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PROPOSED LAW NO. 91 /X

Exhibition of Motives

The amendment of the Legal Regime of the Local Business Sector is a priority

of the XVII Constitutional Government. There are several reasons for this option. In fact, the

companies in the local sector are an essential tool in the development of the action

public, allowing for a flexibility in acting that is not possible according to the

typical rules of the administrative performance of the State. On the other hand, and listening to the

permanent decentralization movement, the number of assignments in charge of the

municipalities has been increasing, being predictable and desirable that such a move

continue and intensify. In this context, many are the gquestionaire decisions of

adoption of the business model, as a form of efficient pursuit of competences

municipal.

Attending to the exponential development of the number of local companies, as well as

to the qualitative diversity they adopt, it becomes essential to carry out a modernization

of the applicable legal regime so as to make it more topical, efficient and adapted to the

legal traffic.

The imperative of modernization also underlies the need for

harmonisation of the Legal Regime of the Local Business Sector with the provisions of the

Regime of the State Corporate Sector, and with the Code of Commercial Societies.

In fact, it is not justified that, at present, local companies will find themselves subjected

to a model of legal regulation distinct from that applicable to public enterprises of the State

and to depart unjustifiably from the provisions of the general societtal legislation. When the

specialty is not justified, the adoption of the general principles becomes mandatory.

Effectively, the adoption of the models of general legal regulation has diverse

virtualities, as it allows for a normalization of gestionary procedures and a

effective accountability for local business management .

On the other hand, the local business initiative should be limited to the scope of assignments

municipal. In principle, the development of business initiative is not admissible

location in areas where private business traffic is fully efficient in satisfaction

of the needs of citizens. In these conditions, any autarctic intervention has

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a necessarily private, rather than public, motivation, which contradicts the principle of

subsidiarity.

In this framework, and listening also to recent developments in law headquarters

Community, the social object of municipal enterprises shall be affixed to an optics

noun and not in a merely formal one. The legal-financial qualification of the

social object of local companies passes to cater primatially to the type of activity

developed, which has unavoidable repercussions at the level of the applicable regime for the

public procurement and for accounting for possible operating deficits. Thus,

any forms of collective organization for-business are reconducted to the

The Legal Regime of the Local Business Sector, while it is supposed to companies

municipal of essentially administrative venue are reconducted to the regime of the Sector

Local Public. Only in this way is the principle of the prevalence of the substance on the

shape.

On the other hand, and listening to the virtualities of the various forms of organization

business, the broad adoption of the most diverse forms of intra and inter-collaboration collaboration

business , allowing to adoption of mixed economy models as well as of

public-public and public-private partnerships is essential, safeguarded the rules of

competition and the obligation of impartiality in the choice of partners.

Thus, the inadequacy of the current legal regime of municipal and regional enterprises

can be seen in a dual perspective. On the one hand, problems arise from the

own application of a diploma that does not respond effectively to the problems of the

public companies, public capital companies and capital companies

majority-public; on the other, there is a concept of a company that does not cover the

societies created under the societarium law and that, therefore, do not become subject to

a minimum set of public rules as it is legally provided for the

State or other state public entities, when these hold the majority of the

capital or voting rights, or the possibility to appoint or impeach the majority of

members of the administration or supervisory bodies.

In this way, a broad concept of local business sector is adopted: in it they integrate

municipal, intermunicipal and metropolitan companies; the present law intends

regulate all the activity of municipalities in corporate form, including shareholdings

in societies with public or private entities.

Similarly, the legal definition of local company is broad, in it fully fit all

companies constituted under the terms of the commercial law, in which the municipalities,

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associations of municipalities and metropolitan areas of Lisbon and Porto may exercise

a dominant influence, directly or indirectly, as well as the entities

local business people-legal persons of public law with a business nature,

meeting exclusively public, local or regional (inter-municipal) capitals.

As for the object, it is three types of municipal companies:

-the companies entrusted with the management of services of general interest;

-the companies tasked with the promotion of local and regional development;

-the companies entrusted with the management of concessions.

Presides over the creation of local companies and their activity the principle of transparency: a

setting up of local businesses, or taking stakes that confirm influence

dominant, depends on the achievement of a prior study of economic feasibility and

financial, in which the gains of quality and rationality are to be identified

added arising from the development of the activity through an entity

business; the activity of local companies is regulated by management contract (in the case

of the companies entrusted with the management of services of general interest) or by contract-

program (in the case of companies tasked with promoting local development and

regional), contractual instruments that define, in a detailed manner, the terms of the

contractual relationship, maxime their object, necessity, purpose and the gains of

efficiency and effectiveness arising from the conclusion of the respective contract; establishes a

principle of prohibition of trade-offs and subsidies for exploitation; they provide for

mechanisms for accountability of the authorities for the negative results of the

local companies; ascribe relevance to corporate debts for the purpose of calculation

of municipal indebtedness limits should the results not be borne

negatives.

Among the municipalities and companies in the local business sector behold a system of

autonomy: the municipal shareholder function is exercised through the issuance of guidelines

strategic; consecs the rule of incompatibility between the exercise of functions

executive in the authorities and local businesses; and establish limits to

remunerations of local public managers.

Thus:

Under the terms of the paragraph d) of Article 197 (1) of the Constitution, the Government presents to the

Assembly of the Republic the following proposal for a law:

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CHAPTER I

General provisions

Article 1.

Scope

1-A This Law establishes the legal regime of the local business sector.

2-The scheme provided for in this Law shall apply to all corporate entities

constituted under the standards applicable to the associations of municipalities and the areas

metropolitans of Lisbon and Porto.

Article 2.

Local business sector

1-The local business sector integrates municipal, inter-municipal, and

metropolitans, henceforth termed "companies".

2-Commercial companies controlled jointly by various entities

public integrate into the business sector of the entity which, on the whole of

participations in the public sector, be holder of the largest share.

Article 3.

Municipal, intermunicipal and metropolitan companies

1-Are municipal, intermunicipal and metropolitan companies the societies

constituted in the terms of the commercial law, in which the municipalities, associations of

municipalities and metropolitan areas of Lisbon and Porto, respectively, can

exert, in a direct or indirect way, a dominant influence by virtue of

any of the following circumstances:

a) Detention of the majority of the capital or voting rights;

b) Right to designate or impeach the majority of the members of the organ of

administration or surveillance.

2-Are also municipal, intermunicipal and metropolitan companies the entities

with a business nature regulated in Chapter VII of this Law.

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Article 4.

Unipersonal societies

1-The municipalities, the associations of municipalities and the metropolitan areas of Lisbon and

of the Port, may constitute unipersonal societies by quotas, in the terms provided for

in the commercial law.

2-Any of the entities provided for in the preceding paragraph may still constitute a

public limited liability for whose shares are the sole proprietor, under the commercial law.

3-A constitution of a joint-stock company unipersonal in the terms of the preceding paragraph

must observe all the remaining constitution requirements of public limited companies.

Article 5.

Social object

1-Companies compulsorily have as an object the exploitation of activities of

general interest, the promotion of local and regional development and the management of

concessions, being prohibited to set up companies for the development of

activities of a uniquely administrative or intended nature

predominantly mercantile.

2-Cannot be created, or participated in, municipal-scope companies,

intercity or metropolitan whose social object does not enter into the scope of

assignments of the municipality or association of respective municipalities.

3-The provisions in the preceding paragraphs shall apply to mere participation in companies

commercials in which they do not exert a dominant influence on the terms of the present

law.

Article 6.

Legal regime

The undertakings shall be governed by this Law, by their respective statutes and, in a subsidiary,

by the scheme of the State business sector and by the standards applicable to societies

commercials.

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Article 7.

Principles of management

Business management should articulate itself with the objectives pursued by the

respective public entities participating in the social capital, aiming at the satisfaction of the

needs of general interest, the promotion of local and regional development and the

efficient exploitation of concessions, ensuring their economic viability and

financial balance.

Article 8.

Creation

1-A creation of the companies, as well as the decision to acquire shareholdings that

they confirm dominant influence, pursuant to this Law, compete:

a) the municipal ones, on a proposal from the city hall, to the assembly

municipal;

b) the intermunicipal scope, on a proposal from the governing board, to the assembly

intermunicipal, existing opinion of the municipal assemblies of the

integral municipalities;

c) the metropolitan scope, on a proposal from the metropolitan junta, to the assembly

metropolitan, existing opinion favorable from the municipal assemblies of the

integral municipalities.

2-A creation of the companies or the decision to acquire a social participation that

confers dominant influence under the terms of this Law must be compulsorily

communicated to the Inspectorate General of Finance , as well as to the regulator of the

sector.

3-The contract of constitution of the companies shall be reduced to written, unless it is

required more solemn form for the transmission of the goods that are the subject of the

inputs in kind.

4-In cases where companies consist of public scripture, it is also

competent the privative notary of the municipality where the company has its registered office.

5-A The conservatory of the competent register shall, officiously, at the expense of the company,

communicate the constitution and the bylaws as well as the respective amendments to the

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Prosecutor's Office and ensure the respective publication pursuant to the provisions of the

Code of Commercial Societies.

6-A The names of companies are accompanied by the indication of their nature

municipal, intermunicipal or metropolitan area (EM, EIM, EMT).

7-On the electronic site of the Directorate General of Local Authorities appears a list,

permanently updated, from all entities in the local business sector.

Article 9.

Economic-financial viability and economic rationality

1-Under the penalty of nullity and financial responsibility, the decision to create the

companies, as well as the decision to take a stake that confers

dominant influence, must always be preceded by the necessary technical studies,

particularly of the project plan, in the optics of investment, exploitation and the

funding, demonstrating the economic viability of the units, in which if

identify the quality gains and the added rationality arising from the

development of the business through a business entity.

2-A allocation of grants or other financial transfers from the

participating entities in the social capital requires the conclusion of a contract of

management, in the case of pursuing finals of general interest, or a contract-

programme, if its object is integrated within the scope of the development function

local or regional.

3-In the case of the company benefiting from a special or exclusive right, in the terms

defined in Article 3 of the Decree-Law No. 148/2003 of July 11, that advantage

must be accounted for for affering its financial viability.

4-The studies referred to in paragraph 1, as well as the draft statutes accompany the

proposals for creation and participation in companies, being the subject of appreciation by the

competent deliberative bodies.

Article 10.

Subjection to the rules of competition

1-Companies are subject to the general rules of competition, national and

community.

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2-From the relationships between the companies and the participating entities in the social capital no

may result in situations which, in any form, are likely to prevent or

distorting competition in whole or in part of the national territory.

3-Companies are governed by the principle of financial transparency and their

accounting must be arranged in such a way as to allow the identification of any

financial flows between them and the participating entities in the social capital, ensuring

compliance with national and community requirements on competition

and public aid.

4-The provisions of paragraphs 1 and 2 of the shall be without prejudice to special derogatory regimes,

duly justified, where the application of the general standards of competition

is likely to frustrate, in law or in fact, the missions entrusted to companies

places in charge of the management of services of general economic interest.

Article 11.

Sectoral regulation

The entities of the local business sector pursuing activities within the framework of

regulated sectors shall become subject to the regulatory powers of the respective entity

regulator.

Article 12.

Hiring standards and choice of private partner

1-Without prejudice to the provisions of the applicable Community standards, the companies shall

adopt transparent and non-discriminatory contracting mechanisms,

ensuring equal opportunities for those interested.

2-The selection of private entities will apply the concursal procedures

established in the legal regime of the granting of the public services in question and,

subsidally, in the legal regimes of public procurement in force, whose

object best if coadune with the activity to be pursued by the company.

3-Direct adjustment is only admissible in exceptional situations provided for in diplomas

applicable, in the terms of the preceding paragraph.

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Article 13.

Prohibition of Compensations

No forms of subsidies for exploitation, investment or in

supplement to equity stakes that are not provided for in the articles

previous.

Article 14.

Public-private partnerships

To public-private partnerships developed by the companies to which the present

law shall apply to the scheme of the Decree-Law No. 86/2003 of April 26 with the necessary

adaptations.

Article 15.

Shareholder function

The rights of holders of the social capital are exercised, respectively, through the

city hall, of the governing board of the association of municipalities or the junta

metropolitan, in accordance with the strategic guidelines provided for in the article

next.

Article 16.

Strategic guidelines

1-Are defined strategic guidelines relating to the exercise of the shareholder function in the

companies covered by this Act, pursuant to the following number, and

same to be reviewed, at least with reference to the length of term of office

of the administration fixed by the respective statutes.

2-A The competence for the approval of the strategic guidelines belongs:

a) in the municipal companies, the town hall;

b) In inter-municipal companies, to the governing board;

c) In metropolitan companies, the metropolitan junta.

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3-The strategic guidelines referred to in the preceding paragraphs define the objectives to be

going ahead with a view to promoting local and regional development or the

form of the pursuit of services of general interest, containing quantified targets

and contemplating the conclusion of contracts between the participating public entities and

the companies of the local business sector, provided for in Articles 19 and 22 of the

present law.

4-The strategic guidelines should be reflected in the annual guidelines set out in

general assembly and in the management contracts to be concluded with the managers.

Article 17.

Delegation of powers

1-The municipalities, the associations of municipalities and the metropolitan areas of Lisbon and

of the Port may delegate powers to the companies by them constituted or

majority-owned participated in the terms of this Law, as long as such conss

expressly of the statutes.

2-In the cases provided for in the preceding paragraph, the Company's bylaws define the

prerogatives of the company's personnel carrying out authority functions,

specifically within the scope of supervisory powers.

CHAPTER II

Companies entrusted with the management of services of general interest

Article 18.

Companies entrusted with the management of services of general interest

For the purposes of this Law, they are considered to be companies entrusted with the management of

services of general interest those whose activities should ensure universality and

continuity of the services provided, the satisfaction of the basic needs of the citizens,

the local or regional economic and social cohesion and the protection of users, without prejudice to the

economic efficiency and the respect of the principles of non-discrimination and the

transparency.

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Article 19.

Guiding principles

The companies entrusted with the management of services of general interest shall continue the

missions that are entrusted to them in the sense, depending on the cases, of:

a) Providing the services of general interest in the local or regional circumscription without

discrimination of rural and inland areas;

b) Promoting access of the generality of citizens, under financial conditions

balanced, to essential goods and services, by seeking, as far as possible,

to adapt the rates and countervections due to the actual situations of the users,

in the optics of the principle of material equality;

c) Ensuring compliance with the requirements for the provision of services of character

universal with respect to economic activities whose access is found

legally vetted to private companies and other entities of the same nature;

d) Ensure the provision of services or the management of activities that require

avuled investments in the creation or development of infrastructure or

distribution networks;

e) To ensure the effectiveness of the management of public service networks, seeking,

specifically, that the production, transport and distribution, the construction of

infrastructure and the provision of the set of such services if they proceed in a manner

articulated, taking into attention the organizational modifications imposed by

technical or technological innovations;

f) Comply with specific obligations, related to safety, with the

continuity and quality of services and with the protection of the environment, owing

such obligations to be clearly defined, transparent, non-discriminatory and

susceptible to control.

Article 20.

Management contracts

1-A provision of services of general interest by companies in the local business sector

depends on the conclusion of management contracts with the participating entities.

2-The contracts referred to in the preceding paragraph shall define in detail the

foundation of the necessity of the establishment of the contractual relationship, the purpose of the

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same relationship as well as the effectiveness and efficiency that is intended to be achieved with the

same, concretized in a set of indicators or benchmarks allowing

measure the achievement of the sectoral objectives.

3-The development of price policies of which operating revenue elapse

annual lower than annual costs is objectively justified and depends on the

adoption of analytical accounting systems where to identify the difference between

the development of the activity at market prices and the subsidised price in optics

of the general interest.

4-The development of pricing policies in the terms of the previous number depends

of prior negotiation with the public law shareholders of the terms that govern

the financial transfers necessary to the annual financing of the activity of

general interest, which are listed in the management contract.

CHAPTER III

Companies tasked with promoting local and regional development

Article 21.

Companies tasked with promoting local and regional development

1-For the purposes of this Law, companies in charge of the promotion are considered

of local or regional economic development those whose activities should

ensuring the promotion of local and regional economic growth, elimination

asymmetries and the enhancement of local or regional economic and social cohesion, without prejudice

of economic efficiency and the respect of the principles of non-discrimination and of the

transparency.

2-The companies tasked with the promotion of local economic development or

regional may develop activities that have been inspired by the scope of assignments of the

institutions instituting, specifically:

a) Promotion, maintenance and conservation of urbanistic infrastructure and management

urban;

b) Urban renewal and rehabilitation, management of building heritage and promotion

of urban and rural development;

c) Promotion and Management of social housing real estate;

d) Qualification and Vocational Training;

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e) Development of local and regional valences;

f) Promotion and Management of collective equipment and provision of services

educational, cultural, health, sporting, recreational and touristic;

g) Creation of structures and provision of support services for the elderly, children or

disadvantaged citizens.

Article 22.

Guiding principles

The companies entrusted with the promotion of local economic development or

regional should continue the missions entrusted to them in the sense, depending on

the cases, of:

a) Conform, regulate and transform the economic-social order in the circumscription

local or regional, without discrimination from rural and inland areas;

b) Promoting local and regional economic growth by supporting activities and

the valences of their own, eliminating asymmetries in the national territory;

c) To develop business activities in the territorial and regional circumscription,

integrating them in the context of structural economic policies of

technological development and creation of distribution networks;

d) To promote risky investments and innovative entrepreneurial activities;

e) Optimizing resources from national financial support programmes and

community;

f) Ensure the provision of services or the management of activities that require

avuled investments in the creation or development of infrastructure;

g) Comply with specific obligations, related to safety, with the

continuity and quality of services and with the protection of the environment and

quality of life, owing such obligations to be clearly defined,

transparent, non-discriminating and susceptible to control.

Article 23.

Contracts-program

1-The companies tasked with the promotion of local economic development or

regional should celebrate contracts-programme where to set out in detail the

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its object and mission as well as the functions of local economic development and

regional to play.

2-Programme contracts apply to the provisions of Article 20 (2), 3 and 4 of Article 20, and of them

is compulsorily listed as the amount of public comholdings that the companies

have the right to receive as a counterpart to the obligations assumed.

CHAPTER IV

Companies entrusted with the management of concessions

Article 24.

Companies entrusted with the management of concessions

For the purposes of this Law, they are considered to be companies entrusted with the management of

grants those that, not by integrating in the previous classifications, have by

object the management of concessions awarded by public entities.

Article 25.

Guiding principles

1-Companies entrusted with the management of concessions must continue the missions

that they are entrusted with, without prejudice to the economic efficiency and the respect of the

principles of non-discrimination and transparency, fully submitting to the

standards of competition.

2-Companies entrusted with the management of concessions must enter into contracts with the

concealable public and with the dealerships, in which they identify the

rights and obligations of the conceding that are taken over by the dealerships, well

as the supervisory powers that remain in the public entity.

3-No form of financing by the entities is permitted

participants to the companies entrusted with the management of concessions.

CHAPTER V

Economic and financial regime

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Article 26.

Financial control

1-Companies become subject to financial control intended to ascertain from

legality, economy, efficiency and effectiveness of its management.

2-Without prejudice to the powers conferred by the Act to the Court of Auditors, the control

financial of the companies compete with the Inspectorate General of Finance.

3-Companies adopt appropriate internal control procedures to ensure

reliability of the accounts and too much financial information, as well as the articulation with

the entities referred to in the preceding paragraph.

Article 27.

Special information duties

Without prejudice to the provisions of the commercial law as to the provision of information to the

holders of social shareholdings, should the companies provide the following elements to the

city hall, to the governing board of the association of municipalities or the junta

metropolitan, as the case may be, with a view to its monitoring and control:

a) Projects of the annual and multi-annual activity plans;

b) Projects of annual budgets, including estimation of operations

financial with the State and local authorities;

c) Annual reporting documents;

d) Quarterly budget implementation reports;

e) Any other information and documents requested for the

monitoring of the situation of the company and its activity, with a view,

specifically, to ensure the sound management of public funds and the evolution of the

your economic-financial situation.

Article 28.

Single fiscal

The supervision of companies is exercised by a reviewer or by a society of

statutory auditors, which proceeds to the legal review, to whom it competes,

specifically:

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a) Scrutinizing the action of the board of directors;

b) Check the regularity of books, accounting records and documents that

serve them support;

c) To participate in the competent bodies the irregularities as well as the facts that

consider revelers of serious difficulties in pursuing the object of the

company;

d) Proceed to the verification of the company's patrimonial values, or by it

received in warranty, deposit or other title;

e) Refer semester to the executive body of the municipality, of the association of

municipalities or the administrative region, as the case may be, information on the

economic and financial situation of the company;

f) Pronounce on any subject of interest to the company, the solicitation

of the board of directors;

g) Issue opinion on the instruments of forecasting management, as well as on the

report of the board of directors and accounts of the financial year;

h) Issue opinion on the value of compensation claims to be received by the

company;

i) Issue the legal certification of the accounts.

Article 29.

Reporting documents

1-Companies ' accountability instruments, to be drawn up annually with

reference to December 31, are as follows, without prejudice to others provided for in the

its statutes or in other legal provisions:

a) Balance sheet;

b) Demonstration of the results;

c) Annex to the balance sheet and the demonstration of the results;

d) Demonstration of cash flows;

e) Relation of equities in the capital of corporations and financing

granted in the medium and long terms;

f) Report on the annual implementation of the multiannual investment plan;

g) Report of the board of directors and proposal for the implementation of the

results;

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h) Opinion from the official reviewer of accounts.

2-The report of the board of directors should allow for a clear understanding of the

economic and financial situation concerning the exercise, analyze the evolution of the management

in the sectors of the business of the company, specifically with respect to

investments, costs and market conditions, and appreciate its development.

3-The opinion of the official reviewer of accounts shall contain the assessment of the management as well as

of the report of the board of directors and the assessment of the accuracy of the accounts and

of the observance of laws and bylaws.

4-The annual report of the board of directors, the balance sheet, the demonstration of

results and the opinion of the official reviewer of accounts are published in the Bulletin

Municipal and one of the most read newspapers in the area.

5-The record of the provision of business accounts is carried out in the terms provided for in the

respective legislation.

Article 30.

Reservations

1-Companies must constitute the reserves and funds provided for in the respective

statutes, however, being compulsory the legal reservation imposed in the Code of

Commercial Societies, and the competent bodies may decide on the

implementation of results by deliberating the constitution of other reserves.

2-The constitution of the legal reserve shall be allocated an annual allocation not less than

10% of the net result of the exercise deducted from the required amount to the coverage of

transient damage.

3-A legal reservation can only be used for incorporation in the capital or for coverage

of transient damage.

4-Statutes may provide for the reserves the use of which is subject to restrictions.

CHAPTER VI

Financial consolidation

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Article 31.

Balance of accounts

1-Companies present balanced annual results in the activities

operational, investment and financing.

2-Without prejudice to the provisions of paragraph 5 of this Article, in the case of the result of

annual operational exploitation plus financial burden to present

negative is mandatory to carry out a financial transfer in charge of the

partners, in the respective proportion of social participation with a view to balancing the

operating operating results of the exercise in question.

3-Public law associates of the companies predict in their annual budgets the

predictive amount required for coverage of annual operating damage

increased financial burdens that are to their responsibility.

4-In the event that the annual budget of the year in question does not contain sufficient funding for the

coverage of the damage referred to in the preceding paragraph, an allowance shall be inserted

supplementary in the budget of the subsequent financial year, the transfer is carried out

in the month following the end date of the accounts.

5-Whenever the balance of exploitation of the company can only be affixed in an optics

multiannual that covers the entire period of the investment, is presented to the

Inspectorate-General Finance a predictive plan of demonstration maps of

adjusted net cash flows in the optics of the multiannual balance of the

operating results.

6-In the situation provided for in the preceding paragraph, the participants of public law in the

social capital of companies predict in their annual budgets the amount

predication required for coverage of financial deviations verified in the result

of annual heightened exploitation of the financial burden in respect of the forecast in

initial map that are of your responsibility, in similar terms to the

provided for in paragraph 3 and 4 of this Article.

7-The correction of the predictive plan of flow statement maps is allowed

of net cash as long as the participants proceed to financial transfers

necessary for the sustaining of possible damage accumulated as a result of

deviations from the initial predictive plan.

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Article 32.

Loans

1-Loans contracted by the companies relies on the limits of the capacity of

indebtedness of municipalities in the event of default of the rules laid down

previous article.

2-It is vetted to the companies to provide loans in favour of the entities

participants and the intervention as a guarantor of loans or other debts of the

Same.

3-The participating entities may not provide loans to companies in the sector

local business.

CHAPTER VII

Local business entities

Article 33.

Constitution

1-The municipalities, the associations of municipalities and the metropolitan areas of Lisbon and

of the Port may constitute legal persons of public law, with a nature

business, henceforth designated "local business entities".

2-The contract for the constitution of local business entities shall be reduced to

written, unless it is required more solemn form for the transmission of the goods which

are the subject of entries in kind.

3-In cases where companies consist of public scripture, it is also

competent the privative notary of the municipality where the local business entity has

your headquarters.

4-Local business entities are subject to the commercial register in the terms

general, with the adaptations that are necessary.

5-A The conservatory of the competent register shall, officiously, at the expense of the entity

local business, communicate the constitution and the statutes, as well as the respective

amendments, to the Public Prosecutor's Office and to ensure the respective publication pursuant to the

commercial registration law.

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Article 34.

Legal regime

1-The entities created pursuant to the preceding Article shall be governed by the standards of the

this chapter and, secondarily, by the remaining standards of this law.

2-To companies of municipal and intermunicipal nature constituted under the terms of the

Decree-Law No 58/98 of August 18 existing at the date of the entry into force of the

present law, the scheme provided for in the preceding paragraph applies.

Article 35.

Autonomy and legal capacity

1-Local business entities have administrative, financial and administrative autonomy

patrimonial.

2-A The legal capacity of local business entities covers all rights and

obligations necessary or convenient to the pursuit of its object.

Article 36.

Denomination

The denomination of local business entities shall integrate the indication of their

municipal, intermunicipal or metropolitan nature ("EEM", "EEIM", "EEMT").

Article 37.

Capital

1-Local business entities have a capital, designated "statutory capital",

held by the entities provided for in Article 32 (1) or by other entities

public, and intended to respond to the respective permanent need.

2-The statutory capital may be increased in the terms set out in the statutes.

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Article 38.

Organs

1-A The administration and the audit of local business entities structurate

according to the modalities and with the envisaged designations for the societies

anonymous.

2-The administration and supervisory bodies have the generic skills provided for

in the commercial law, without prejudice to the provisions of this Law.

3-Statutes may provide for the existence of another organ, deliberative or

advisory, defining the respective competences.

4-The statutes shall regulate, with observance of the applicable legal standards, the

competence and the mode of designation of the members of the organs to which the

previous numbers.

5-Statutes may provide for the existence of other organs, deliberative or

advisory, defining, inter alia, the respective competences as well as the

mode of designation of the respective members.

Article 39.

Tutela

1-A The economic and financial tutelage of local business entities is exercised by the

municipal chambers, governing boards of the associations of municipalities and by the

metropolitan joints, depending on the cases, without prejudice to the respective power of

superintendence.

2-A tutela covers:

a) The approval of the strategic and activity plans, budget and accounts, thus

as from appropriations for capital, subsidies and compensatory damages;

b) The approval of prices or tariffs to be practising by business entities that

explore services of general economic interest or exercise the respective

Exclusive activity, save when its definition compete to

other independent entities;

c) The remaining powers expressly referred to in the statutes.

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Article 40.

Instruments of forecasting management

The economic management of local business entities is disciplined by the following

predictive management instruments:

a) Multiannual and annual plans for activities, investment and financial;

b) Annual investment budget;

c) Annual farm budget, unfolded in budget of income and

cost budget;

d) Annual treasury budget;

e) Forecasting balance.

Article 41.

Accounting

The accounting of local business entities respects the Official Plan of

Accounting and must respond to the needs of business management, allowing for a

permanent budgetary control.

Article 42.

Reporting documents

The instruments of accountability of local business entities, to be drawn up

annually with reference to December 31, are as follows, without prejudice to others

provided for in the statute or other legal provisions:

a) Balance sheet;

b) Demonstration of the results;

c) Annex to the balance sheet and the demonstration of the results;

d) Demonstration of cash flows;

e) Relation of equities in the capital of corporations and financing

granted in the medium and long terms;

f) Report on the annual implementation of the multiannual investment plan;

g) Report of the body of administration and proposal for the implementation of the results;

h) Opinion of the supervisory body.

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Article 43.

Restructuring, merger and extinction

1-A The restructuring, merger or extinction of local business entities is

competence of the organs of the municipality or competent association for their creation,

to whom it is incumbent to define the terms of the settlement of their respective heritage.

2-Local business entities must be extinguished when the municipality or

association responsible for its constitution has to fulfil assumed obligations

by the organs of the local business entity for which the respective heritage is

insufficient revele.

CHAPTER VIII

Other provisions

Article 44.

Status of staff

1-The status of corporate staff is that of the scheme of the individual contract of employment.

2-A The subject matter for collective contracting is governed by the general law.

Article 45.

Commissions of service

1-The officials and actors of the central, regional and local administration, including from the

public institutes, they may perform duties in the entities of the local business sector

in specific allocation regime or special ceding, pursuant to the legislation

general in mobility.

2-Can still perform functions in the entities of the local business sector the

workers of any public companies, in the occasional yielding regime, in the

terms set out in the Labor Code.

3-The staff of the framework of the municipalized services to be the subject of

processing in companies, under the terms of this Law, may choose between

integration into the framework of the company or in the frame of the respective municipality, in the terms

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established in protocol to be concluded between the municipality and the company, and may not

occur, in any case, loss of remuneration or any other right or

regalia.

Article 46.

Status of the local manager

1-The simultaneous exercise of full-time or partial functions in the chambers is prohibited

municipal and paid executive functions in municipal enterprises,

intermunicipal and metropolitan.

2-The remuneration of the members of the administrative bodies of the companies referred to

in the previous article are limited to the remunerative index of the mayors

of the municipalities of Lisbon and Porto.

CHAPTER IX

Final provisions

Article 47.

Adaptation of the statutes

1-Within the maximum period of two years from the date of publication, the companies

municipal and intermunicipal already constituted must appropriate their statutes to the

provisions of this Law.

2-The provisions of this Law shall prevail over the statutes of the entities referred to in the

previous number that, the deadline mentioned therein, have not been reviewed and

adapted.

Article 48.

Abrogation standard

It is repealed the Act No 58/98 of August 18.

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Article 49.

Entry into force

This Law shall come into force on January 1, 2007.

Seen and approved in Council of Ministers of July 27, 2006

The Prime Minister

The Minister of the Presidency

The Minister of Parliamentary Affairs