Decree-Act 75/2017 of 26 June (“DL 75/2017”), approving the rules on appropriation of an asset pledged under a commercial pledge will enter into force on 1 July 2017.
Under DL 75/2017 the parties to a pledge agreement may now lawfully agree in respect of the satisfaction of a commercial obligation that in the event of default by a corporate pledgor, the pledgee may take possession of the pledged asset or right for the value resulting from a valuation made once the obligation becomes overdue (the method and criteria of such valuation must be set out in the pledge agreement).
However, the pledgee is under the obligation of repaying the pledgor the difference between the value of the appropriated asset and the secured amount owed.
Note, moreover, that the parties may only agree appropriation by the pledgee provided that there are no higher-ranking pledges over the pledged asset or right.
This legislative development is particularly important considering that, to this date, and with the exception of provisions governing financial collateral arrangements, there was no process in the Portuguese legal system which allowed a creditor to take possession of a pledged asset. Moreover, contrary to what is provided for financial collateral arrangements, DL 75/2017 does not restrict the types of entities that can take commercial pledges.