João Marques Mendes and Joana Campelo (PLMJ) authored this publication.

In Portugal, the Council of Ministers has the power to oppose transactions involving the acquisition of direct or indirect control over strategic assets by non-EU or non-EEA natural or legal persons. Based on the imperative of ensuring public safety, the Council of Ministers reserves the right to object to transactions that pose a threat to national defense, security or critical services vital to the country's interests, in exceptional circumstances and via a duly justified decision.

Specifically, according to the Portuguese FDI Law, the Portuguese government may oppose investments made by foreign investors that allow direct or indirect control over strategic assets.

Summary of major changes in 2024

No changes to the FDI legal framework were introduced since 2014.

Who files?

The Portuguese FDI Law does not require mandatory notification of any transaction. Nonetheless, the prospective purchaser may, on a voluntary basis, request advance confirmation that an opposition decision will not be issued. There is no official form for this request, but it must include the full description of the terms of the envisaged transaction. If the government does not initiate an assessment procedure within 30 business days counted from the date of the request, a non-opposition decision is deemed to have been issued.

If no confirmation is requested in advance, a review of the transaction can be initiated by the government ex officio within 30 business days from the conclusion of the transaction or from the date it becomes publicly known.

Types of deals reviewed

Under the Portuguese FDI Law, the Portuguese government has the power to review any transaction that allows control over strategic assets, which are defined as the key infrastructures and assets related to defense and national security, or to the provision of essential services in the energy, transport or communications sectors. There is no financial threshold for investments to be able to be screened under the law.

There is also no definition of "strategic assets related to defense and national security or to the provision of essential services in the energy, transport or communications sectors," which creates some uncertainty as to the possibility of screening of transactions in these sectors.

Scope of the review

The review will focus on the nature of the business to be acquired and the parties involved in the transaction.

In the event a transaction is subject to FDI screening, the criteria that will guide whether the government opposes the transaction include, among other factors, the track record of the buyer and the country in which the buyer is domiciled or to which it is in some way linked. The law gives examples of some situations where it will assume a threat to the defense, national security or the security of supply of essential services.

The law defines situations where transactions resulting, directly or indirectly, in the acquisition of control, directly or indirectly, by a person or persons from countries outside the EU are likely to jeopardize national defense and security.

This includes where there are serious indications, based on objective elements, of the existence of links between the buyer and third countries that do not recognize or respect the fundamental principles of the democratic rule of law, which represent a risk to the international community as a result of the nature of their alliances; or who maintain relations with criminal or terrorist organizations or with persons linked to such organizations, taking into account the official positions of the EU in these matters.

National security may also be jeopardized where the buyer has, in the past, used the controlling position held over other assets to create serious difficulties for the regular provision of essential public services in the country in which they were located, as well as neighboring countries, or does not guarantee the main allocation of the assets, as well as their reversal at the end of the corresponding concessions, when they exist, namely taking into account the lack of adequate contractual provisions for this purpose.

Additionally, national security could be jeopardized if the transaction results in a change in the destination of strategic assets.

If an opposition decision is issued, all legal acts and transactions relating to the transaction in question shall be deemed null and void, including those relating to economic exploitation or the exercise of rights over the assets or over the entities that control them.

Review process timeline

A review of the transaction can be initiated by the Portuguese government within 30 business days from the conclusion of the transaction or from the date it becomes publicly known, whichever occurs later, by means of notifying the prospective purchaser to present the information and relevant documents about the transaction within ten business days—if another deadline is not provided for in the notification.

The opposition decision must be taken by the Council of Ministers—upon a proposal from the member of the government responsible for the area in which the strategic asset in question is integrated—within 60 business days from the complete delivery of information and documents.

How foreign investors can protect themselves

Investors can request advance confirmation of whether a transaction will be subject to screening under the FDI Law. Investors should consider, in their risk assessment of the likeability of screening, the sectors in which the target develops its activity, the essentiality of services provided by the target, its market share or on the impact of the transaction, among other factors.

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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