On July 19, the Portuguese Securities Market Commission ("CMVM") published Regulation No. 4/2013 ("Regulation") and a new version of CMVM’s Code on Corporate Governance ("CMVM’s Corporate Governance Code") which replaces the code’s former version, in force since 2010.

This Regulation will enter into force on January 1, 2014. Therefore, CMVM’s current regulation No. 1/2010 will remain in force until 31 December 2013. It is expected that the issuers of securities admitted to trading on a regulated market ("Issuers") have an adequate period of time to adjust to this new paradigm and to the way of compliance with disclosure requirements.


  1. Adoption of a Corporate Governance Code different from the one issued by CMVM (Article 2 of the Regulation)

One of the main innovations introduced by the Regulation is the greater freedom given to Issuers regarding their choice on the corporate governance code to be adopted by the company.

Article 2, No. 2 of the Regulation now allows Issuers subject to Portuguese law to adopt a corporate governance code other than CMVM’s Corporate Government Code, provided that said code is issued by an entity organised for this purpose. Thus, the Issuers may, for example, decide to adopt as their corporate governance code the Code of Corporate Governance approved in January by the Portuguese Institute of Corporate Governance ("Instituto Português de Corporate Governance").

However, regardless of the code adopted, the choice of the Issuers must be duly justified in the Corporate Governance Report – even if CMVM’s Corporate Governance Code is the one being adopted.

  1. Elimination of Disclosure Requirements

Disclosure requirements made redundant due to mandatory legislation with the same content published after the entry into force of CMVM’s Regulation No. 1/2010 were eliminated. These requirements concern information duties on the structure and remuneration of the members of the governing bodies ("Disclosure of the remuneration and plans of allotment of shares and / or stock options"), which have now been transferred to the Report Model on Corporate Governance.

  1. Model and Structure of the Corporate Governance Report (Annex I to the Regulation)

The Corporate Governance Report results from the consolidation of the two annexes to CMVM’s regulation No. 1/2010 which, therefore, will be presented in a single document of mandatory presentation - the "Corporate Governance Report", which includes the elements and follows the model set out in Annex I to the Regulation.

According to this model, the Corporate Governance Report will now be divided into two distinct parts:

  • Part I - with mandatory information on ownership structure, organization and corporate governance, where Issuers provide information on the corporate governance practices adopted by the company, with a cross-cutting nature regarding all companies. CMVM understands that this information consists of the minimum information on corporate governance that any Issuer, regardless of the chosen Corporate Governance Code, should be required to disclose, since it constitutes the minimum information that shareholders and the market in general are entitled to receive; and
  • Part II - with evaluation of the corporate governance, where the Issuers state their degree of compliance with the code that the company has decided to subject itself to.

Despite the changes made to the reporting model, Part I of the Report Model will continue to be subject to analysis in terms of supervision, in order to verify whether the information therein required is actually disclosed. With respect to Part II, the practice of assessing the degree of compliance with the Recommendations, in the way it has been done up until now or according to new guidelines to be eventually defined, remains unaltered.

iv) "Comply or Explain" Principle (Article 1, No. 3 of the Regulation)

Regarding the statement on the level of compliance with the Recommendations, this Regulation gave special emphasis to the "comply or explain" principle, reinforcing the assumption of equivalence between compliance and explanation for the non-compliance.

According to the Regulation, Issuers must explain in an effective, justified and reasoned way, the grounds for the non-compliance with the Recommendations set forth in the adopted corporate governance code, in such terms that demonstrate the suitability of the adopted alternative solution to the principles of sound corporate governance and that allow an assessment of said reasons in such terms that they become materially equivalent to the compliance with the Recommendation.

Note that, under this principle, not every explanation is to be accepted as materially equivalent to compliance within this principle. According to CMVM, the only explanations to be positively considered are the ones which, in substantial terms, justify, in casu, the waiver of the recommendations and, on the other hand, evidence the compliance of the adopted alternative conduct with sound corporate governance practices and / or with the general principle underlying the recommendation at stake. These explanations must, inter alia:

  • Lay on specific aspects of the company or of its circumstance that justify the waiver of the recommendation or its inapplicability to the case;
  • Demonstrate the compliance of the alternatively adopted conduct with sound recognized governance practices and / or the general principle of corporate governance underlying the recommendation;
  • Be configured as a valid alternative under the principles of corporate governance; and
  • Not compromise the axiological substance of the recommendation non-complied with.
  1. Entry into force of the Regulation (Article 4 of the Regulation)

The Regulation shall enter into force on 1 January 2014, and the diploma sets forth that the Corporate Governance Report to be prepared by Issuers on 2014 regarding the financial year of 2013 must already be made in accordance with the new Regulation, according to the Corporate Governance Report Model, including the statement on the compliance of the Recommendations.


Of the main amendments arising from the new version of the CMVM’s Corporate Governance Code, we highlight the following:

  1. Voting and Control of the Company

According to recommendation I.3., Issuers will no longer be allowed to set forth mechanisms intended to cause the mismatch between the right to receive dividends or subscription of new securities and the voting rights of each ordinary share, unless said mechanisms are duly justified by the shareholders’ long term interests.

  1. Supervision and Management

Recommendation II.1.7. requires the existence of an appropriate number of independent directors from among non-executive directors, eliminating the minimum proportion of 1/4 in relation to total number of directors. Therefore, the adequacy of the number of independent directors is now dependent not only on the size of the company and its shareholder structure but also on its free float and on the governance model adopted. On the other hand, this recommendation lists a set of circumstances that may affect the exemption or analysis of independent directors.

The coordination of the work of non-executive members and the conditions for the existence of an independent or informed decision-making environment is now ensured by an independent administrator in case the Chairman of the Board of Directors exercises executive functions (cf. recommendation II.1.10.).

  1. Remuneration

In accordance with Recommendation III.8., when the removal of an administrator is not due to serious breach of their duties nor to their unfitness for the normal exercise of their functions but can still be grounded on an inadequate performance, the company shall foresee the suitable legal instruments necessary so that any indemnity or compensation, beyond the ones legally due, is not required.