VII. Frequently asked questions
1. Who is subject to Banco de Portugal’s authorisation process to exercise functions?
Members of the management and supervisory bodies of all entities subject to Banco de Portugal’s supervision are subject to the authorisation process to exercise functions and to the respective assessment.
Members of the management and supervisory bodies of the following entities are subject to the above mentioned authorisation process:
- Credit institutions listed in Article 3 of the Credit Institutions and Financial Companies Legal Framework(Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF):
- Banks;
- Savings banks;
- Central Mutual Agricultural Credit Bank and the mutual agricultural credit banks;
- Credit financial institutions;
- Mortgage credit institutions;
- Other undertakings classified by law as credit institutions;
- Investment companies and financial companies as listed in Articles 4-A and 6 of the Credit Institutions and Financial Companies Legal Framework:
- Dealers;
- Brokers;
- Wealth management companies;
- Foreign-exchange or money-market mediating companies;
- Other undertakings which, in meeting the definition of investment companies, are classified as such according to the law;
- Credit financial companies;
- Investment companies;
- Financial leasing companies;
- Factoring companies;
- Mutual guarantee companies;
- Investment fund management companies;
- Regional development companies;
- Exchange offices;
- Credit securitisation fund management companies;
- Microcredit financial companies;
- Other undertakings which, in meeting the definition of financial companies, are classified as such according to the law;
- Holding companies when their holdings, either directly or indirectly, confer on them a majority of the voting rights in one or more credit institutions or financial companies, or which have a qualifying holding in such companies and are not supervised by the Insurance and Pension Funds Supervisory Authority, as established in Article 117 of the RGICSF;
- Payment institutions and electronic money institutions, under the terms of the Legal Framework for Payment Systems and Electronic Money (Decree-Law No 242/2012 of 7 November 2012, especially Articles 6 and 12).
The following persons are also subject to authorisation to exercise functions:
- Managers of branches of credit institutions having their head office in Portugal and established in European Union Member States;
- Managers of branches of credit institutions having their head office in Portugal and established in third countries;
- Managers of branches or representative offices located in Portugal of credit institutions that are not authorised in other European Union Member States, and that are subject to all the suitability requirements as established by law for the members of the management body of credit institutions having their head office in Portugal.
The authorisation process to exercise functions and the respective assessment cover all members of the management body, whether executive or non-executive, and all members of the supervisory body and their alternates.
Also subject to registration with Banco de Portugal, but not to the authorisation and assessment process, are the Chair and Secretary of the shareholders’ meeting of the institutions subject to Banco de Portugal’s supervision, as well as the managers of branches located in Portugal, of credit institutions having their head office in a European Union Member State.
2. Are the requirements for being a member of a management body the same as those for being a member of a supervisory body?
The requirements are partially the same. However, special rules must be taken into account concerning the independence and incompatibility of members of the supervisory body, in accordance with the Credit Institutions and Financial Companies Legal Framework, the Commercial Companies Code and specific legislation applicable to the institution in question.
3. Do the requirements for being a member of a management or supervisory body depend on the type of institution in question?
Although the common framework is established in the Credit Institutions and Financial Companies Legal Framework, special legislation, should it exist, must be consulted relating to each type of institution to verify whether or not there are any additional requirements that may apply.
4. Are there special requirements for members of management body of an institution supervised by Banco de Portugal who also belong to a corporate body of a public sector company?
Yes. In order to hold both positions, in addition to the Credit Institutions and Financial Companies Legal Framework and the specific legislation applicable to the type of institution in question, special rules applicable to the State corporate public sector and public managers must be considered.
See:
- Public Manager Statute, Decree-Law No 71/2007, of 27 March 2007
- Rules applicable to the corporate public sector and State-owned enterprises, Decree-Law No 133/2013 of 3 October 2013
5. What documents should be submitted to Banco de Portugal for the authorisation process to exercise functions?
The following documents should be submitted to Banco de Portugal for the authorisation process to exercise functions:
- Questionnaire, as in the annex to Instruction of Banco de Portugal No 12/2015, duly completed and signed;
- Detailed curriculum vitae;
- Photocopy, front and back, of an identity document (Citizen Card, identity card or equivalent document);
- Valid and up-to-date criminal record certificate, issued by the competent authority of the country of nationality or by the competent authority of the country of residence, should they differ;
- Assessment report by the institution of the member of the management or supervisory body as referred to in Article 30-A of the Credit Institutions and Financial Companies Legal Framework (Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF);
- Photocopy of a document proving the designation of the person(s) concerned (e.g. copy of the minutes of the shareholders’ meeting), except in the cases of prior authorisation as referred to in Article 30-B (3) of the RGICSF;
- Assessment of the requesting institution as to the collective composition of the management and supervisory bodies, considering the professional qualifications, experience and availability of their members to exercise their functions, under the terms of Article 30 (4) of the RGICSF;
- Up-to-date version of the Articles of Association of the institution.
In addition to the aforementioned items, the application must contain the access code for the online permanent commercial corporate certificate of the institution in question.
Where applicable, the provisions of Instruction of Banco de Portugal No 102/96 on the establishment of branches and carrying out of activities under the freedom to provide services should also be observed.
See:
- Instruction of Banco de Portugal No 12/2015
6. When should the authorisation process to exercise functions begin?
Persons nominated ex novo as eligible may only begin exercising functions after this authorisation, hence the authorisation request does not have to be presented within a given time-frame.
In the case of reappointments, the authorisation request to exercise functions must be presented within 15 working days of the reappointment decision date.
7. What is the collective assessment of the management body or supervisory body?
The collective assessment of the management bodies is the procedure by which the institution and Banco de Portugal assess whether the composition of the body as a whole is suitable for the institution in question, considering its characteristics and the institution’s lifecycle (for instance, the institution may be facing a special situation, such as a merger, weak financial health, or increased risk in a particular area of its activity).
Under the collective assessment it can be concluded that the weaknesses of any members of the body in question are compensated by the strengths of other members, especially in terms of professional qualifications and experience (provided a minimum level of professional qualification and experience is assured) and of availability.
In what concerns reputation, the assessment is exclusively conducted on an individual basis.
Collective assessment of independence varies depending on whether the object of the assessment is the management body or supervisory body.
The type of entity in question must also be considered. Certain regimes have specific rules in this area, as is the case of the regime applicable to investment fund management companies.
In what refers to the supervisory body, the law establishes objective criteria to assess independence (Article 414 of the Commercial Companies Code), potential conflicts of interest (Article 414-A of the Commercial Companies Code) and the minimum number of independent members (Article 31-A (3) of the Credit Institutions and Financial Companies Legal Framework).
8. Who is responsible for the collective assessment of the management and supervisory bodies?
The collective assessment of the management and supervisory bodies is primarily the responsibility of the institutions. This assessment is followed by Banco de Portugal assessment which constitutes a condition for the exercise of functions.
The institution must undertake an accurate and complete assessment of members of its management and supervisory bodies in order to ensure they are aware of the strengths and weaknesses of its structure and enable shareholders to possess enough information on such persons before they are designated.
The institution must verify whether, and to what extent, the qualification, experience or availability of certain members compensates for the weaknesses of others, without overlooking the adoption of measures to eliminate the weaknesses detected (e.g. through training).
This assessment must be included in the assessment report of the members of the management and supervisory bodies to be submitted to Banco de Portugal.
Instruction of Banco de Portugal No 12/2015 contains a matrix which enables the institution to objectively carry out and formalise the collective assessment of the management and supervisory bodies.
The matrix is designed for a collective assessment of the skills accumulated in the institution’s corporate bodies and is assessed as a whole. Thus, the less favourable qualification of any member relating to aspects analysed in the aforementioned matrix may not have an impact on the individual assessment of his or her suitability to exercise his/her functions.
It is expected that a collegiate body brings together persons with different characteristics, namely with varying degrees of knowledge of the issues in question and differing professional experience, within or outside the institution.
9. What are the consequences of a negative collective assessment of the management body or supervisory body?
In the event of a negative assessment of a particular body as a whole, the institution is invited to propose a new composition for the body, ensuring that the weaknesses detected are corrected.
In the absence of such correction, the body may be collectively refused since, as a whole, it fails to meet the required standards, especially in terms of professional qualification and experience or availability. However, this does not mean that certain persons who are part of the rejected body are prevented from being part of a new body to be proposed by the institution.
10. The collective composition of a collegiate body can be rejected in case one of its members is negatively assessed by Banco de Portugal?
No. The fact that one eligible person is not authorised to exercise functions does not mean that the composition of the body as a whole is rejected.
The collective assessment does not match with the individual assessment. Collective assessment allows the required diversity in the composition of the body to be analysed and weaknesses to be detected in terms of professional qualification and experience, availability and independence, which may obstruct the suitable performance of the body as a whole. This assessment also considers the distribution of roles within the given bodies.
The negative assessment of an eligible person triggers his or her non-authorisation, although the remaining members of the collective body may be accepted. It is therefore up to the institution to present a substitute. In case the law or the institution’s articles of association allow it, such a substitution may even not be required.
11. When should the special registration procedure begin?
Once authorisation to exercise functions is obtained, special registration of the eligible persons with Banco de Portugal should be requested within a timeframe of 30 days after the date on which the eligible person has started to exercise functions, by means of a request addressed by the credit institution to Banco de Portugal, which must specify the day in which tasks started to be exercised.
In the case of reappointments of all the members of the body, as well as in cases of a request for authorisation to exercise functions as an alternate in a management or supervisory body, the special registration must be requested along with the corresponding authorisation request.
See:
- Credit Institutions and Financial Companies Legal Framework (Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF), Article 71 (1)
- Instruction of Banco de Portugal No 12/2015, Article 3
12. When can the person designated to exercise functions on a management or supervisory body of an institution subject to supervision by Banco de Portugal begin to exercise those tasks?
Functions can only start to be exercised once the respective authorisation process to exercise functions is concluded. Authorisation is a necessary condition for the functions to be exercised.
See:
- Credit Institutions and Financial Companies Legal Framework (Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF), Article 30-B (4)
13. What is the purpose of the prior authorisation?
Prior authorisation is requested before the designation of the eligible person by the competent body of the institution.
Prior authorisation expires 60 days after being granting by Banco de Portugal (or the ECB, in the event of the institution being considered significant within the Single Supervisory Mechanism) unless special registration for the exercise of functions is requested to Banco de Portugal.
Prior authorisation allows the person to exercise functions immediately following their nomination.
14. Designation for a new directorship to be exercised in addition to a directorship already registered with Banco de Portugal must be communicated? What information should be submitted to Banco de Portugal?
Yes. Designation to a new directorship in an entity, whether subject or not to Banco de Portugal’s supervision, in addition to a directorship already registered with Banco de Portugal, must be communicated at least 30 days in advance of the expected start date of exercise of functions.
The documents to be submitted to Banco de Portugal in this context are:
- A complete report of all the roles performed by the interested party, indicating those which involve day-to-day management tasks;
- Indication of the main business of the entities where functions are exercised, in the event of such entities not being subject to registration with Banco de Portugal;
- Indication of any shareholding interest which may exist between the entity/entities where functions are exercised and that/those where the new functions are to be exercised;
- Copy of the minutes of the meeting of the management body of the entity subject to Banco de Portugal’s supervision, in which the interested party exercises functions, proving that the body is aware of the planned positions accumulation.
See:
- Credit Institutions and Financial Companies Legal Framework (Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF), Article 33
- Instruction of Banco de Portugal No 12/2015, Article 7
15. Does Banco de Portugal assess the integrity of those who have or may have qualifying holdings in entities subject to its supervision? If so, when?
Yes. Banco de Portugal assesses the suitability of those who have or may have qualifying holdings in entities subject to its supervision.
A natural or legal person proposing, directly or indirectly, to acquire a qualifying holding in a credit institution must communicate his or her intention previously to Banco de Portugal. The suitability assessment is conducted in the context of the analysis that Banco de Portugal undertakes in respect of such proposal.
In the event of the proposed acquisition resulting in changes to the management body, the new members are also subject to assessment, not only of the reputation requirement, but also of professional qualification and experience, independence and availability requirements.
See:
- Credit Institutions and Financial Companies Legal Framework (Regime Geral das Instituições de Crédito e Sociedades Financeiras – RGICSF), Articles 102 and 103 (2) (a) and (b)
- Notice of Banco de Portugal No 5/2010
16. What documents should be submitted to Banco de Portugal to assess the suitability of owners of qualifying holdings?
The documents to be submitted to Banco de Portugal to assess the suitability of those proposing to acquire qualifying holdings, whether direct acquirers or those at the top of the holding chain, are:
- Information as defined in Annex I of Notice of Banco de Portugal No 5/2010;
- Photocopy, front and back, of an identity document (Citizen Card, identity card or equivalent document), of the proposed acquirer if a natural person, or the members of the management and supervisory bodies of the proposed acquirer if a legal person;
- Declaration of veracity of the information provided, as defined and exemplified in Annex III of Notice of Banco de Portugal No 5/2010.
This is without prejudice to the fact that Banco de Portugal reserves the right to request complementary documents and information as may be deemed necessary, at any time.
See:
- Notice of Banco de Portugal No 5/2010
