CMVM regulation 1/2023

CMVM (the Portuguese Securities Market Commission) Regulation 1/2023 on the information obligations of issuers and rules applicable to takeover bids ("Regulation 1/2023" or the "Regulation") was published on 26 April. The Regulation repeals CMVM Regulations 7/2018 (amendment of CMVM Regulation 5/2008), 5/2008 (disclosure requirements), 3/2006 (bids and issuers), 11/2005 (scope of International Accounting Standards) and 6/2002 (presentation of financial information by segment). The Regulation also provides for the possibility of reviewing and consolidating all these matters not subject to repeal into a single, autonomous and simplified regulation.

1. What is at stake?

In general terms, the objectives of this revision are (i) to adapt the content of the above-mentioned regulations to the changes made to the Portuguese Securities Code (Código dos Valores Mobiliários - "Securities Code") at the end of 2021, and (ii) to continue the process of simplifying the obligations incumbent on issuers, eliminating those that are redundant or additional to the European legislation, unless there are specific national circumstances that justify their maintenance.

The rationale behind this revision is therefore to simplify the legislation and to increase the transparency and comprehensibility of the current rules for issuers in order to promote investor confidence and market competitiveness. The main changes introduced by this new Regulation are detailed below.

The rationale behind this revision is therefore to simplify the legislation and to increase the transparency and comprehensibility of the current rules for issuers in order to promote investor confidence and market competitiveness.

1.1. Information duties - regulation of the matters provided for in CMVM Regulations 5/2008 and 11/2005 and repeal of Regulation 6/2002

  • End of public companies: Regulation 1/2023 excludes from its subjective scope, by virtue of the abolition of the public company in the new Securities Code, those entities that have made public offers without the subsequent admission of the securities to the market. Instead, it focuses on companies with securities admitted to trading on a regulated market.
  • Elimination of duties that already result from the Securities Code or the MAR: With regard to the disclosure of facts concerning companies issuing securities, it appears that Regulation 1/2023 eliminates from its objective scope a number of information duties that also result from the Securities Code and Regulation (EU) 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse ("Market Abuse Regulation" or "MAR"). In particular, we note the duties to disclose (i) assignments or changes of credit ratings, which is information falling under the concept of privileged information, (ii) lists of holders of qualifying holdings in the annual report and accounts, already included in the corporate governance reports and notices of qualifying holdings, (iii) the duty of confidentiality with respect to privileged information resulting from the MAR, and (iv) certain rules on the means of disclosure.
  • Own shares: In order to improve alignment with the European rules contained in Directive 2013/50/EU of the European Parliament and of the Council of 22 October 2013 (the "Transparency Directive"), the reporting obligation will no longer apply to all transactions in own shares, but only when the percentage of voting rights attached to the own shares in question exceeds or falls below the thresholds of 5% or 10% of the total voting rights. This obligation also applies to other securities giving the right to subscribe, acquire or sell shares issued or to be issued by the issuer.
  • Managers' transactions: the notification and disclosure of transactions by managers and closely related persons upon their appointment or after the admission of the securities to trading is no longer regulated by this Regulation. This is because it is understood that this obligation to disclose the initial position does not result from the European regulation applicable to managers' transactions (the MAR) and that this information is already disclosed by issuing companies in other ways. The Portuguese Companies Code and the Securities Code require the disclosure of this information in the proposals for general meetings, whenever the election of members is an item on the agenda. It should be noted that this aspect in no way conflicts with the obligations to report transactions following the appointment of managers or the admission of securities to trading, which remain in place.
  • Criteria for the notification of changes in securities with voting rights attached: This Regulation limits the previous rule on changes in securities with voting rights attached (Article 2(3) of CMVM Regulation 5/2008) to the rules on mandatory takeover bids ("Takeover Bids"), in the sense that the market must be informed of changes which, while leaving the size of the holding with voting rights unchanged, may give the participant an ability to exercise influence that it did not have previously. The proposed solution is limited to cases where the relevant thresholds for takeover bids are exceeded. It is designed to ensure the protection of minority shareholders which is the basis of the takeover bids rules. It also aims to ensure transparency in the event of an effective change of control. This can be monitored through compliance with the rules on the acquisition, modification and elimination of qualifying shareholdings and the corresponding sources of attribution or securities.
  • Financial information: In line with the amendments to the Securities Code, Regulation 1/2023 repeals the rules on quarterly financial statements and stipulates that issuers that are not required to publish consolidated financial statements must now present their financial statements in accordance with international accounting standards. In this respect, Regulation 1/2023 has removed the obligation to present financial information by segment for individual financial statements in accordance with the Accounting Standards System.

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