Authorisation for setting-up: financial companies
The setting-up of a financial company depends on an authorisation granted by the Banco de Portugal, on a case-by-case basis, in accordance with Article 16 of the Legal Framework of Credit Institutions and Financial Companies (Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF), approved by Decree-Law No 298/92 of 31 December 1992 and applicable to financial companies and investment firms by reference under Articles 174-A and 199-C of the RGICSF.
What is a financial company?
In accordance with the definition provided for in Article 2-A(kk) of the Legal Framework of the RGICSF, financial companies are companies the principal activity of which is to carry out one or more of the activities that banks are authorised to conduct, except accepting deposits or other repayable funds from the public.
This definition does not apply to:
- Investments firms referred to in paragraphs e) and f) of Article 4(A) of the RGICSF;
- Credit institutions, under Article 3 of the RGICSF;
- Holding companies subject to supervision by the Banco de Portugal, under Article 117 of the RGICSF;
- Payment institutions, under the Legal Framework for Payment Services and Electronic Money (Regime Jurídico dos Serviços de Pagamento e da Moeda Eletrónica – RJSPME), approved by Decree-Law No 91/2018 of 12 November 2018;
- Electronic money institutions, under the RJSPME;
- Investment fund management companies and credit securitisation fund management companies, whose prudential supervision is incumbent upon the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM), under Decree-Law No 144/2019 of 23 September 2019.
Type of financial company
The RGICSF provides definitions of the following types of financial companies:
Financial companies may only carry out the operations permitted by the laws and regulations governing their activity (Article 7 of the RGICSF), namely as described in the table below.
|
Type of financial company |
Activities |
Legal framework |
|
Dealer |
· Reception and transmission of orders in relation to one or more financial instruments
· Execution of orders on behalf of third parties
· Management of portfolios belonging to third parties
· Placement in public distribution offers
· Registration and deposit of securities
· Credit granting, including the loan of securities, for securities-trading operations with the involvement of the dealer
· Advice on transferable securities investment, advice on the capital structure, industrial strategy and related issues, as well as on the merger and acquisition of corporations
· Assistance in public offer of securities
· Foreign exchange and safety deposit box rental service related to the provision of investment services |
Decree-Law No 262/2001 of 28 December 2001 |
|
Broker |
· Reception and transmission of orders in relation to one or more financial instruments
· Execution of orders on behalf of third parties
· Management of portfolios belonging to third parties
· Placement in public distribution offers, without underwriting
· Registration and deposit of securities
· Advice on transferable securities investment |
Decree-Law No 262/2001 of 28 September 2001 |
|
Wealth management company |
· Management of portfolios belonging to third parties
· Investment advice |
Decree-Law No 163/94 of 4 June 1994 |
|
Foreign exchange or money market mediating company |
· Foreign exchange or money market intermediation operations
· Provision of related services |
Decree-Law No 110/94 of 28 April 1994 |
|
Credit financial company |
· Carrying out of operations authorised to banks, except taking deposits and other repayable funds from the public and the provision of payment services and issuance of electronic money |
Decree-Law No 100/2015 of 2 June 2015 |
|
Investment firm |
· Financial operations
· Provision of related services as referred to in Article 3 of the legal framework governing investment firms |
Decree-Law No 260/94 of 22 October 1994 |
|
Financial leasing company |
· Financial leasing activities
· On an ancillary basis, possibly also sale, assignment of operation, leasing or other management acts over reinstated assets, and leasing of movable property under conditions other than those described above |
Decree-Law No 72/95 of 15 April 1995 |
|
Factoring company |
· Acquisition of short-term credit, resulting from proceeds of the sale of products or the provision of services in internal and external markets |
Decree-Law No 171/95 of 18 July 1995 |
|
Mutual guarantee company |
· Financial operations
· Provision of related services to the benefit of micro, small and medium-sized enterprises
· Financial operations and provision of related services to the benefit of other legal and natural persons, especially students and researchers |
Decree-Law No 211/98 of 16 July 1998 |
|
Regional development company |
· Promotion of productive investment in the relevant region and support of its economic and social development |
Decree-Law No 25/91 of 11 January 1991 |
|
Exchange office |
· Purchase and sale of foreign banknotes and coins or travellers’ cheques
· On an ancillary basis, possibly also purchase of gold and silver, as well as coins for numismatics purposes
· In addition, pursuit of activities as agent of a payment institution or electronic money institution having its head office in Portugal or in another EU Member State, under the conditions set out in the RJSPME |
Decree-Law No 3/94 of 11 January 1994 |
|
Microcredit financial company |
· Granting of small amounts of credit to households and firms intending to engage in an economic activity
· Advice to borrowers and monitoring of funded projects |
Decree-Law No 12/2010 of 19 February 2010 |
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013
| Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012. |
EBA Guidelines on internal governance (EBA/GL/2017/11) | These specify the internal governance arrangements, processes and mechanisms that credit institutions and investment companies should apply under Article 74(1) of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013, in order to ensure effective and prudent management of the institution. |
These specify the internal governance arrangements, including sound risk management, which institutions, payment institutions and electronic money institutions should implement when they outsource functions, in particular with regard to the outsourcing of critical or important functions. | |
These specify, among others, the requirements regarding the suitability of members of the management body of credit institutions, investment firms, financial holding companies and mixed financial holding companies, and the notions of: · sufficient time commitment; · honesty, integrity and independence of mind of a member of the management body; · adequate knowledge, skills and experience of the management body; · adequate human and financial resources devoted to the induction and training of such members. | |
EBA Guidelines on sound remuneration policies (EBA/GL/2015/22) | These establish requirements on sound remuneration policies and practices applicable to all staff and disclosures on remuneration under Directive 2013/36/EU and Regulation (EU) No 575/2013. |
Legal Framework of Credit Institutions and Financial Companies | It regulates access to and pursuit of activity by financial companies and the exercise of their supervision, as well as the supervisory powers and tools. |
It determines which information should accompany communications of acquisition of or increase in qualifying holdings in credit institutions and financial corporations. | |
It determines which elements the institutions must submit together with the authorisation request for the exercise of functions of the members of the management and supervisory bodies. | |
Executive Order No 95/94 of 9 February 1994 | It sets the minimum share capital of credit institutions and financial companies. |
Law No 83/2017 of 18 August 2017 | It sets forth anti-money laundering and counter terrorist financing measures. |
It governs conditions of application, procedures, instruments, mechanisms, enforcement measures, reporting obligations and other aspects necessary for ensuring compliance with obligations for the prevention of money laundering and terrorist financing, within the activities of financial entities subject to the Banco de Portugal’s supervision. | |
Notice of the Banco de Portugal No 3/2020
| It regulates the internal control and governance systems and sets the minimum standards upon which the organisational culture of the entities subject to the Banco de Portugal’s supervision should be based. |
It regulates the reporting obligations relating to organisational conduct and culture and internal control and governance systems
|
Requirements for setting-up a financial company
Upon the submission of an application for authorisation to set up a financial company, the Banco de Portugal checks whether the submitted proposal meets the general requirements imposed by law.
These requirements are listed in Article 14 of the RGICSF, with any necessary adaptation under Article 174-A (other financial companies) and 199-C (investment firms) of the RGICSF, and according to which financial companies must:
- correspond to one of the types provided for in Portuguese law;
- have as their sole purpose the activities legally permitted by law;
- have an initial capital not lower than the legal minimum capital (Executive Order No 95/94 of 9 February 1994);
- have their head office and effective management in Portugal;
- have robust governance arrangements in place, including a clear organisational structure with well defined, transparent and consistent lines of responsibility;
- have effective processes in place to identify, manage, monitor and report risks;
- have adequate internal control mechanisms, including sound administrative and accounting procedures;
- have remuneration policies and practices in place promoting and consistent with sound and prudent risk management;
- have management and supervisory bodies composed of members whose reputation, professional qualification, independence and availability, at an individual level or at the level of the bodies as a whole, provide guarantees of sound and prudent management.
Stages for authorising the setting-up of a financial company
Authorisation
1. Submission of the application and supporting information
The application for authorising the setting-up of a financial company must be submitted to the Banco de Portugal and, in general, include the following:
- elements listed in Article 17 of the RGICSF;
- complementary elements.
For this purpose, the Banco de Portugal makes a list available with all the information and elements necessary for a proper examination of the application for authorising the setting-up of financial companies.
The application for authorisation, including all the supporting information above, may be submitted in electronic or physical format.
Electonic format: dsp.registos.expediente@bportugal.pt
Physical format:
Banco de Portugal, Prudential Supervision Department, Authorisations Unit
R. Francisco Ribeiro, 2
1150-165 Lisbon
2. Assessment of the application
The Banco de Portugal checks the completeness of the information received for the analysis of the application procedure, assesses all the information submitted and may request the applicant to provide any clarifications and additional elements which it considers appropriate to render a decision.
If the Banco de Portugal considers that the application does not contain all necessary information and elements, nor meet all legal and regulatory requirements, it notifies the applicants and allows them reasonable time to render their opinion and, if applicable, remedy any inadequacy, before refusing to grant authorisation.
3. Decision on registration
The Banco de Portugal may also take one of the following decisions:
- Granting of authorisation
The decision to grant the authorisation allows the applicants to set up a financial company. The relevant financial company, however, may only commence its activity upon a special registration with the Banco de Portugal, under Article 194 of the RGICSF. - Refusal of authorisation
The Banco de Portugal refuses authorisation, notably in any of the situations described in Article 20(1) of the RGICSF.
The Banco de Portugal notifies the applicant of its decision within six months of the receipt of a complete application or of the additional information required from the applicants, but in any case within twelve months from the receipt of the initial application. Non-notification of the decision within the above-mentioned periods shall imply a presumption of tacit refusal of the application.
The granting of authorisation by the Banco de Portugal enables the applicant to set up the financial company, which is required to commence its activity within twelve months of the Banco de Portugal’s decision. The authorisation lapses after this period. Nevertheless, the Banco de Portugal may, upon request of the applicants and one time only, extend the time limit for the commencement of activity for another period of twelve months.
For the company’s commencement of activity, the applicant is required to request the company’s special registration with the Banco de Portugal.
Special registration with the Banco de Portugal
4. Prior and on-site verification of compliance with the legal and operational requirements for the commencement of activity
After the setting-up of the financial company is authorised by the Banco de Portugal, and after the company is effectively set up, the parties concerned must request the Banco de Portugal to proceed with the company’s special registration for the purposes of Article 65(1) of the RGICSF.
Upon such request, the Banco de Portugal carries out a prior inspection at the financial company premises, in order to check whether all conditions for authorisation necessary for the setting-up of the company or for the pursuit of the activity are met.
5. Decision on registration
Following the on-site verification of the legal and operational requirements for the commencement of activity, the Banco de Portugal may adopt one of the following decisions:
- Special registration of the company if it has found that the conditions for the pursuit of activity are met. The special registration of the financial company covers the items listed in Article 66 of the RGICSF. The financial company may commence its activity once its registration is completed.
- Refusal to proceed with the company’s special registration, particularly when any of the authorisation requirements necessary for the setting-up of the financial company or the pursuit of activity is not met, in accordance with Article 72 of the RGICSF.
Clarifications
The Banco de Portugal is prepared to clarify any specific question regarding projects to set up investment companies or financial companies, provided they are submitted to the Banco de Portugal in advance.
Questions can be sent by email to (dsp.registos.expediente@bportugal.pt) or by post to:
Banco de Portugal, Prudential Supervision Department, Authorisations Unit
R. Francisco Ribeiro, 2
1150-165 Lisbon
All questions submitted to the Banco de Portugal must be presented with a highly specific factual basis and be well-reasoned, in order to allow for an adequate analysis.
FAQs
Does the Banco de Portugal charge any fee as part of a financial company authorisation and registration or supervision procedure?
No.
In which languages can the application for authorisation be submitted?
The applications for authorisation can be submitted in Portuguese or English.
Official documents (e.g. criminal record certificates) which are not issued by Portuguese authorities must be certified under the Hague Convention or duly legalised. If these are not drawn up in Portuguese or English, they must be accompanied by a certified translation in accordance with the Hague Convention or duly legalised.
Translations of documents must be certified and accompanied by information on the translation entity certifying their suitability.
What should I do in case of changes to the information initially sent to the Banco de Portugal during the authorisation application procedure?
If, during the authorisation procedure, there is any change to the information included in the initial application or in the elements provided in the meantime (supervening fact), such change must be communicated to the Banco de Portugal as soon as possible and by means made available for this purpose, accompanied by all the necessary supporting elements.
May the application for authorisation refer to an already incorporated commercial company?
Yes, the application for authorisation may refer to an already incorporated commercial company.
However, in these cases, the commercial company may not carry out any activities pertaining to financial companies, nor include in its company or business name any expressions suggesting such activity, until the authorisation and registration procedure with the Banco de Portugal is successfully completed.
Under Article 11 of the RGICSF, only undertakings authorised as credit institutions or financial companies may include in their company or business name or use in their activity expressions which suggest an activity pertaining to credit institutions or financial companies.
Is a criminal record certificate issued more than a year ago deemed valid for the purposes of the application for authorisation?
Criminal record certificates are deemed valid if they contain their validity period and this has not lapsed. In particular, the validity period of Portuguese criminal records is three months from the date of issue; thus, a certificate issued more than a year ago would not be valid for this purpose.
May the Banco de Portugal make the information contained in the authorisation procedure publicly available?
No, the Banco de Portugal is subject to the duty of professional secrecy under Article 80 of the RGICSF.
