Ministerio das Finanças (Ministry of Finance)
Decree-Law
(This is not an official translation of the law)
Portugal Telecom, S.A., PT in short, is the outcome of the restructuring of the national telecommunications sector which was created by a merger governed by the terms set out under Decree-Law no. 122/94 of May 14th.
Decree-Law no. 44/95 of February 22nd, approved the 1st phase of the privatization process which consisted of the sale of shares through a public offer for sale on the national stock exchange. This sale was directed at the public at large, whereas one batch was reserved for workers, small subscribers and immigrants to acquire. Also, a direct sale was conducted for a group of financial institutions in view of the obligation of having to lastly disperse the remainder of shares, some of which on international markets.
Now, attempts are being made to discipline the 2nd phase of PT's privatization by enshrining, as per the Government's privatization programme, approved by the Resolution of the Council of Ministers no. 21/96 of February 8th, a model which will ensure the continuity of the dispersion of the company's capital on national and international markets alike. This will thus strengthen the shareholder structure of the company, without prejudice to the State holding a position in its capital.
Furthermore, attempts are also being made to internationalize the company, begun with the 1st phase of privatization, which will help the company and the Country to assert themselves on the international capital markets and contribute to the creation of conditions to maintain a national telecommunications operator in the context of growing global competition in this field.
In this respect, the model of aggregation of proposals for purchase, with some adjustments thereto, has been taken up, considering how efficient it has been in allowing for the pursuit of several objectives laid down for this operation in the light of the national experience and the experience gained from privatizations conducted in other countries.
It must be pointed out that the concerns about strengthening the degree of internationalization of the company do not jeopardize, in the model adopted, the creation of conditions for a substantial participation of national citizens and companies in this company's share capital. In particular, since it is in charge of providing an all important public service.
The total number of shares to be sold in this 2nd phase of privatization is designed to list the company on the Lisbon Stock Exchange.
Thus:
In devising the legal regime set out under Act no. 11/90 of April 5th and in keeping with the terms of paras a) and c) of no. 1 of article 201 of the Constitution, the Government hereby decrees the following:
Article 1
The 2nd phase of privatization of the share capital of Portugal Telecom, S.A., PT in short, has been approved. This privatization will be governed by this Decree-Law and by the resolutions of the Council of Ministers which will lay down the final and concrete conditions of the operations necessary for its implementation.
Article 2
1- The 2nd phase of PT's privatization will consist of the sale of a number of ordinary shares, held either by the State or by PARTEST - Participações do Estado, SGPA, S.A., added to those which are already privatized, correspond to a percentage not higher than 49 % of the respective share capital.
2 - The amount of shares to be sold will be set within the percentage laid down in the earlier paragraph, through a resolution of the Council of Ministers.
3 - Without prejudice to the terms under nos. 2 and 3 of the following article, the sale shall be conducted through a public offer for sale on the national market aimed at the public at large and a direct sale for a group of financial institutions which are bound to subsequently disperse the shares, part of which on international markets, with a view to achieving the desirable degree of PT's internationalization and asserting the presence of the Country and its companies on international capital markets.
4 - Provided that it is necessary to ensure the commitments made by the financial institutions in compliance with the obligation to disperse the shares, an additional batch from that earmarked for direct sale may be sold, without prejudice to the terms under no. 1.
5 - PT shall apply for all of its shares to be listed on the Lisbon Stock Exchange.
Article 3
1 - The amount of shares on the public offer for sale will be laid down by a resolution of the Council of Ministers.
2 - A batch of shares will be reserved for PT's workers, small subscribers and immigrants to acquire.
3 - A batch of shares for acquisition at the price to be set for the public offer for sale for the public at large, may be reserved for:
a) PT shareholders;
b) Those holding CTT and TLP equity securities;
c) Those holding TLP and TP bonds.
4 - For the purposes of this act, are considered:
a) Workers, those who are mentioned under article 12 of Act no. 11/90
of April 5th;
b) PT shareholders, those bodies which acquire that quality up to the
5th working day following the publication of the first resolution of
the Council of Ministers which lays down the final and concrete
conditions for the operation and hold that quality until the end of the
period of the public offer for sale, without prejudice to other
conditions which may be laid down through a resolution of the
Council of Ministers, especially as to the minimum number of shares
to be held.
5 - The shares not covered by the reserves mentioned under nos. 2 and 3, as well as those not placed within the scope of the same, will be offered to the public at large in connection with the public offer for sale.
Article 4
1 - The shares acquired in connection with the reserve mentioned under no. 2 of article 3 shall not be available for a period of six months.
2 - The said period of unavailability shall be counted from the day when the special session is held at the stock exchange in order to obtain the results of the public offer for sale.
3 - During the period of unavailability, the said shares shall not be burdened nor subject to legal dealings aimed at transferring the respective ownership, although this may be possible in the future.
4 - The deals struck in violation of the earlier paragraph, even prior to the beginning of the period of unavailability are considered null and void.
5 - The shares acquired by small subscribers and immigrants in connection with the reserve mentioned under no. 2 of article 3, do not grant those shareholders the right to vote during the period of unavailability.
6 - The rights to vote inherent in the shares acquired by PT workers in connection with the reserve mentioned under no. 2 of article 3, cannot be exercised during the period of unavailability, even through a third party.
7 - Deals in view of which the workers undertake to exercise, in a particular way, the rights of vote inherent in the shares mentioned under the earlier paragraph, are considered null and void.
8 - The invalidities provided for under nos. 4 and 7 may be legally declared at the request of the Public Prosecution Service, without prejudice to their application, under the general terms of law, by any interested party, including PT itself.
Article 5
1 - The shares which are not put up for sale, as well as those which do not fall within the scope of this offer for sale, shall be available for direct sale to a group of financial institutions, both Portuguese and foreign.
2 - The financial institutions acquiring shares shall undertake to disperse the shares they acquire through direct sale.
3 - In the dispersion mentioned in the earlier paragraph, a portion of the shares must be placed on international markets.
4 - The definition of specific conditions governing direct sale and the subsequent dispersion of the shares falling within the scope of that definition shall figure in the specifications schedule to be approved by a resolution of the Council of Ministers.
5 - For the purposes of registering the shares, as well as the payment of fees or commissions legally due, direct sale and the subsequent dispersion mentioned in the previous paragraphs are considered a single transaction.
Article 6
1 - Should demand in the public offer for sale exceed the shares earmarked for the same, the batch reserved for direct sale may be reduced by a percentage not higher than 15 % of that which, under the terms of no. 1 of article 3, is reserved for the public offer for sale, adding to the latter the number of shares taken away from the former.
2 - The sale of an additional batch of shares not exceeding 15 % of the batch for direct sale may be agreed with the purchasing financial institutions mentioned under no. 1 of article 5, provided that this sale is necessary to ensure the commitments made by the financial institutions in order to comply with the obligation of dispersion of shares mentioned under nos. 2 and 3 of article 5.
3 - The additional batch mentioned under no. 3 may be sold only within 30 days from the date of conclusion of the direct sale.
4 - The unit selling price of shares in the additional batch will be equal to that of the shares earmarked for direct sale.
Article 7
1 - The final and concrete conditions for the operations to be conducted in view of this act shall be laid down by the Council of Ministers, through the approval of one or more resolutions.
2 - In the resolutions mentioned in the earlier paragraph the Council of Ministers shall, in particular:
a) Determine the number of shares to be sold in the 2nd phase of PT's
privatization, under the terms of no. 1 of article 2;
b) Determine the number of shares for the public offer for sale and
direct sale, under the terms of article 3 and no. 1 of article 5;
c) Regulate the transfer of the remainder of shares of the public offer
for sale to direct sale;
d) Determine the ways and means for setting the selling prices;
e) Foresee the conditions in which the original holders of public debt
arising from the nationalizations and expropriations can mobilize, at
face value, the respective indemnities under the terms of article 24 of
Act no. 11/90 of April 5th.
3 - As for the public offer for sale, the resolutions of the Council of Ministers mentioned under no. 1 shall:
a) Determine the number of shares reserved for acquisition by workers,
small subscribers, immigrants and, if need be, PT shareholders,
holders of CTT and TLP equity securities and TLP and TP bond
holders under the terms of nos. 2 and 3 of article 3;
b) Lay down the special conditions for the acquisition of shares by
workers, small subscribers and immigrants, especially with regard
to the discount to be made on the price to be determined under the
terms of no. 1 of article 8 and allow workers the possibility of
paying in instalments;
c) Subject the acquisition of shares to minimum and maximum
individual numbers according to the categories of investors
as mentioned in the previous para;
d) Define the pro rata criteria;
e) Regulate the mode of transfer of the remainder of shares from one
class to another;
f) Regulate, where necessary, the terms under which the shares may be
acquired by PT shareholders;
g) Regulate, where necessary, the terms under which those holding
CTT and TLP equity securities may acquire shares;.
h) Regulate, where necessary, the terms under which TLP and TP bond
holders may acquire shares.
4 - As for direct sale, the resolutions of the Council of Ministers mentioned under no. 1 shall:
a) Approve the specifications schedule mentioned under no. 4 of article
5;
b) Select the purchasing financial institutions under the terms of no. 1 of
article 5.
Article 8
1 - The Council of Ministers shall set the prices for the sale of PT shares under the terms provided for in para d) of no. 2 of the earlier article. The price to be set for the shares in the direct sale shall not be less than what is set for shares in the public offer for sale.
2 - The Council of Ministers shall delegate the powers mentioned in the earlier paragraph through a resolution to the Minister of Finance who may sub-delegate these powers to the Secretary of State of the Treasury and Finance.
Article 9
1 - No body, private or corporate, may acquire more than 10 % of PT's share capital within the operations provided for by this act. The proposals for acquisition exceeding this limit shall be scaled back to the limit laid down.
2 - For the purposes of this act, are regarded as the same body two or more companies which between themselves enjoy a relationship of simple interest or reciprocal interest of a sum higher than 50 % of the share capital of one of them or a majority of which is held by the same partner.
3 - The terms under no. 1 are not applicable:
a) To the institutions which in connection with the issue of programmes
of the American Depositary Receipts (ADR) or the Global
Depositary Receipts (GDR) act as depositaries or custodians of PT
shares and hold accounts in their name at the Securities Exchange,
where for those purposes ADR or GDR holders have been
shareholders
b) The international settlement houses for PT shares registered in the
securities accounts open in their name in institutions of custody,
registered with the Securities Exchange.
4 - PARTEST - Participações do Estado, SGPS, S.A. represents the State for the purposes of the terms under no. 3 of article 384 of the Companies Act.
Article 10
Within 60 days from the end of the 2nd phase of privatization, PT shall publish, under the terms provided for under article 330, no. 2 of the Securities Exchange Act, the list of shareholders whose interest is equal to or higher than 1 % of the share capital, indicating the number of shares held by each one.
Article 11
In order to conduct the privatization operations provided for under this Decree-Law the Minister of Finance is delegated powers, which he may sub-delegate to the Secretary of State of the Treasury and Finance, to determine the further necessary conditions deemed appropriate, including especially, powers to sign, by direct settlement, the contract to stage and launch the public offer for sale, as well as the contracts for the sale of shares provided for under no. 1 of article 5 and no. 2 of article 6.
Article 12
The public deed to amend PT's charter as well as all the appropriate registers which include the amendments arising from this act shall be exempt from payment of any tax and fee.
Article 13
This decree-law comes into force on the very day of its publication.
Seen and approved in the Council of Ministers of April 18th 1996. António Manuel de Carvalho Ferreira Vitorino - Maria Manuela de Brito Arcanjo Marques da Costa - José Manuel da Costa Monteiro Consiglieri Pedroso.
