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18 February 2004
On February 4 2004 the Portuguese government decided to revoke Decree-Law 380/93, which for the past 10 years has required the authorization of the minister of finance for the acquisition of stakes of over 10% in companies undergoing reprivatization.
Decree-Law 380/93 was enacted to ensure that the Portuguese government could become involved in reprivatizations through the appropriate means, while respecting the general rules of the EC Treaty, with a view to protecting its financial interests.
The new decree-law will come into effect immediately once the legislative process has been concluded (the Portuguese president must promulgate the decree-law) and the statute has been published in the Official Gazette. This is expected to occur by the end of March.
The government's decision is the final step in a protracted dispute between the European Commission and Portugal over Portugal's delay in ensuring compliance with its obligations under Article 56 of the EC Treaty.
As a result of the restrictions imposed by Decree-Law 380/93, important acquisitions in major undertakings in strategic sectors of the Portuguese economy were blocked by former ministers of finance, who had the power to refuse authorization to acquisitions that exceeded 10%.
The harmonization of Portuguese legislation with EU law commenced with a June 4 2002 ruling of the European Court of Justice (ECJ) declaring that Portugal had failed to comply with its obligations under Article 73B of the EC Treaty (now Article 56 of the EC Treaty).
The ECJ found that Decree-Law 380/93 could obstruct acquisitions in the companies concerned and deter investors in other member states from investing in undertakings undergoing reprivatization.
On May 15 2003 the European Commission enjoined Portugal to apply the ECJ ruling.
The process of execution of the EU decisions on the elimination of privatization restrictions began on November 15 2003, when the government repealed other important restrictions to the movement of capital. Law 102/2003 revoked a number of statutes which restricted the movement of capital by prohibiting the acquisition by investors from other EU member states of more than a given number of shares in certain national undertakings.
With this set of measures, the Portuguese government has brought Portuguese privatization law into line with EU requirements and has avoided infringement proceedings to be carried out by the commission.
For further information on this topic please contact Frederico Pereira Coutinho or José Miguens Mendes at Gonçalves Pereira, Castelo Branco e Associados by telephone (+351 21 355 3800) or by fax (+351 21 353 2362) or by email (email@example.com or firstname.lastname@example.org).
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Frederico Pereira Coutinho