Basic law on privatization
Law No. 10/19 of 14 May established the Legal Regime for Privatization and Reprivatization and applies to privatization and reprivatization of public companies, shareholdings held directly by the State or other public entities and other assets and public goods when considered in isolation. This law also applies to the transfer of rights of exploitation of the means of production that were previously prohibited to private initiative for reasons of public interest and other goods that are not subject to a specific legal regime or fall within the absolute reserve of the State, under the terms of the applicable legislation.
The privatization process must comply with the principles of justice, competition, legality, competitiveness, equality, impartiality, efficiency and transparency.
The President of the Republic has the power to approve the privatization program and to coordinate its implementation.
The entities and persons below may not buy companies from the Public Business Sector or assets owned by the State to be sold in privatization processes:
- Any entity that, for the position it holds, is in a position of conflict of interests or where said acquisition constitutes an act of public misconduct, in accordance with the applicable legislation;
- Officials and administrative agents directly involved in the conduct of the privatization process, as well as their spouses, ascendants and descendants directly or indirectly;
- All entities prevented from participating in public procurement procedures, under the terms defined in the Public Procurement Law.
The real estate assets included in the privatization to be sold process must be registered in the name of the State or of another public entity in the Land Register Office and in the Tax Office.
The decision to privatize is effective only after its publication in the Official Gazette (Diário da República) and is the responsibility of the President of the Republic.
Privatization is always preceded by at least a prior evaluation of the assets of the entity of the Public Business Sector or asset or public good to be privatized. The costs are borne by the entity that manages the privatization process.
The public company to be privatized is transformed into a limited company by act of the entity competent to take the decision to privatize. In the same act will be approved the by-laws of the company, passing the company to be governed by the law applicable to commercial companies. The public limited company that results from the transformation maintains the legal personality of the transformed company and succeeds it in the legal and contractual rights and obligations.
- Disposal of the shares representing the capital stock;
- Increase in the share capital open to the subscription of private entities;
- Disposal of assets;
- Assignment of the right of exploitation and management.
Types of procedure
- Offer on the stock exchange.
It is forbidden to use the simplified contracting procedure under the terms of the Public Procurement Law.
Privatization procedures are conducted by a Negotiation Committee set up specifically for this purpose.
The system of prior authorization is that which is determined by an act of its own, of the holder of the Executive Power.
Without prejudice to the principle of nationalization and confiscation can only be reprivatized public companies that have been nationalized under Law No. 3/76 of March 3.
Acquisition of shares by employees and other small subscribers
The Privatization Program may provide that a percentage of up to 20% of the share capital of the entity of the Public Business Sector to be privatized shall be reserved for the acquisition or subscription under special conditions by the employees of the privatized company and other small subscribers.
The employees of the entities of the Public Business Sector to be privatized maintain the rights and obligations they hold.