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03 July 2009
The Portuguese legislature has once again reacted to the problems in the financial sector, introducing changes to: (i) promote the disclosure of information about remuneration at management and supervisory board level in public-interest entities; and (ii) revise the penalty regime for breach of duty by credit institutions, insurance undertakings and participants in regulated security markets.
The changes introduced by Law 28/2009, which was issued on June 19 2009, directly concern the banking sector, credit institutions and other financial companies because the law has adopted the concept of 'public interest entity' given in Legislative Decree 225/2008, which implemented the EU Statutory Audits Directive (2006/43/EC).
All credit institutions(1) must present their general shareholders' meeting with a detailed statement on board remuneration. The disclosure must cover details of the mechanisms linking remuneration to the institution's performance, as well as information about other forms of variable income and stock option plans. This statement must be published with the credit institution's annual financial statements.
The law also introduces changes regarding penalties applicable to credit institutions and financial companies. One of the main changes is the introduction of a new conduct rule and a penalty of up to €5million. Credit institutions cannot grant credit of over €15,000 to offshore entities if the borrower is located in a jurisdiction that is deemed 'uncooperative' by the Bank of Portugal or if the borrower's ultimate beneficiary is unknown. Credit institutions must prepare a special register of transfers to offshore entities, which must be periodically disclosed to the Bank of Portugal.
For further information on this topic please contact Manuel Magalhães or Francisco Mendes Correia at Cuatrecasas Gonçalves Pereira by telephone (+351 21 355 3800) or by fax (+351 21 353 2362) or by email (firstname.lastname@example.org or email@example.com).
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Francisco Mendes Correia