This content is from: Local Insights


Portugal will soon have a legal diploma foreseeing and regulating undertakings for collective investments in transferable securities (Ucits) under statute through the form of securities investment companies with variable capital (SICAV) and securities investment companies with fixed capital (SICAF).

There is a legal void regarding investment companies, or more precisely, as regards Ucits under statute, as Ucits were only foreseen in Portuguese law under the form of contract (investment funds), as common funds (no separate legal entities) managed by management companies.

According to the preamble of the project for the new law, the decision - to provide a legal framework for Ucits under statute - comes from the wide acceptance, encountered by foreign SICAV and SICAF already marketed in Portugal, with Portuguese investors. Providing Portuguese economical agents with the same instruments as those available to foreign ones was also significant.

For these reasons, a legal diploma is being prepared, which will regulate the creation of SICAVs and SICAFs. Alongside the specific regulation, which is being prepared - the investment fund's law, the Portuguese Companies Code and the Portuguese Securities Code will be also applicable, as the general legal framework.

Furthermore, the preamble of the new law project highlights that given the similar "functional identity", between contractual Ucits and Ucits under statute, will require the creation of specific rules in order to avoid the favouring of a competitive unbalance as regards one of the types of Ucits. These rules will cover risk diversification, asset valuation and regulation and supervision by the Portuguese Securities Market Commission (CMVM).

In order to set up a Ucits under statute, an authorization process with the Portuguese Securities Market Comission (CMVM) - pursuant to consultation with the Bank of Portugal - will have to be undergone. The Bank of Portugal will also control the capacity and experience of the members of the corporate bodies. Only pursuant to the CMVM authorization (and Bank of Portugal consultation) can the Ucits under statute be incorporated.

All alterations to the by-laws and management regulation of the Ucits under statute must be previously approved by the CMVM.

The authorization process will be conducted by especially designated persons called promotores who will assume the responsibility set out in the new law project.

The preamble of the new law project also points out that by being more specific than investment funds the investment companies require special regulation on two aspects:

At a corporate level - unlike investment funds, investment companies are legal entities, under the form of corporations (sociedade anónima), and therefore all corporate aspects need to be regulated.

At a management level - as regards investment funds there is a complete split between managers and management beneficiaries, as regards investment companies that split is not so defined because managers are at the same time beneficiaries, or at least have the capacity of electing them.

Given the possibility of investment companies being self-managed, the law qualifies them as financial intermediaries, and therefore subjects them to the Portuguese Securities Code, in order to ensure the thoroughness, competence, as well as the human and technical means and the diligence patterns to which investment fund management companies are subject.

Ucits under statute are supervised by the CMVM, which also regulates the carrying out of their activity under a series of aspects enumerated in the new law.

Sofia Gouveia Pereira

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