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Portugal

The Portuguese Capital Markets Commission has enacted a regulation determining the terms and conditions for the direct listing of foreign securities on the Portuguese Stock Exchange.

Regulation 17/98 expressly regulates the listing of securities issued by non-residents in the official market - the first stock exchange market - where only the most attractive and liquid securities are listed.

Foreign securities can be listed only in the official market. This is because, among other things, its listing rules are more demanding, in particular with regards to the issuer's legal status, the need to assure capital dispersion and the disclosure obligations. This will ensure investors have more accurate knowledge of the listed securities.

The regulation adopts an equalization principle, which applies listing rules in a similar way to that of a foreign issuer's national stock exchanges. It applies to listing requirements such as market capitalization, periodic disclosure of accountancy statements, sound economic and financial status, and to disclosure obligations such as price sensitive information.

According to the regulation, a financial intermediary must assure the link between the foreign issuer and the Portuguese market. Only banks authorized to perform these activities in Portugal can act in this capacity; filing the securities listing petition in the stock exchange, assuring the exercise of inherent rights, disclosing the relevant information and overseeing that the securities are listed, and therefore tradable in Portugal. The securities will be registered in the Portuguese central depository for trading purposes, thus assuming book-entry form.

Listing prospectuses will benefit from the EU's mutual recognition principle. Other prospectuses will require previous approval by the Capital Markets Commission.

Foreign issuers with listed securities can disclose financial information according to Portuguese or internationally accepted accountancy standards.

The dispersion of the securities listed can be proved through its historical records in foreign stock exchanges, as well as its trading liquidity and regularity.

The Portuguese Stock Exchange expects to gain more market capitalization with the listing of foreign securities, increasing the growth of trading volumes and foreign investment.

This new possibility of listing foreign securities is also a result of Portugal's integration in the process of globalization as a fully participating member state in the first group of countries to adopt the euro in 1999.

Miguel Castro Pereira

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