the transportation sector in Portugal by affecting the flow of trade and energy, increasing costs, and creating uncertainty regarding future supply. To address these challenges, some solutions have been implemented in Portugal.
One of the implemented solutions was the search for alternative transportation routes. Portuguese transportation companies sought alternative routes to transport goods between Europe and Asia, avoiding Ukraine and using alternative sea and land routes. This helped to reduce the dependence of Portuguese companies on Ukraine as a transit hub for the transportation of goods.
Another solution was the promotion of alternative energy sources. Uncertainty regarding energy supply from Russia led to greater promotion of alternative energy sources in Portugal, such as solar and wind energy, to reduce dependence on imported energy sources and improve energy security. Efforts were also made to improve transportation infrastructure in Portugal, including investments in ports and airports. This helped to increase transportation efficiency in Portugal, reducing costs and improving the competitiveness of Portuguese companies.
In addition, Portuguese transportation companies have diversified their activities, exploring new markets and transportation services to reduce dependence on a single sector or market.
These solutions have helped to mitigate the negative impacts of the crisis on the transportation sector in Portugal.
DYNAMICS IN THE TRANSPORT SECTOR IN TERMS OF M&A
In recent years, there has been a significant number of mergers and acquisitions (M&A) in the transport sector in Portugal, with national and international companies aiming to expand their operations and strengthen their market position.
A recent example of a major M&A operation in the transport sector in Portugal was the acquisition of a major Portuguese operator by one of the largest urban transport companies in Spain, in order to expand its presence in Portugal and increase its market share in urban transport throughout the Iberian Peninsula.
Another significant operation was the acquisition of one of the largest urban transport operators in Lisbon by another Portuguese logistics and transport company. The acquisition allowed the acquirer to expand its urban transport operations in Lisbon and increase its market share in the transport sector in Portugal.
In addition, there have been other M&A operations in the cargo transportation sector in Portugal, involving a German logistics company.
THE ELECTRIC MOBILITY PROGRAM
In Portugal, a true ecosystem is being created in the transportation sector, driven primarily by the electric mobility program. This is an ambitious program that has a direct relationship with the transportation sector in the country, as its main objective is to encourage the adoption of electric vehicles as an alternative to combustion engine vehicles.
In recent years, electric mobility has been gaining more and more ground in the world, especially in countries that seek to reduce greenhouse gas emissions and decrease dependence on fossil fuels. Portugal is an example of a country that has invested in electric mobility programs, encouraging the adoption of electric vehicles and the development of the necessary infrastructure.
The electric mobility program in Portugal was launched in 2010 by the Portuguese government and aims to encourage the adoption of electric vehicles, the creation of a charging network, and the promotion of technological innovation. Since then, Portugal has stood out in the adoption of electric vehicles, with over 100,000 electric vehicles in circulation and a well-developed public charging infrastructure throughout the country.
One of the main incentives for the adoption of electric vehicles in Portugal are the tax incentives. The Portuguese government offers a series of tax incentives for the purchase of electric vehicles, including exemption from the Vehicle Tax (ISV) and the Single Circulation Tax (IUC).
Another incentive for the adoption of electric vehicles are the financial incentives offered by the Portuguese government. Companies and individuals can benefit from subsidies and low-interest credit lines for the purchase of electric vehicles.
The incentives make the acquisition of electric vehicles more accessible for the population and companies.
In addition to incentives for the adoption of electric vehicles, the electric mobility program in Portugal has also invested in creating a public charging network. Currently, there are over 5,000 charging points throughout the country, making electric mobility more accessible and convenient for electric vehicle drivers. The Portuguese government has also created technical standards and safety requirements for the installation of charging stations in public and private locations.
The electric mobility program in Portugal also encourages research and development of electric mobility technologies. There has been significant investment in the research and development of battery technologies and intelligent charging systems, which has allowed for the development of more advanced solutions for electric mobility.
Public awareness is also an important aspect of the electric mobility program in Portugal. Public awareness campaigns about electric mobility are frequently carried out, increasing awareness and promoting the adoption of electric vehicles. In addition, the program includes an initiative to certify technicians for the installation and maintenance of electric vehicles and charging infrastructure, ensuring the quality of the services offered for electric mobility.
The adoption of electric vehicles has brought a number of benefits to Portugal. The reduction of greenhouse gas emissions has contributed to the country meeting its emissions reduction targets set in the Paris Agreement. In addition, the adoption of electric vehicles has generated jobs and contributed to the growth of the Portuguese economy. The reduction of noise and improvement of air quality also have positive impacts on the quality of life for Portuguese citizens.
In European terms, Portugal performs well in terms of electric vehicle adoption. Portugal ranked third in the electric vehicle adoption ranking in Europe, behind only Norway and the Netherlands. The well-developed charging infrastructure, fiscal and financial incentives, and investment in research and development are some of the factors that contribute to Portugal’s prominence in electric mobility in Europe.
It is likely that legislative developments will occur in the transport sector in Portugal in the near future, particularly regarding electric mobility. Some of the legislative changes in prospect include:
- More ambitious targets for emissions reduction: Portugal has committed to increasingly ambitious targets for reducing greenhouse gas emissions. Legislative developments may encourage the adoption of electric vehicles and other sustainable mobility solutions to achieve these targets.
- Expansion of charging infrastructure: There are areas where coverage needs to be expanded. Legislative changes may occur to accelerate the installation of charging stations throughout the country, making electric mobility more accessible.
- Regulation of shared mobility services: Shared mobility services, such as shared cars and bicycles, have become increasingly common in Portugal. Legislative changes may occur to regulate these services and ensure their safety and quality.
- Promotion of intermodality: Intermodality is a way of promoting the use of different modes of transportation in a single trip, reducing dependence on individual transportation. Legislative changes may occur to encourage intermodality and make it more accessible for Portuguese citizens.
Portugal has shown enormous potential for exporting solutions in the framework of the electric mobility program. The country has been recognized as a reference in electric mobility and has invested in innovative solutions that can be applied in other countries. Some of the solutions in which Portugal can stand out include:
- Intelligent charging infrastructure: Portugal has invested in smart charging solutions that allow for more efficient management of the electrical grid and avoidance of overloads. This solution can be applied in other countries that are developing the charging infrastructure for electric vehicles.
- Energy storage systems: Portugal has invested in energy storage solutions that enable the integration of renewable sources into the electrical grid more efficiently. This solution can be applied in other countries that are developing their renewable energy infrastructure.
- Shared mobility: Portugal has encouraged the adoption of shared mobility solutions, such as shared cars and bicycles. This solution can be applied in other countries that are facing problems with congestion and air pollution in cities.
- Electric vehicle development: Portugal has supported the development of electric vehicles, especially with regard to battery manufacturing. This solution can be applied in other countries that are trying to develop their electric vehicle industry.
In addition, Portugal has a strategic geographical location that could allow for the export of electric mobility solutions to other countries in Europe and Africa. Its proximity to the African continent, in particular, could enable Portugal to develop electric mobility solutions to meet the specific needs of that region.
We believe that trust will be the determining factor for the future of electric mobility, given its current state of development and implementation. Consumers need to have confidence in the technology, charging infrastructure, safety, total cost of ownership, and reliability of electric vehicles. If these concerns are successfully addressed, electric mobility has great potential to become an attractive option for most consumers.
Contributors: Transport department of Raposo Bernardo | please contact lisboa@raposobernardo.com