Markets
Portugal: the price has to be named in the report
Portugal permits the instrument but polices the procedure rather than the price. Article 365 of the Código das Sociedades Comerciais allows convertible bonds, and Article 460 imposes no percentage floor on the issue price. What constrains is the rest of Article 460: the direito de preferência can be lifted only by a resolution taken on its own, on a written report naming the price and the criteria behind it.
Key takeaways
- The resolution must stand alone. Article 460 requires the resolution limiting or suppressing pre-emption to be taken separately from any other resolution, by the majority required for a capital increase. It cannot be folded into the increase itself as a single vote.
- The report has to name a price. Where the board proposes the suppression, its written report must state the justification, how the new shares will be allotted, the payment conditions, the preço de emissão, and the criteria used to determine it.
- Suppression can be granted forward. Article 460 lets the general meeting suppress pre-emption in relation to an increase the board has yet to resolve under Article 456, which is what makes a standing arrangement structurally possible at all.
- The supervisory body sees every board resolution. Under Article 456 the draft goes to the conselho fiscal, the audit committee or the general and supervisory board, and an unfavourable opinion pushes the decision back to the general meeting.
Article 460 is the gate, and it is a paperwork gate
Portuguese law starts from a flat prohibition: the legal right of preference on the subscription of shares may not be limited or suppressed except under the conditions of Article 460 itself. The general meeting resolving a capital increase may do so where the interesse social justifies it, and it may do the same for an increase the board will resolve later.
Two features of that article shape the deal more than any pricing rule would. The resolution has to be taken in isolation, so shareholders vote on the suppression as its own question rather than as a clause inside a larger authorisation. And the report supporting it has to carry an issue price and the criteria behind that price, published at the point of the resolution.
A conversion price discovered against a market window months later is not a price you can put in that report. It is a formula. Whether a stated formula, with its reference period and its bounds, satisfies the requirement is the whole Portuguese question, and it is not settled by the text.
| What the structure needs | What the CSC provides |
|---|---|
| A convertible instrument | Article 365: bonds convertible into shares representing the company's capital or held by it, ordinary or preference, with or without votes |
| Pre-emption lifted for an outside investor | Article 460, on the corporate interest, by a stand-alone resolution |
| Authority to issue again without a meeting | Article 456 authorised capital, up to a ceiling in the articles and for no more than five years |
| Price fixed later, against the market | Not addressed. The report must state the price and the criteria used to determine it |
| A minimum price the investor must respect | None beyond the prohibition on issuing below nominal value |
| Summary of the statute only. Articles 366 and 367 add further conditions on the deliberation and on shareholders' preference over the bonds themselves. | |
What Article 456 costs a facility in practice
The authorised-capital route is the only way to avoid a meeting per drawdown. The articles must fix a maximum amount and a period of no more than five years, and where they are silent on the period it is five years. What is easy to miss is the third paragraph: every draft board resolution under that authority goes to the supervisory body first, and where no favourable opinion is given the board may refer the disagreement to the general meeting.
So Portugal permits a standing authority and then places a standing reviewer inside it. That is workable for a small number of sized tranches with a bounded price. It is a poor fit for a facility drawn opportunistically at whatever the market is doing that week. See equity facilities and convertible debt financing for the shapes that survive that constraint.
General information, not legal advice. Articles 366 and 367 of the Código das Sociedades Comerciais, which govern the deliberation on convertible bonds and shareholders' preference over them, were not available to us in full and are not described here. Whether a formula satisfies the Article 460 report requirement is unsettled. Take advice from qualified Portuguese counsel, and confirm the position with the CMVM where it is in doubt.
Euronext Securities Porto, and the part that is easy
Nothing on the exit side is difficult here. Conversion shares are registered through Euronext Securities Porto, are fungible with the listed line and trade on admission, with no holding period and no resale registration. On Euronext Lisbon, admitting fungible shares is exempt from a prospectus up to 30% of the number already admitted over 12 months, raised from 20% by Regulation (EU) 2024/2809 with effect from 4 December 2024; on Euronext Access Lisbon no admission prospectus arises. Issuers with a US register should read Rule 144 and restricted securities separately. Everything hard about a Portuguese deal happens before issuance.
Where the honest answer runs out
We found no Portuguese listed issuer that has run a committed equity facility or a floating-price convertible with a single outside investor. Euronext Lisbon is a small market and the absence may simply reflect that. But an issuer should not be told that a settled Portuguese convention exists, because we cannot show one. Send the articles, the standing authorisations and the segment and we will tell you which of these questions is actually live for you.
Primary sources
- CSC Article 456 — capital increase resolved by the board
- CSC Article 460 — limitation or suppression of the preference right
- CSC Article 365 — obrigações convertíveis em accoes
- Directive (EU) 2017/1132 — Articles 47, 68 and 72
Financing Portuguese listed issuers: frequently asked questions
Does Portuguese law set a minimum price for a convertible?
Article 460 of the Código das Sociedades Comerciais imposes no percentage floor and prescribes no valuation method. The only hard floor is the prohibition on issuing shares below nominal value or accountable par, which applies across the European Union. What Article 460 does require is that the price and the criteria used to reach it are stated in a written report to the general meeting.
Can pre-emption be suppressed in advance for a facility drawn in tranches?
Article 460 contemplates it. The general meeting may suppress the pre-emption right in relation to a capital increase that the board is yet to resolve under the authorised-capital route in Article 456. That is the structural basis for a standing arrangement. Whether one report can carry a series of drawdowns priced months apart is a question for Portuguese counsel and it is the decisive commercial point.
What is the authorised-capital route in Article 456?
The articles of association may authorise the board to increase capital for cash, once or more than once. The articles must fix a maximum amount and a period of no more than five years, and where no period is stated the period is five years. Each draft board resolution then goes to the supervisory body, and if no favourable opinion is given the board may put the disagreement to the general meeting.
Is there an active market for these structures in Portugal?
We could not identify one. No Portuguese listed issuer was found to have run a committed equity facility or a floating-price convertible with a single outside investor. That is an absence of evidence rather than evidence of absence, but an issuer should plan on being early rather than on following a settled market convention.
If this is about a live situation
Portugal polices the procedure rather than the price, and the written report naming the preço de emissão is what a standing arrangement has to survive. If a general meeting is being convened anyway, the instrument comparison sets out which structures can honestly be described in that report.