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Newsletter July 2017

Legal Updates

Amendments to the special revitalization process

On the 1st of July, the amendments to the Insolvency and Business Recovery Code, namely the Special Revitalization Process (PER) introduced by the Decree-Law no. 79/2017 of June 30th came into force. The legislative initiative is part of the “Capitalise Program”, approved by the Resolution of the Council of Ministers nº 42/2016, of August 18th, which implements measures to re-launch the portuguese economy and promote investment, seeks to perfect and give credibility to the PER as an instrument recovery. Thus, to promote the transparency of this mechanism, this decree-law provides for the publicity of the composition of the debtor’s insolvent estate, in an electronic portal, yet to be defined.

The main change is the narrowing of the criteria for the introduction of the PER, which will henceforth be reserved only for companies. For the debtor who is a natural person, the Special Process for Payment Agreement is created, which allows the debtor to enter into negotiations with the respective creditors in order to complete a payment agreement.

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Bank clients will be able to open deposit accounts through digital channels

Following the technological advances that are already felt in other areas, the Bank of Portugal decided to approve the opening of bank accounts through the use of electronic means.

At a time when portuguese banks are increasingly betting on the simplification of banking operations, by providing various home banking services and mobile banking, the Bank of Portugal has authorised the opening of bank accounts through digital channels (online and mobile), and proof of the identification elements will be made using videoconferencing. In this way, the presence of the client in the desk and the time spent in journeys and in waiting becomes optional.

This option from the Regulator responds to the evolution of reality and to the needs of foreign investors which are increasingly choosing Portugal to invest in. It is another step taken by Portugal towards simplification procedures and the use of new technologies which are already used in different programs such as the Company on the Spot, Trademark on the Spot, Non-Habitual Tax Resident, online License Application or even Criminal Records.

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Business Updates

An integral community of farfetch passes access to the luxury market in china

Luso-British company Farfetch, established in 2008 by portuguese José Neves, will join the largest Chinese online retailer, JD.com. The Chinese company will invest about 356 million euros in the Luso-British platform, continuing to demonstrate the great Chinese interest in investing in Portugal and in portuguese companies.

With this merger it is expected a strengthening of marketing, logistics and technological solutions for both companies, with the main goal of implementing the Farfetch brand in China. This partnership will bring great benefits to both parties, with the 700 brands and boutiques of the Farfetch community gaining access to the luxury market in China. On the other hand, JD.com wins a portuguese startup, whose market value exceeds one billion dollars.

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Portugal leaves the excessive deficit procedure

There are many great news coming from Portugal these days, at all levels. However, the highlight goes to the Economy. First, the forecasts regarding the growth of the portuguese economy, then, the decline of unemployment to pre-crisis levels.

Now, it was the ECOFIN’s turn to announce that Portugal left the Excessive Deficit Procedure (EDP), following a recommendation from the European Commission.

It was a confirmation of the expectations made after Portugal had reached a public deficit of 2% in 2016. This was a decisive factor for ECOFIN, which was then strengthened by the most recent forecast regarding the public deficit for 2017 of 1.8%.

As if this was not enough to illustrate all that has already been done and it is still being done within the portuguese political and budgetary management, the Government, through the Minister of Finance, Mário Centeno, announced that he had requested the authorisation from the European Stability Mechanism and ECOFIN to anticipate the payment of more than 10 billion euros of the loan granted by the IMF during the 2011 financial rescue.

Mário Centeno explained that Portugal now has a very reasonable financial backup, which allowed the Government to explore the possibility of anticipating the payment of the loan of the IMF to reduce the amount of interest Portugal would have to pay, which, Centeno adds, is also part of the strategy to reduce the weight of interest in public debt of Portugal.

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