The acquisition of a public company in Portugal involves a regulated and formalized process. The main rules are established in the Portuguese Securities Code, and the process is overseen by the Portuguese Securities Market Commission (CMVM).
In addition to standard procedures common to both private and public acquisitions – such as due diligence and NDA – listed companies are subject to particular rules.
For instance, as regards listed companies, a mandatory takeover bid is applicable whenever the acquirer gains control (i.e., more than 50% of voting rights) or gains more than 1/3 of the voting rights and does not guarantee minority shareholder protection.
If the purchaser acquires 90% or more of voting rights, they may force a buyout of the remaining shareholders. Conversely, if the purchaser acquires 90% or more of voting rights, minority shareholders may force the purchaser to acquire their shares.
Additionally, if certain conditions are met (e.g., squeeze-out or shareholder approval), the company may be delisted from the stock exchange.
The above does not prejudice other regulatory requirements applicable both to public and private acquisitions, including antitrust clearance (if thresholds are met), Bank of Portugal or European Central Bank approvals in financial sector deals.
Finally, as regards foreign investment, and although Portuguese framework does not discriminate between national and foreign investors, certain sectors (e.g., defense, energy, infrastructure) may trigger national interest review.
Typically, M&A deals include a due diligence, the execution of NDAs and the negotiation of the share purchase agreement.
In the case of public companies, where there is a public takeover offer (Oferta Pública de Aquisição – OPA), the process includes additional specific regulatory documentation and filings:
Typically, M&A deals include a due diligence, the execution of NDAs and the negotiation of the share purchase agreement.
In the case of public companies, where there is a public takeover offer (Oferta Pública de Aquisição – OPA), the process includes additional specific regulatory documentation and filings:
In Portugal, mandatory tender offers are strictly regulated under the Portuguese Securities Code and supervised by CMVM. This regulatory framework ensures that minority, non-selling shareholders are treated fairly when control of a listed company changes hands.
When an entity or a person obtains control of a listed company, as defined in the Portuguese Securities Code, it is legally obliged to launch a mandatory tender offer supervised by CMVM for all outstanding shares (and other voting securities) of the company.
The process is fully regulated under applicable law and involves the preparation of the offer and prospectus, regulatory filings and notifications, and the preparation of a target board of directors’ report to shareholders.
Minority shareholders are protected by equal treatment, fair price rules, and exit mechanisms such as:
In Portugal, M&A deals can be structured as most suits the strategic, tax, legal, and commercial specifications of each transaction. The most common structures are acquisition of shares, subscription of share capital (formalized through a share capital increase of the target company) and asset deal (Transfer of Assets and Liabilities). As in the assets deal the buyer acquires specific assets and/or liabilities of a company rather than its shares, this type of deal is most used for acquisition of distressed companies or purchase of carve-out business units. As a downside of structuring the deal as an asset deal involves that generally third-party consents are obtained for the transfers of relevant agreement as well as compliance with labor communication formalities. Also acquisition through merger (national or cross border merger) is possible, being the merger specifically ruled in the Portuguese Companies Code and is subject to specific formalities and possibility of opposition by creditors
Although the same are not forbidden, Portuguese law does not contain specific legislation on SPACs and the same are not common in Portugal.
Although Portuguese law is quite flexible and M&A deals can accommodate any price adjustment mechanism that is acceptable to the parties, the three most common approaches under M&A practice in Portugal are the True-Up and Locked-Box Regime.
Under the Locked-Box Regime the purchase price is fixed based on a historical balance sheet (the “locked-box date”) and from that date until closing, no leakage (unauthorized value transfers) is allowed. In this regime the buyer accepts economic risk from the locked-box date. It is mostly used to simplify pricing and avoid complex closing adjustments although commonly the buyer demands warranties, indemnities, and interest or ticking fee to compensate for the time between the locked-box date and closing.
The True-Up Regime (Completion accounts) implies that the purchase price is adjusted post-closing based on actual financials at closing (e.g., working capital, net debt, cash). This mechanism allows the security of having real-time financial status at closing but involves the preparation and agreement of the parties on the completion accounts and usually includes expert determination clauses.
Earn-Out Provisions are also commonly used in Portugal especially in Startups, tech, or businesses with unpredictable earnings, and mainly where the seller will be still involved in the business of the target after completion. A portion of the price is contingent on future milestones (e.g. EBITDA, revenue, net income) of the target.
Reverse Earn-Out, Fixed Price, Down Payments are not standard market practice in Portugal.
The most critical mandatory conditions precedent in Portuguese M&A are:
In Portugal, while antitrust and regulatory approvals are mandatory by law, clauses like MAC, break-up fees are negotiable instruments that balance deal certainty and risk allocation.
MAC (Material Adverse Change) Clauses
Break-up Fees (Termination Fees)
In Portugal, knowledge and materiality qualifiers have no legal definition, although legal framework allows for limitation of liability clauses, so the way “knowledge” and “materiality” qualifiers are drafted can significantly shape the enforceability of indemnities. These clauses must be negotiated and defined in the SPA.
Knowledge Qualifiers: In Portuguese M&A practice, sellers often try to qualify their representations and warranties by limiting them to matters “to the best of the seller’s knowledge” (or a variant). The definition is negotiated in the SPA. Typical approaches include: (i) Actual knowledge – knowledge the seller actually had. (ii) Constructive knowledge / reasonable knowledge – what the seller should have known after reasonable inquiry. (iii) Specified knowledge groups – often linked to the knowledge of named individuals (e.g. directors, senior management).
Materiality Qualifiers:
Materiality is almost usually defined in the agreement, either quantitatively or qualitatively – by reference to the importance to the business as a whole (e.g., any contract accounting for more than 5% of annual revenue).
Portuguese M&A practice is broadly aligned with other EU jurisdictions, bring-down provisions— which require that representations and warranties (reps & warranties) made at signing remain true and accurate at closing—are usual practice.
Bring down provisions (although in some cases may be qualified by materiality or fundamental R&W) are standard when signing and closing are separated by time, there is a completion accounts mechanism, conditions precedent are pending.
Nevertheless, this may vary in scope and intensity depending on the deal structure, risk allocation, and negotiation dynamics inter alia considering the deal size and complexity, whether it’s a private equity deal or strategic buyer, presence of interim covenants and MAC clauses.
Portuguese contract law is mainly governed by the Portuguese Civil Code), and it does not explicitly regulate sandbagging. However, sandbagging provisions are generally enforceable, if expressly agreed between the parties. Portuguese legal framework upholds freedom of contract, provided that the clause is clear, express, and not contrary to public interest.
This means that implied sandbagging rights are uncertain under Portuguese law unless contractually provided for as courts may infer the parties’ intentions based on the nature of the breach, the good faith principle, the duty to mitigate damages or whether the buyer acted opportunistically.
Anti-Sandbagging Clauses are also often included in M&A deals, especially where disclosure and diligence were extensive as well as knowledge qualifiers and clauses limiting liability for issues disclosed or known to the buyer.
Portuguese contract law is mainly governed by the Portuguese Civil Code), and it does not explicitly regulate sandbagging. However, sandbagging provisions are generally enforceable, if expressly agreed between the parties. Portuguese legal framework upholds freedom of contract, provided that the clause is clear, express, and not contrary to public interest.
This means that implied sandbagging rights are uncertain under Portuguese law unless contractually provided for as courts may infer the parties’ intentions based on the nature of the breach, the good faith principle, the duty to mitigate damages or whether the buyer acted opportunistically.
Anti-Sandbagging Clauses are also often included in M&A deals, especially where disclosure and diligence were extensive as well as knowledge qualifiers and clauses limiting liability for issues disclosed or known to the buyer.
Traditional seller indemnification is that if any R&W proves false seller indemnifies buyer for resulting loss that occurs due to fact occurred prior to closing date. It is however common practice in Portugal to mitigate this indemnification obligation with survival periods, caps, materiality qualifier (such as baskets, de minimis), disclosed information or increase the respective scope for example with specific indemnifications and covenants
Strict “My Watch – Your Watch” Structures where buyer assumes all post-closing liabilities, even if relating to past practices are not forbidden by Portuguese legal framework and are used mainly in transactions where seller has negotiating leverage (clean exit), or transactions with W&I insurance (buyer protection shifts to insurer).
It is however important to bear in mind thar that civil law backroad in Portugal is conceptually closer to contractual damages and therefore drafting often borrows common-law style, but needs careful alignment with Portuguese law, (e.g., liability for fraud or willful misconduct cannot be excluded).
Portugal sees classic R&W indemnification, with caps/baskets/survival periods in line with European practice. Specific indemnities are common for known risks. “My watch – your watch” allocations may be used, especially in deals with W&I insurance.
Traditional seller indemnification is that if any R&W proves false seller indemnifies buyer for resulting loss that occurs due to fact occurred prior to closing date. It is however common practice in Portugal to mitigate this indemnification obligation with survival periods, caps, materiality qualifier (such as baskets, de minimis), disclosed information or increase the respective scope for example with specific indemnifications and covenants
Strict “My Watch – Your Watch” Structures where buyer assumes all post-closing liabilities, even if relating to past practices are not forbidden by Portuguese legal framework and are used mainly in transactions where seller has negotiating leverage (clean exit), or transactions with W&I insurance (buyer protection shifts to insurer).
It is however important to bear in mind thar that civil law backroad in Portugal is conceptually closer to contractual damages and therefore drafting often borrows common-law style, but needs careful alignment with Portuguese law, (e.g., liability for fraud or willful misconduct cannot be excluded).
Portugal sees classic R&W indemnification, with caps/baskets/survival periods in line with European practice. Specific indemnities are common for known risks. “My watch – your watch” allocations may be used, especially in deals with W&I insurance.
Portuguese law sets specific statutes of limitations for different types of liabilities and survival periods in SPAs are often aligned with these.
Core liabilities are:
The main liabilities Portuguese buyers should consider are linked with tax, employment/social security, environmental matters. Survival periods in SPAs are calibrated against statutory limitation periods, but usually negotiated shorter for general warranties, with longer coverage for tax, employment, environmental, and fundamental warranties.
In cross-border M&A transactions involving Portuguese companies, parties often consider choosing foreign law and foreign courts or arbitration venues for dispute resolution. Under Portuguese law, this is generally permissible, but with important limitations and practical considerations.
Under the Rome I Regulation (EC 593/2008) – which is directly applicable in Portugal – parties are free to choose the governing law of their contract, provided that the mandatory rules established under local law are complied with (such as provisions governing the transfer of shares, real estate matters, assignment of credits and obligations).
The enforceability of foreign judgments in Portugal depends on the jurisdiction of origin. Judgments from EU member states generally benefit from automatic recognition under the Brussels I Regulation (EU 1215/2012), meaning they are directly enforceable without further judicial review. Judgments issued by non-EU countries, on the other hand, require a formal recognition process in Portugal (exequatur).
International arbitration is fully recognized and widely used in large or cross-border transactions involving Portuguese targets, particularly due to Portugal’s status as a signatory to the New York Convention. This ensures that foreign arbitral awards are generally enforceable in Portugal, provided procedural requirements are met.
For significant or cross-border deals, parties frequently apply internationally renowned rules such as those of the ICC (International Chamber of Commerce), LCIA (London Court of International Arbitration), or ICSID (International Centre for Settlement of Investment Disputes). Arbitration usually takes place in neutral venues like London, Paris, or Geneva, chosen for their established credibility in international dispute resolution. In smaller Portuguese transactions, parties often opt for the Portuguese Chamber of Commerce and Industry Arbitration Centre, which is well-regarded for domestic cases.
Market practice is to choose Portuguese law where the target is a Portuguese company.
In Portuguese M&A practice parties choose between litigation before national courts or arbitration to resolve disputes. Each option has distinct advantages and disadvantages, depending on the size, complexity, and international dimension of the transaction.
The choice should be reflected clearly in the SPA, especially if multiple agreements or jurisdictions are involved.
Arbitration proceedings are quicker, private (preserving sensitive deal and financial information), and Parties can choose neutral arbitrators and seat, avoiding concerns about local bias. Awards are widely enforceable under the New York Convention (over 170 countries).
As a downside arbitration involves arbitrator fees, administrative costs, and potentially higher legal fees and decisions are final and binding with limited grounds for annulment.
Av. da República 32 – 4 º Esq, 1050-193 Lisboa,
Portugal
Call: +351 21 781 5660
Cristina Ribeiro Coelho
Partner
Email: cristina.coelho@tfra.pt
Call: +351 217 815 660
