This content is from: Local Insights

Portugal

In the August issue of IFLR, our article contained an omission that we would like to amend. Where the article read: "as such the Portuguese Securities Market Commission holds that, considering that until the options are exercised there is no obligation on the part of the employee, there is no reason (...) to extend protection (...) to the employee in his capacity as beneficiary of the option, prematurely, as long as he remains the recipient of a (potential) future stock option". It should have read: "as such the Portuguese Securities Market Commission sustains that, considering that until the options are exercised there is no obligation on the part of the employee, there is no reason (...) to extend protection (...) to the employee in his capacity as beneficiary of the option, prematurely, as long as he remains the recipient of a (potential) future stock offer".

As mentioned in the earlier article, the understanding of the Portuguese Securities Market Commission (CMVM) in the case discussed, resulted not only from the interpretation of the new Securities Code, but also from the application of those rules to the specific traits of the case submitted to the CMVM.

However, and as also mentioned in our previous article, such understanding cannot and should not be generalized, as the type of procedure adopted by the CMVM in face of each plan depends on the specific traits of each. For example, if the moment the beneficiary of the plan executes his investment decision (eg by debiting respective account or by salary withholding) differs from one Plan to another (eg the moment of the granting of the option/moment of share subscription), this may be enough to alter the CMVM's view. This, due to the fact that one of the most relevant criteria for considering a stock option plan as an offer of securities is the need to protect investors when they effectively begin exercising their investment decision. At this moment, it is necessary to submit the offer to the constant control of the rules that protect investors contained in the Securities Code and to the Securities Market Commission.

The rules related to the offer of securities foreseen in the Securities Code, notwithstanding the nature of the offer, are essentially aimed at protecting the beneficiaries of the offer.

Sofia Gouveia Pereira

Instant access to all of our content. Membership Options | One Week Trial