The Third Amendment To Law No. 63-A/2008, Of 24 November, Establishing Measures Of Strengthening The Financial Soundness Of Credit Institutions Within The Scope Of The Initiative To Strengthen The Financial Stability And The Provision Of Liquidity In

Original Language Title: Procede à terceira alteração à Lei n.º 63-A/2008, de 24 de Novembro, que estabelece medidas de reforço da solidez financeira das instituições de crédito no âmbito da iniciativa para o reforço da estabilidade financeira e da disponibilização de liquidez no

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PRESIDENCY of the COUNCIL of MINISTERS 1 Proposal of law No. 30/XII explanatory statement in reaction to the early impacts of global financial crisis, the law No. 63-A/2008, of November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010, December 31, came to establish a set of measures for strengthening the financial soundness of credit institutions in the context of the initiatives taken at the global level for the preservation financial stability. After about 2 years of after its adoption, and although it becomes apparent that to date has not yet been necessary to resort to the mechanisms provided for in the recapitalisation law No. 63-A/2008, of November 24, however, the need for a revision of the recapitalisation measures initially planned, in order to allow a more solid and clear framework to respond to the needs that may arise in the future taking into account the current situation of economic and financial instability in the Euro area. Framed in the measures to be taken in fulfilment of the programme of economic and Financial Aid, this Bill aims to contribute to the strengthening of the capital levels of banks (Core Tier 1), which is essential for the stability of the financial system, as well as for the safety of depositors and to the proper functioning of the economy.

PRESIDENCY of the COUNCIL of MINISTERS 2 With the changes now introduced, the aim is to make it clear that the intervention of the State in the recapitalisation of these institutions takes on subsidiary and temporary nature, and should function as an ultima ratio measure vis-à-vis other alternatives possible and preferable, as is, for example, the use of capital injections by private shareholders, nationals or foreigners. Thus, this Bill applies to public initiative unleashed in capitalization processes of credit institutions, and shall take place using instruments and financial resources to allow the funds made available to the credit institution are eligible for own funds (Core Tier 1). To that end, we decided to simplify the means through which the capitalisation operation takes place, especially for this purpose two distinct possibilities: (i) the acquisition, by the State, own shares of the credit institution (or other securities representing the capital when the institution concerned does not take the form of a public limited company) and, (ii) the capital increase of the credit institution. The established regime intends to respond to the special requirements posed by economic and financial crisis that currently falls on the entire Euro area. In fact, the financial soundness of credit institutions it is essential to stimulate the functioning of the economy, which complies with stress, since this scheme should not be confused with an option of public economic intervention, that objectively does not correspond, either in its letter or spirit. In fact, despite the recapitalisation operations effected in the light of the legal regime provided for in this law shall determine, by the State, the acquisition of shares representing the share capital of legal position intervention stock institutions that this watch not confused-as a rule-with a true shareholder. Thus, the shares acquired by the State in this context, are considered as special actions, but only to the extent that give the holder a right to priority dividend (intended for the PRESIDENCY of the COUNCIL of MINISTERS 3 to remunerate the public investment in the credit institution). However, these actions do not confer voting rights to the State, except in instances specifically provided for, in which major changes are concerned to the credit institution, as, in particular, in cases of split, merger, transformation, and are subject to the regime applicable to ordinary shares. On the other hand, during the initial phase of the State recapitalization is also prevented from proceeding to the free disposal of shareholdings acquired as part of the operation, this limitation is intended to ensure the stability of the shareholder structure of the credit institution, and which determines, for its part, that the sale of shareholdings can only occur for the benefit of existing shareholders in accordance with the rules of the right of pre-emption. In order to establish a regime flexible enough, we decided to establish also a second phase of recapitalisation, which coupled with the aforementioned first phase may not exceed the maximum total duration of five years, which has in particular credit institutions that have benefited from a recapitalisation amount and that, in the course of the recapitalisation plan agreed with the State have not shown capable of achieving the objectives established in the initial phase there. In this case, as in all situations in which occurs the recapitalisation plan, the powers of the State will follow in all its breadth and length, those that typically result from the holding of the shares there is acquired, which means, in particular, the free exercise of all the voting rights, as well as the possibility to appoint or to increase the number of members of the administrative or supervisory not now limited to the appointment of non-executive directors, as happens in the first phase.

The legal frame, as envisaged by this Bill allows, within a framework of extreme difficulty provided by the current economic and financial instability, making of PRESIDENCY of the COUNCIL of MINISTERS and 4 proportional to the interests of all parties involved, the best defense of the public interest, which in all the circumstances it is for the State to safeguard, as well as respecting the legal autonomy of credit institutions and as well as the rights of its shareholders. So: under d) of paragraph 1 of article 197 of the Constitution, the Government presents to the Assembly of the Republic the following proposal of law: Article 1 subject-matter this degree proceeds to the third amendment to law No. 63-A/2008, of November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010 , 31 December, establishing measures of strengthening the financial soundness of credit institutions within the scope of the initiative to strengthen the financial stability and the provision of liquidity in financial markets. Article 2 amendment to law No. 63-A/2008, of November 24 articles 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 17, 18, 19, 20, 23, 24 and 25 of Act No. 63-A/2008, of November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010 , 31 December, shall be replaced by the following: ' article 2 reinforcing the Core Tier 1 ratio of COUNCIL of MINISTERS PRESIDENCY 5 1-strengthening the financial soundness of credit institutions is carried out by means of capitalisation operations with recourse to public investment, with a view to the fulfilment of the Core Tier 1 ratio established according to the applicable laws and regulations. 2-the use of public investment is carried out in accordance with the principles of necessity and proportionality, compensation and guarantee the capital invested and to minimise the risks of distortion of competition, the State may not exercise, regardless of their participation in the share capital of the credit institution, or control over the institution, in accordance with article 486.º of the companies code and paragraph 2 of article 13 of the general scheme of the institutions of Credit and finance companies, approved by Decree-Law No. 298/92 of 31 December, subject to the provisions of article 16 of this law. 3-recourse to public investment subsidiary and temporary in nature, being applicable to operations of capitalisation of credit institutions to be carried out until 30 June 2014. 4 - […]. Article 3 [...] 1-can benefit from capitalization transactions provided for in this law credit institutions have headquarters in Portugal, including mutatis mutandis credit institutions set up as a public limited company. 2-the savings banks that benefit from capitalization transactions provided for in this law shall take the form of a public limited company, does not apply the provisions of article 4 of the Decree-Law, PRESIDENCY of the COUNCIL of MINISTERS 6


No. 136/79, of 18 May. 3-If the Central Agricultural Mutual credit Box benefit from capitalization transactions provided for in this law, the State can subscribe or purchase capital securities representing the capital of that credit institution acquiring the quality of associated, by applying the arrangements provided for in this Act. 4-in the case referred to in the preceding paragraph:) has application to the provisions of paragraphs 2 and 4 of article 53 of the Legal Regime of Mutual agricultural credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January; (b)) the State can withdraw the quality of associated, in the situations provided for in article 8 of this law, without subjection to the requirements provided for in article 68 of the legal framework for the Agricultural Credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January. 5-If the agricultural mutual credit boxes not integrated in the Integrated System of Agricultural Mutual Credit benefit of capitalization operations provided for in this law, the State can acquire capital securities representing the capital of those credit institutions, acquiring the quality of associated, by applying the arrangements provided for in this Act. 6-in the case referred to in the preceding paragraph:) has no application to article 16 of the Legal Regime of Mutual agricultural credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January;

PRESIDENCY of the COUNCIL of MINISTERS 7 (b)) the State can withdraw the quality of associated, in the situations provided for in article 8 of this law, without subjection to the requirements laid down in article 17 of the Legal Regime of Mutual agricultural credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January. Article 4 [...] 1-the capitalization can be carried out with recourse to the instruments and financial resources to allow the funds made available to the credit institution are eligible for Core Tier 1 capital. 2-the capitalisation operation can be carried out through: a) acquisition of own shares held by the credit institution, or other securities representing capital when the institution does not take the form of a public limited company; b) […]; c) other instruments or funds eligible for Core Tier 1 own funds in accordance with the conditions established for such eligibility. d) [Repealed].

3-When the casing operation is performed by means of the acquisition of own shares of the credit institution, such shares converted automatically in special actions subject to the conditions laid down in paragraphs 5 and 6.

PRESIDENCY of the COUNCIL of MINISTERS 8 4-the increase of the share capital provided for in subparagraph (b)) of paragraph 2 may only be carried out by issuing special actions subject to the conditions laid down in paragraphs 5 and 6, in the case of credit institutions set up as a public limited company. 5-the creation of special actions provided for in the preceding paragraph is not subject to statutory forecast expressed. 6-special actions referred to in paragraphs 3 and 4 are subject to the regime of ordinary shares, except to the extent that entitlement to a priority dividend, in accordance with the provisions of Article 4bis *. 7-the provisions of paragraphs 3 to 6 shall apply mutatis mutandis to capital securities set out in paragraphs 3 and 5 of article 3. 8-regardless of participation that purchase pursuant to points (a)) and b) of paragraph 2, and without prejudice to the provisions of the following paragraph and in article 16, the State can only exercise their right to vote in decisions respecting the amendment of the articles of Association, merger, Division, transformation, dissolution, or other matters to which the law or the statutes require a qualified majority.

9-When the participation which the State acquires pursuant to points (a)) and b) of paragraph 2 exceeds a threshold to be defined by order of the Member of Government responsible for the area of finance, taking into account the rules and guidelines in the field of State aid, can the State exercise the voting rights attaching to the participation held in that it exceeds the threshold. 10-the provisions of paragraph 8 shall apply to equity provided for in paragraphs 3 and 5 of the COUNCIL of MINISTERS PRESIDENCY 9 of article 3. 11-the capitalisation operation carried out in accordance with point (b)) of paragraph 2 may consist in the issue of ordinary shares for shareholders of the credit institution to the public or to both, with underwriting or guarantee placement, in whole or in part, by the State, by means of Commission to be determined by Member of the Government responsible for the area of finance. 12-Is the State authorized to underwrite or guarantee the placement of the issue in accordance with the procedure referred to in the preceding paragraph, without prejudice to the possibility of resorting to a financial intermediary for this purpose. Article 6 [...] Without prejudice to the provisions of the Commercial companies code regarding the possibility of restriction or withdrawal of the right of pre-emption, the deadline for the exercise in the context of capital increases of credit institutions, under this law, may not exceed 15 days, counted from the publication of the notice in mass circulation national daily newspaper , sending e-mail or shipment of registered letter addressed to the holders of registered shares.

Article 7 [...] 1-the voting rights acquired by the State in the context of this law are not considered for purposes of duty general public offering launch.

PRESIDENCY Of The COUNCIL Of MINISTERS 10 2-[...]. 3 - […]. 4-[Repealed]. Article 8 [...] 1-showing ensured by the credit institution, the maintenance of adequate levels of equity, in particular Core Tier 1, the public disinvestment is accomplished, in particular, in accordance with market conditions and to ensure adequate remuneration and guarantee the capital invested, taking into account the objectives of financial stability. 2-going on amounts generated in the year, distributable as dividends, and without prejudice to the provisions of the preceding paragraph, are the same used for the public disinvestment.

3-in the course of public investment, without prejudice to the provisions of article 16a and in articles 102 et seq. of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December, the State can only alienate the participation that get in the share capital of the credit institution, in whole or in part the shareholders of the institution, the date of disinvestment, and according to the rules of right of first refusal. 4-it is the Bank of Portugal, for the purposes of paragraph 1, verify PRESIDENCY of the COUNCIL of MINISTERS 11 which is ensured the maintenance of adequate levels of own funds after the approval of the individual accounts of the credit institution or, where applicable, after the approval of the consolidated accounts of the parent company of the group to which belongs the credit institution , on whose financial situation relating to consolidated supervision exercised by the Bank of Portugal. 5-actions in which achieving the State's participation be converted automatically, upon exiting, into ordinary shares. 6-the provisions of this article shall apply mutatis mutandis to capital securities provided for in paragraphs 3 and 5 of article 3. Article 9 access to public investment and discussions of society 1-access to public investment to strengthen Core Tier 1 capital depends on the presentation by the credit institution, with the Bank of Portugal, a recapitalisation plan which provides for necessary and appropriate measures to that end, its timing, and the demonstration that the institution meets the appropriate conditions of solidity for the continuation of its activity. 2-the recapitalisation plan mentioned in the preceding paragraph is subject to approval by the General Assembly of the beneficiary institution. 3-the implementation of the measures provided for in the recapitalisation plan approved pursuant to paragraph 1 it is incumbent upon the Board of Directors, mandated for this purpose, where appropriate, in the said resolution. 4-the mandate given by the General Assembly involves giving the Board of jurisdiction to take all the measures provided for in this law, including increases in capital without reliance limits PRESIDENCY of the COUNCIL of MINISTERS statutory 12 that perhaps there may be established. 5-[previous paragraph 4]. 6-[previous No. 5]. Article 10 [...] 1-the general meeting shall be convened specifically for the purpose referred to in paragraph 2 of the preceding article, at least fourteen days notice published in mass circulation national daily newspaper or by electronic mail addressed to all the shareholders, giving them the possibility to vote by electronic means. 2 - […].



Article 11 [...] 1-corporate resolutions relating to matters covered by this chapter shall not apply the provisions of paragraph 3 of article 397.º of the code of Civil procedure and is assumed – if, for all legal purposes, that their suspension damage greater than that which would result from the implementation of the resolution.

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2 - […]. Article 12 recapitalisation Plan with public capital 1-the recapitalisation plan provided for in paragraph 1 of article 9 shall comply with the Community rules and guidelines in the field of State aid and contain, inter alia, the following elements: a) capital reinforcement targets Core Tier 1, with an indication of the evolution, composition and structure of these own funds throughout the duration of the plan as well as the nature of the operations envisaged for their implementation; b) updated information about the assets and liabilities, as well as the ratios and prudential indicators about the liquidity and processing, quality of assets and risk coverage;

c) strategic Programming of activities throughout the duration of the plan, including possible changes in the structure of the group in the institution, and in particular, non-financial holdings, owned by same, and projections about the evolution of profitability, liquidity position and capital adequacy; d) any adjustments to be made in the system of corporate governance and management mechanisms and control of risks, with a view to achieving the objectives of the plan. and) cost reduction and increased structural weight of financing to small and medium-sized enterprises, in particular in the sectors of goods and PRESIDENCY of the COUNCIL of MINISTERS 14 marketable services; f) measures to respond to any additional requirements arising from stress tests; g) terms and conditions of public disinvestment. 2-it is the Bank of Portugal proceed to the analysis of the recapitalisation plan, and must remit, within 10 working days, its proposal for a decision, duly substantiated, to the Member of Government responsible for the area of finance. 3-on the proposal for a decision, the Bank of Portugal pronounced, in particular, on the assets and liabilities of the credit institution on the amount of public investment required and about the terms and conditions of public disinvestment.

4-the Bank of Portugal may request the credit institution and further information elements which are necessary for the assessment of the recapitalisation plan, as well as require the amendment or the forecast of additional measures. 5-the period referred to in paragraph 2 may be extended for an equal period if the complexity of the operation. Article 13 [...] 1-[...]. 2 - […]. 3-the decision referred to in paragraph 1 also lays down the terms and conditions of the PRESIDENCY of the COUNCIL of MINISTERS 15 public disinvestment, fulfilled the objectives of strengthening of own funds. 4-the decision referred to in paragraph 1 must be taken within five working days, renewable for an equal period if the complexity of the operation justifies, without prejudice to the Faculty of return of the plan to the Bank of Portugal for clarification, in which case the term suspended. 5-Notwithstanding the provisions of article 16, the order referred to in paragraph 1 may be modified in the event of serious or systematic failure to comply with the obligations assumed by the credit institution, or in case of abnormal change of the circumstances in which it was founded. Article 14 [...] 1-[...]: a) to the use of the means provided under strengthening of own funds, in particular with regard to the credit institution's contribution to the financing of the economy, particularly to households and small and medium-sized enterprises, in particular in the context of tradable goods and services sectors; b) […]; (c)) the remuneration policy of the owners of the management and supervisory bodies, taking into account the provisions of paragraph l) from 24 of the annex to Decree-Law No 104/2007, of 3 April; d) […];

PRESIDENCY Of The COUNCIL Of MINISTERS And 16) [...]; f) […]; g) to prior approval by the Member of Government responsible for the area of finance decision to proceed to the payment of interest or dividends, except in compliance with legal obligations; h) the prior consultation of the Member of Government responsible for the area of finance in making decision on the exercise of the right of repurchase of an instrument eligible for regulatory capital; I) to reduce structural costs.

2-While the credit institution to meet within the public investment for strengthening of own funds, the State may appoint by order referred to in paragraph 1 of the preceding article, a member for the Administration and supervision of the credit institution, without prejudice to article 16A. 3-the order referred to in the preceding paragraph assigns to the representative appointed by the State the following functions In addition to other actions that are attributed by law or by the statutes: a) to ensure the verification of compliance with recapitalisation plan and the obligations of the recipient credit institutions established under this scheme, in view of financial stability and the patrimonial interests of the State;

PRESIDENCY of the COUNCIL of MINISTERS 17 b) prepare and send to the Bank of Portugal and member of the Government responsible for the area of finance, with a minimum monthly periodicity, a report containing the conclusions of the evaluation in accordance with the preceding paragraph; c) Inform the Bank of Portugal and the Member of Government responsible for the area of Finance of any relevant fact within their respective functions. 4-[previous paragraph 3].

Article 16 [...] 1-where a credit institution has a level of Core Tier 1 capital, less than the minimum required, and not on its own initiative, or no change in accordance with guidelines of the Bank of Portugal a recapitalisation plan, can this determine the institution to submit a plan of recapitalization with recourse to public capital, pursuant to this law. 2-In case of failure to comply with the provisions of the previous article, the Bank of Portugal may appoint an interim administration for the institution, revoke the authorization of operation, or apply measures for resolution in accordance with the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December.

PRESIDENCY of the COUNCIL of MINISTERS 18 3-the preceding paragraphs shall not affect the exercise of the powers of the Bank of Portugal, in accordance with title VIII of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December. 4-the implementation of the operation and the definition of its terms, conditions and charges, it is for the Member of Government responsible for the area of finance, by order, apply the provisions of the previous chapter. 5-[Repealed].

Article 17 [...] The measures of strengthening the financial strength provided for in this law have the resources obtained in the framework of the financial support granted to the Portuguese Republic by the European Union and the International Monetary Fund, up to a ceiling of 12 billion euros, the register as provided for in article 2 of law No. 48/2011, August 26, on the State budget. Article 18 [...] 1-[...]. 2-the implementation of the measures provided for in this law is evaluated with maximum quarterly periodicity and includes individual reports on each of the credit institutions concerned, to refer to the Member of Government responsible for the area of finance.

PRESIDENCY Of The COUNCIL Of MINISTERS 19 3-[...]. Article 19 [...] Going on impeachment under the code of procedure in administrative courts of any standards issued in implementation of this law or any acts done in its scope, it is assumed that the adoption of precautionary measures concerning such rules or acts seriously harms the public interest.

Article 20 [...] 1-[...]. 2 - […]. 3-If the public intervention over a concentration in that any of the conditions referred to in paragraph 1 of article 9 of law No. 18/2003, of 11 June, this operation can be carried out before it was the subject of a decision of non-opposition by the competition authority, not depending on the validity of the legal transactions conducted under this authorization operation expressed or implied, that authority. Article 23 [...] [...]: PRESIDENCY of the COUNCIL of MINISTERS to 20) the terms and conditions of public investment; b) the terms and any additional elements of the recapitalisation plan provided for in article 12; c) [Repealed].



Article 24 [...] The public exit referred to in article 8 must occur, under him, within a maximum period of five years. Article 25 [...] 1-[...]. 2-in the case of activation of guarantees, the conversion of credit in the credit institution's capital is carried out through the issuance of special actions, or in accordance with the provisions laid down in paragraphs 4 to 6 of article 4, in consultation with the Bank of Portugal, the institution concerned subject to the obligations laid down in article 14. 3-in the situation provided for in paragraph 1, and without prejudice to the powers of intervention of the Bank of Portugal under the provisions of title VIII of the general scheme of credit institutions and financial corporations, PRESIDENCY of the COUNCIL of MINISTERS 21


approved by Decree-Law No. 298/92 of 31 December, applies, with the necessary adaptations, the provisions of this law and the State may exercise the powers, which gives the article 16A. 4-the provisions of this law regarding competence of organs of convening general meetings and corporate resolutions are applied within the framework of the activation of guarantees granted under the law No. 60/2008 , 20 October, and its regulation, and the capital increase for the State credit cast considered as capital increase in cash.»

Article 3 systematic Changes 1-changes the heading of chapter III of law No. 63-A/2008, of November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010 of 31 December, shall be replaced by the following: ' chapter III public recapitalisation Initiative». 2-Chapter IV is added to law No. 63-A/2008, of November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010, December 31, with the term ' non-compliance with recapitalisation plan with recourse to public capital», which includes article 16-a. 3-the previous chapter IV becomes chapter V of law No. 63/2008 , November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010, December 31, with the term ' final provisions '.

PRESIDENCY of the COUNCIL of MINISTERS Article 22 4 addition to law No. 63-A/2008, of November 24 are added to law No. 63-A/2008, of November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010 of 31 December, articles 4-and 16-A, as follows : ' article 4-remuneration of public investment 1-public investment to be carried out in accordance with the provisions of this law should be adequately remunerated, in accordance with the relevant Community rules and guidelines and on terms to be defined by order of the Member of Government responsible for the area of finance. 2-If the institution has distributable amounts generated in the year, above the minimum level of own funds, including from Core Tier 1, these must be applied to the remuneration of the State's participation gained under this regime, unless this involves ineligibility total shares held by the State for the purposes of the calculation of own funds. Article 16-the Strengthening of the powers of the State in the credit institution's PRESIDENCY of the COUNCIL of MINISTERS 23 1-If the public divestment not occur within three years, or at any time in the event of failure of the recapitalisation plan: a) the State may exercise all of the voting rights attaching to the social participation that holds in the institution;

(b)) the State may appoint or strengthen the number of members of the management and supervisory bodies of the credit institution which represent, in order to ensure representation in the governing bodies of the institution in the proportion corresponding to the percentage of voting rights held in the institution; (c)) the State may dispose freely, in whole or in part, their social participation in the institution, regardless of the legal rights of preference referred to in article 8, paragraph 2, and without prejudice to the provisions of articles 102 et seq. of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December; d) distributable amounts, as dividends, investors who have acquired their participation beyond the scope of this scheme must be used for the public disinvestment, without prejudice to compliance with the minimum capital levels, particularly of Core Tier 1. 2-Without prejudice to the immediate start of term of Office of a member of the PRESIDENCY of the COUNCIL of administration and supervision 24 MINISTERS appointed by the State, the right of appointment referred to in point (b)) of the preceding paragraph shall be exercised with respect for the statutory limits concerning the composition of the organs of the institution and involve, where appropriate, the consequent replacement and expiry of the mandate of one or more of the holders.

3-choice of retiring administrators in virtue of the preceding paragraph, the Chairman of the general meeting shall convene an extraordinary general meeting within five days from the appointment referred to in point (b)) of paragraph 1, which for this purpose is communicated by the Member of Government responsible for the area of finance. 4-When the institution receiving the recapitalisation with public investment is the Central Agricultural Mutual credit Box or a box mutual agricultural credit that is not integrated in the Integrated System of Mutual Agricultural Credit, apply the provisions of paragraph 1 (b)) and d) of paragraph 1, as well as the provisions laid down in paragraphs 3 and 4, mutatis mutandis.» Article 5 set Norm Are abrogated subparagraph (d)) of paragraph 2 of article 4, paragraph 4 of article 7, paragraph 5 of article 16, and article 23, point (c)) of the law No. 63-A/2008, of November 24, as amended by laws Nos 3-B/2010 of 28 April, and 55-A/2010, of 31 December. Article 6 PRESIDENCY of the COUNCIL of MINISTERS 25 Republication is republished, in the annex, which forms an integral part of this decree-law, law No. 63-A/2008, of November 24, with the current wording.

Article 7 entry into force this law shall enter into force on the day following that of its publication.

Seen and approved by the Council of Ministers of 3 November 2011 the Prime Minister and State Minister of finance and Deputy Minister of Parliamentary Affairs PRESIDENCY of the COUNCIL of MINISTERS 26 ANNEX (article 6) CHAPTER I General provisions Article 1 subject-matter this law establishes measures of strengthening the financial soundness of credit institutions within the scope of the initiative to strengthen the financial stability and the provision of liquidity in financial markets. Article 2 reinforcing the Core Tier ratio 1 1-strengthening the financial soundness of credit institutions is carried out by means of capitalisation operations with recourse to public investment, with a view to the fulfilment of the Core Tier 1 ratio established according to the applicable laws and regulations. 2-the use of public investment is carried out in accordance with the principles of necessity and proportionality, compensation and guarantee the capital invested and to minimise the risks of distortion of competition, the State may not exercise, regardless of their participation in the share capital of the credit institution, or control over the institution, in accordance with article 486.º of the companies code and paragraph 2 of article 13 of the general scheme of the institutions of Credit and finance companies, approved by Decree-Law No. 298/92 of 31 of PRESIDENCY of the COUNCIL of MINISTERS December 27, without prejudice to the provisions of article 16 of this law.

3-recourse to public investment subsidiary and temporary in nature, being applicable to operations of capitalisation of credit institutions to be carried out until 30 June 2014. 4-[Repealed]. Article 3 subjective scope 1-can benefit from capitalization transactions provided for in this law credit institutions have headquarters in Portugal, including mutatis mutandis credit institutions set up as a public limited company. 2-the savings banks that benefit from capitalization transactions provided for in this law shall take the form of a public limited company, does not apply the provisions of article 4 of Decree-Law No. 136/79, of 18 May. 3-If the Central Agricultural Mutual credit Box benefit from capitalization transactions provided for in this law, the State can subscribe or purchase capital securities representing the capital of that credit institution acquiring the quality of associated, by applying the arrangements provided for in this Act. 4-in the case referred to in the preceding paragraph:) has application to the provisions of paragraphs 2 and 4 of article 53 of the Legal Regime of Mutual agricultural credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January;

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(b)) the State can withdraw the quality of associated, in the situations provided for in article 8 of this law, without subjection to the requirements provided for in article 68 of the legal framework for the Agricultural Credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January. 5-If the agricultural mutual credit boxes not integrated in the Integrated System of Agricultural Mutual Credit benefit of capitalization operations provided for in this law, the State can acquire capital securities representing the capital of those credit institutions, acquiring the quality of associated, by applying the arrangements provided for in this Act. 6-in the case referred to in the preceding paragraph:) has no application to article 16 of the Legal Regime of Mutual agricultural credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January; (b)) the State can withdraw the quality of associated, in the situations provided for in article 8 of this law, without subjection to the requirements laid down in article 17 of the Legal Regime of Mutual agricultural credit and agricultural credit cooperatives, approved by Decree-Law No. 24/91 of 11 January. Article 4-caps 1-modes the capitalization can be carried out with recourse to the instruments and financial resources to allow the funds made available to the credit institution are eligible for Core Tier 1 capital.

PRESIDENCY of the COUNCIL of MINISTERS 29 2-capitalization operation can be carried out through: a) acquisition of own shares held by the credit institution, or other securities representing capital when the institution does not take the form of a public limited company; b) increase of the share capital of the credit institution; c) other instruments or funds eligible for Core Tier 1 own funds in accordance with the conditions established for that eligibility; d) [Repealed]. 3-When the casing operation is performed by means of the acquisition of own shares of the credit institution, such shares converted automatically in special actions subject to the conditions laid down in paragraphs 5 and 6. 4-the increase of the share capital provided for in subparagraph (b)) of paragraph 2 may only be carried out by issuing special actions subject to the conditions laid down in paragraphs 5 and 6, in the case of credit institutions set up as a public limited company. 5-the creation of special actions provided for in the preceding paragraph is not subject to statutory forecast expressed. 6-special actions referred to in paragraphs 3 and 4 are subject to the regime of ordinary shares, except to the extent that entitlement to a priority dividend, in accordance with the provisions of Article 4bis *. 7-the provisions of paragraphs 3 to 6 shall apply mutatis mutandis to capital securities set out in paragraphs 3 and 5 of article 3.



PRESIDENCY of the COUNCIL of MINISTERS 30 8-regardless of participation that purchase pursuant to points (a)) and b) of paragraph 2, and without prejudice to the provisions of the following paragraph and in article 16a, the State can only exercise their right to vote in decisions respecting the amendment of the articles of Association, merger, Division, transformation, dissolution, or other matters to which the law or the statutes require a qualified majority. 9-When the participation which the State acquires pursuant to points (a)) and b) of paragraph 2 exceeds a threshold to be defined by order of the Member of Government responsible for the area of finance, taking into account the rules and guidelines in the field of State aid, can the State exercise the voting rights attaching to the participation held in that it exceeds the threshold. 10-the provisions of paragraph 8 shall apply to equity provided for in paragraphs 3 and 5 of article 3. 11-the capitalisation operation carried out in accordance with point (b)) of paragraph 2 may consist in the issue of ordinary shares for shareholders of the credit institution to the public or to both, with underwriting or guarantee placement, in whole or in part, by the State, by means of Commission to be determined by Member of the Government responsible for the area of finance. 12-Is the State authorized to underwrite or guarantee the placement of the issue in accordance with the procedure referred to in the preceding paragraph, without prejudice to the possibility of resorting to a financial intermediary for this purpose. Article 4-the remuneration of public investment 1-public investment to be carried out in accordance with the provisions of this law should be adequately remunerated, in accordance with the relevant Community rules and guidelines and on terms to be defined by order of the Member of Government responsible for the area of finance.

PRESIDENCY of the COUNCIL of MINISTERS 31 2-If the institution has distributable amounts generated in the year, above the minimum level of own funds, including from Core Tier 1, these must be applied to the remuneration of the State's participation gained under this regime, unless this involves ineligibility total shares held by the State for the purposes of the calculation of own funds. Article 5 advance payment on account of the advance entries of funding for the credit institution to consider – if allocated to carry out the obligation of entry in case of capital increase and releases the State of this obligation to the extent applicable. Article 6 right of preference in subscription Without prejudice to the provisions of the Commercial companies code regarding the possibility of restriction or withdrawal of the right of pre-emption, the deadline for the exercise in the context of capital increases of credit institutions, under this law, may not exceed 15 days, counted from the publication of the notice in mass circulation national daily newspaper , sending e-mail or shipment of registered letter addressed to the holders of registered shares. By way of derogation from article 7 duty to launch tender offer 1-the voting rights acquired by the State in the context of this law are not considered for purposes of duty general public offering launch.

PRESIDENCY of the COUNCIL of MINISTERS-Not to fall within 32 2 the effects of imputation of voting rights, nor to the duty of general public offering launch acquisition, the arrangements for the exercise of voting rights that have as their purpose the binding of society for the purposes of implementation of capitalisation operations under this law. 3-The subscribed shares by the State, and while these remain on your title, shall not apply the provisions of paragraph 5 of article 227.º of Código dos Valores Mobiliários, starting-if the deadline envisaged at the time of there transmission of shares to third parties. 4-[Repealed]. Article 8 public Disinvestment 1-showing ensured by the credit institution, the maintenance of adequate levels of equity, in particular Core Tier 1, the public disinvestment is accomplished, in particular, in accordance with market conditions and to ensure adequate remuneration and guarantee the capital invested, taking into account the objectives of financial stability 2-distributable amounts generated in the exercise going on , as dividends, and without prejudice to the provisions of the preceding paragraph, are the same used for the public disinvestment. 3-in the course of public investment, without prejudice to article 16, and in articles 102 et seq. of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December, the State can only alienate the participation that get in the share capital of the credit institution, in whole or in part the shareholders of the institution, the date of disinvestment, and according to the rules of right of first refusal. 4-it is the Bank of Portugal, for the purposes of paragraph 1, make a PRESIDENCY of the COUNCIL of MINISTERS 33 is ensured the maintenance of adequate levels of own funds after the approval of the individual accounts of the credit institution or, where applicable, after the approval of the consolidated accounts of the parent company of the group to which belongs the credit institution , on whose financial situation relating to consolidated supervision exercised by the Bank of Portugal. 5-actions in which achieving the State's participation be converted automatically, upon exiting, into ordinary shares. 6-the provisions of this article shall apply mutatis mutandis to capital securities provided for in paragraphs 3 and 5 of article 3. CHAPTER II Strengthening of own funds article 9 access to public investment and discussions of society 1-access to public investment to strengthen Core Tier 1 capital depends on the presentation by the credit institution, with the Bank of Portugal, a recapitalisation plan which provides for necessary and appropriate measures to that end, its timing, and the demonstration that the institution meets the appropriate conditions of solidity for the continuation of its activity. 2-the recapitalisation plan mentioned in the preceding paragraph is subject to approval by the General Assembly of the beneficiary institution.

3-the implementation of the measures provided for in the recapitalisation plan approved pursuant to paragraph 1 it is incumbent upon the Board of Directors, mandated for this purpose, always


PRESIDENCY of the COUNCIL of MINISTERS 34 necessary, in that deliberation. 4-the mandate given by the General Assembly involves giving the Board of jurisdiction to take all the measures provided for in this law, including capital increases, without reliance on statutory limits that perhaps there may be established. 5-The deliberations of a capital increase in the context of the strengthening of equity shall not apply the provisions of paragraph 3 of article 87 of the code of commercial companies. 6-the decisions provided for in the preceding paragraphs produce immediate effect, without prejudice to the need to see the record of the minutes and to be entered in the commercial register. Article 10 shape and scope of the deliberations of the company 1-the general meeting is convened specifically for the purpose referred to in paragraph 2 of the preceding article, at least fourteen days notice published in mass circulation national daily newspaper or by electronic mail addressed to all the shareholders, giving them the possibility to vote by electronic means. 2-the general meeting deliberates, for all intents and purposes provided for in this law, by a simple majority of the votes present and no quorum requirement of incorporation.

Article 11 Challenge of corporate resolutions PRESIDENCY of the COUNCIL of MINISTERS 35 1-corporate resolutions relating to matters covered by this chapter shall not apply the provisions of paragraph 3 of article 397.º of the code of Civil procedure and is assumed – if, for all legal purposes, that their suspension damage greater than that which would result from the implementation of the resolution. 2-the suspension of credit institutions corporate resolutions adopted within the framework of the strengthening of equity can only be requested by shareholders, individually or together, hold shares representing at least 5% of the share capital of the credit institution. Article 12 recapitalisation Plan with public capital 1-the recapitalisation plan provided for in paragraph 1 of article 9 shall comply with the Community rules and guidelines in the field of State aid and contain, inter alia, the following elements: a) capital reinforcement targets Core Tier 1, with an indication of the evolution, composition and structure of these own funds throughout the duration of the plan as well as the nature of the operations envisaged for their implementation; b) updated information about the assets and liabilities, as well as the ratios and prudential indicators about the liquidity and processing, quality of assets and risk coverage;

c) strategic Programming of activities throughout the duration of the plan, including possible changes in the structure of the group in the institution, and in particular, non-financial holdings, owned by same, and PRESIDENCY of the COUNCIL of MINISTERS 36 projections about the evolution of profitability, liquidity position and capital adequacy; d) any adjustments to be made in the system of corporate governance and management mechanisms and control of risks, with a view to achieving the objectives of the plan. and) cost reduction and increased structural weight of financing to small and medium-sized enterprises, in particular in the sectors of tradable goods and services; f) measures to respond to any additional requirements arising from stress tests; g) terms and conditions of public disinvestment. 2-it is the Bank of Portugal proceed to the analysis of the recapitalisation plan, and must remit, within 10 working days, its proposal for a decision, duly substantiated, to the Member of Government responsible for the area of finance. 3-on the proposal for a decision, the Bank of Portugal pronounced, in particular, on the assets and liabilities of the credit institution on the amount of public investment required and about the terms and conditions of public disinvestment. 4-the Bank of Portugal may request the credit institution and further information elements which are necessary for the assessment of the recapitalisation plan, as well as require the amendment or the forecast of additional measures. 5-the period referred to in paragraph 2 may be extended for an equal period if the complexity of the operation. Article 13 Decision of COUNCIL of MINISTERS PRESIDENCY 37 1-it is the Member of Government responsible for the area of finance, by order, to decide on the implementation of the capitalization operation, their terms, conditions and charges to assume the credit institution concerned. 2-in the weighting of the decision, the Member of Government responsible for the area of finance takes into account, inter alia, the contribution of the credit institution concerned for the financing of the economy and the need for strengthening of own funds. 3-the decision referred to in paragraph 1 also lays down the terms and conditions of public disinvestment, fulfilled the objectives of strengthening of own funds. 4-the decision referred to in paragraph 1 must be taken within five working days, renewable for an equal period if the complexity of the operation justifies, without prejudice to the Faculty of return of the plan to the Bank of Portugal for clarification, in which case the term suspended. 5-Notwithstanding the provisions of article 16, the order referred to in paragraph 1 may be modified in the event of serious or systematic failure to comply with the obligations assumed by the credit institution, or in case of abnormal change of the circumstances in which it was founded.

Article 14 obligations of credit institution 1-While the credit institution to meet within the public investment to strengthen own funds shall be subject to the terms, conditions and charges set out in the order provided for in paragraph 1 of the preceding article, in particular as regards: PRESIDENCY of the COUNCIL of MINISTERS the 38) the use of the means provided under strengthening of own funds in particular with regard to the credit institution's contribution to the financing of the economy, particularly to households and small and medium-sized enterprises, in particular in the context of tradable goods and services sectors; b) the adoption of principles of good corporate governance, which can include the enhancement of the number of independent directors; (c)) the remuneration policy of the owners of the management and supervisory bodies, taking into account the provisions of paragraph l) from 24 of the annex to Decree-Law No 104/2007, of 3 April; d) the adoption of measures to avoid distortions of competition; and) the possibility of be required the strengthening of contributions to deposit guarantee funds; f) the adoption of mechanisms that allow achieving disinvestment in public market conditions to ensure that an appropriate return on capital invested, thereby ensuring the protection of the interests of taxpayers;

g) to prior approval by the Member of Government responsible for the area of finance decision to proceed to the payment of interest or dividends, except in compliance with legal obligations; h) the prior consultation of the Member of Government responsible for the area of finance in making decision on the exercise of the right of repurchase of an instrument eligible for regulatory capital;

PRESIDENCY of the COUNCIL of MINISTERS 39 i) to reduce structural costs. 2-While the credit institution to meet within the public investment for strengthening of own funds, the State may appoint by order referred to in paragraph 1 of the preceding article, a member for the Administration and supervision of the credit institution, without prejudice to article 16A. 3-the order referred to in the preceding paragraph assigns to the representative appointed by the State the following functions In addition to other actions that are attributed by law or by the statutes: a) to ensure the verification of compliance with recapitalisation plan and the obligations of the recipient credit institutions established under this scheme, in view of financial stability and the patrimonial interests of the State; b) prepare and send to the Bank of Portugal and member of the Government responsible for the area of finance, with a minimum monthly periodicity, a report containing the conclusions of the evaluation in accordance with the preceding paragraph; c) Inform the Bank of Portugal and the Member of Government responsible for the area of Finance of any relevant fact within their respective functions. 4-are null the deliberations of bodies of the credit institution which contradict the commitments for this undertaken pursuant to this article. Article 15 Liability the liability of the members of the administrative and supervision towards the company, to the shareholders and creditors for any action pursuant to this chapter shall only exist in case of fraud or serious fault of the PRESIDENCY of the COUNCIL of MINISTERS 40


Agent. CHAPTER III public recapitalisation Initiative article 16 Part 1 intervention-where a credit institution has a level of Core Tier 1 capital, less than the minimum required, and not on its own initiative, or no change in accordance with guidelines of the Bank of Portugal a recapitalisation plan, can this determine the institution to submit a plan of recapitalization with recourse to public capital pursuant to this law. 2-In case of failure to comply with the provisions of the previous article, the Bank of Portugal may appoint an interim administration for the institution, revoke the authorization of operation, or apply measures for resolution in accordance with the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December.

3-the preceding paragraphs shall not affect the exercise of the powers of the Bank of Portugal, in accordance with title VIII of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December. 4-the implementation of the operation and the definition of its terms, conditions and charges, it is for the Member of Government responsible for the area of finance, by order, apply the provisions of the previous chapter. 5-[Repealed].

PRESIDENCY of the COUNCIL of MINISTERS 41 CHAPTER IV the recapitalisation plan with recourse to public capital article 16-the enhanced powers of the State in the credit institution 1-If the public disinvestment does not occur within three years, or at any time in the event of failure of the recapitalisation plan: a) the State may exercise all of the voting rights attaching to the social participation that holds in the institution; (b)) the State may appoint or strengthen the number of members of the management and supervisory bodies of the credit institution which represent, in order to ensure representation in the governing bodies of the institution in the proportion corresponding to the percentage of voting rights held in the institution;

(c)) the State may dispose freely, in whole or in part, their social participation in the institution, regardless of the legal rights of preference referred to in article 8, paragraph 2, and without prejudice to the provisions of articles 102 et seq. of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December; d) distributable amounts, as dividends, investors who have acquired their participation beyond the scope of this scheme must be used for the public disinvestment, without prejudice to compliance with the minimum capital levels, particularly of Core Tier 1.

PRESIDENCY of the COUNCIL of MINISTERS 42 2-Without prejudice to the immediate start of functions of the members of the management and supervisory bodies appointed by the State, the right of appointment referred to in point (b)) of the preceding paragraph shall be exercised with respect for the statutory limits concerning the composition of the organs of the institution and involve, where appropriate, the consequent replacement and expiry of the mandate of one or more of the holders. 3-choice of retiring administrators in virtue of the preceding paragraph, the Chairman of the general meeting shall convene an extraordinary general meeting within five days from the appointment referred to in point (b)) of paragraph 1, which for this purpose is communicated by the Member of Government responsible for the area of finance. 4-When the institution receiving the recapitalisation with public investment is the Central Agricultural Mutual credit Box or a box mutual agricultural credit that is not integrated in the Integrated System of Mutual Agricultural Credit, apply the provisions of paragraph 1 (b)) and d) of paragraph 1, as well as the provisions laid down in paragraphs 3 and 4, with the necessary adaptations. Chapter V final provisions article 17 Financing measures for strengthening the financial strength provided for in this law have the resources obtained in the framework of the financial support granted to the Portuguese Republic by the European Union and the International Monetary Fund, up to a ceiling of 12 billion euros, the register as provided for in article 2 of law No. 48/2011, of 26 August in the State budget.

PRESIDENCY of the COUNCIL of MINISTERS Article 43 18 monitoring and supervision 1-without prejudice to the competence of other entities with inspectivas functions, the Bank of Portugal to monitor and supervise the fulfilment of the obligations of the credit institution established in despatches referred to in articles 14 and 16 2-implementation of the measures provided for in this law is evaluated with maximum quarterly periodicity and includes individual reports on each of the credit institutions subject to , to refer to the Member of Government responsible for the area of finance. 3-every six months, the Member of Government responsible for the area of finance gives knowledge to Parliament of capitalisation operations carried out within the framework of this law and its implementation.



Article 19 public interest going on disputes under the code of procedure in administrative courts of any standards issued in implementation of this law or any acts done in its scope, it is assumed that the adoption of precautionary measures concerning such rules or acts seriously harms the public interest. Article 20 of COUNCIL of MINISTERS PRESIDENCY 44 Competition 1-without prejudice to the international obligations of the Portuguese State, is not considered concentrations the State acquisition of shareholdings or assets in credit institutions under this law. 2-While public intervention remains held under this law, whenever you are referred to the susceptibility of weighting of relevant economic interests, for the purposes of the legislation applicable to concentrations of companies, must be considered for the protection of the public interest, the urgency inherent in performance in the financial sector, the circumstances relating to risk and asset situation of credit institutions in particular as regards solvency and liquidity, and its implications in the Portuguese financial system stability.

3-If the public intervention over a concentration in that any of the conditions referred to in paragraph 1 of article 9 of law No. 18/2003, of 11 June, this operation can be carried out before it was the subject of a decision of non-opposition by the competition authority, not depending on the validity of the legal transactions conducted under this authorization operation expressed or implied, that authority. Article 21 1 Review-this law can be reviewed at any time, in particular if financial market conditions so warrant or if this is necessary for reasons of coordination COUNCIL of MINISTERS PRESIDENCY 45 at the level of the euro zone and the European Union. 2-Notwithstanding the previous paragraph, this law is reviewed within six months. Article 22 the State References references in this Act to the State include companies whose capital is held directly or indirectly by the State. Article 23 Legislation the Member of Government responsible for the area of finance sets, by Ordinance, procedures for the implementation of this law, in particular: a) the terms and conditions of public investment; b) the terms and any additional elements of the recapitalisation plan provided for in article 12; c) [Repealed]. Article 24 time limit of public disinvestment disinvestment public referred to in article 8 must occur, under him, within a maximum period of five years. Article 25 coordination with the system of warranties 1-access to public investment in the context of this law is independent of the PRESIDENCY of the COUNCIL of resource MINISTERS 46 by the credit institution the personal guarantees of the State, pursuant to law No. 60-A/2008, of 20 October. 2-in the case of activation of guarantees, the conversion of credit in the credit institution's capital is carried out through the issuance of special actions, or in accordance with the provisions laid down in paragraphs 4 to 6 of article 4, in consultation with the Bank of Portugal, the institution concerned subject to the obligations laid down in article 14. 3-in the situation provided for in paragraph 1, and without prejudice to the powers of intervention of the Bank of Portugal under the provisions of title VIII of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December, applies, with the necessary adaptations, the provisions of this law and the State exercise, the powers which gives the article 16A.


4-the provisions of this law regarding competence of organs of convening general meetings and corporate resolutions are applied within the framework of the activation of guarantees granted under law No 60-A/2008, of 20 October, and its regulation, and the capital increase for the State credit cast considered as capital increase in cash. Article 26 entry into force this law shall enter into force on the day following that of its publication.

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