Management and supervision |
Management and supervision
Public limited companies may opt for one of three structures:
Board of directors and supervisory board
Board of directors
The number of directors of the board is established in the memorandum of association.
The management can be performed by a sole director as long as the share capital does not exceed EUR 200,000.
Directors need not be shareholders, but they must be natural persons with full legal capacity.
If a legal person is appointed as a director, it must appoint a natural person to exercise the office in its name; the legal person is joint and severally liable with the appointed natural person for the actions of the latter.
Directors may be designated in the memorandum of association or elected by the general meeting or inaugural meeting, for a term of office established in the memorandum of association, which is no greater than four calendar years.
The chairman of the board can be elected by the general meeting that elected the board of directors or by the board of directors itself. The memorandum of association can approve the provision of a casting vote for board of directors´ resolutions to the chairman. The Chairman will always possess a casting vote if the board is composed of an even number of directors.
The board of directors is a collective body which acts per the majority of its members. The company becomes bound by the deals concluded by the majority of the board members or by a lower number, if so established in the articles of association.
The board of directors shall be responsible for managing the company´s business activities, for which purpose it is provided with ample management powers. It must submit to the resolutions of shareholders or to the intervention of the supervisory board or the audit committee only in the circumstances in legislation or the memorandum of association that establish such.
The board of directors functions as a sole body by majority. The company is bound by the contracts entered into by the majority of its directors, or by a lesser number, if so established in the memorandum of association.
The board of directors meets whenever convened by the chairman or by two other directors.
The board of directors must meet at least once a month, unless otherwise established in the memorandum of association.
The directors must be notified in writing, with the appropriate advance notice, except where the memorandum of association provide for meetings on pre-established dates or another form of providing notice of meeting.
Supervisory Board
The company is supervised by:
a) A supervisory board or a sole supervisor;
b) A supervisory board and a statutory auditor or a firm of statutory auditors that is not a member of the supervisory board.
The second type of supervision model is compulsory for companies issuing securities traded on regulated markets and for companies, not totally controlled by another company that has implemented this supervision model, exceed 2 of the following thresholds during two consecutive years:
i) Balance sheet total: EUR 100.000.000,00;
ii) Total net Sales and other revenues: EUR 150.000.000,00;
iii) Number of employees: 150.
The supervisory board has a minimum of 3 permanent members. If the supervisory board is composed of three permanent members, then it shall have one or two substitutes. When the number of members is higher then three, there must always be two substitutes. Should include a Certified Official Auditor (ROC)), except in the case mentioned in paragraph b) above.
If the sole supervisor model is implemented, the post must be held by a statutory auditor or a statutory audit firm and a substitute must be appointed, also a statutory auditor or a statutory audit firm. Whatever the case, they must never be shareholders of the company.
The sole supervisor is governed by the legal requirements applicable to statutory auditors and, on a subsidiary basis, where applicable, by the provisions governing supervisory boards and their members.
The permanent members of the supervisory board and their substitutes, the sole supervisor and the ROC are elected by the general assembly for the period established in the articles of association, which cannot exceed four years. The first appointment of the company´s supervisory officers may be made in the memorandum of association or at the inaugural meeting.
The supervisory board´s duties are:
a) Supervise the company´s management;
b) Ensure compliance with legislation and the memorandum of association;
c) Verify that books and ledgers, accounting registers and supporting documents are in order;
d) Verify, whenever it deems such action convenient and by the means it considers appropriate, the extension of the cashbook and the stock of any kind of goods or assets belonging to the company or received by way of guarantee, deposit or for some other end;
e) Verify the accuracy of financial statements;
f) Verify whether the accounting policies and valuation criteria adopted by the company lead to the correct evaluation of the assets and the profit/loss;
g) Draw up an annual report on the supervision of the company and issue a statement of opinion on the annual report, accounts and proposals presented by the board;
h) Convene the general meeting when necessary, whenever the chairman of the general meeting should do so but does not;
i) Supervise the effectiveness of the risk management system, the internal control system and the internal audit system, if these exist;
j) Receive any communication of irregularities from shareholders, company employees or others;
l) Contract the services of experts to assist one or more of its members to perform their functions. The hiring and remuneration of experts must take into account the importance of the matters committed to their attention and the economic situation of the company;
m) Comply with all other duties established in law or in the memorandum of association.
When the system of a supervisory board and statutory auditor is adopted, apart from the duties referred to in the previous paragraph, the supervisory board is also responsible for:
a) Supervising the process of preparing and disclosing financial information;
b) Propose the appointment of the statutory auditor to the general meeting;
c) Supervising the audit of the company´s financial statements;
d) Supervising the independence of the statutory auditor, in particular with regard to the provision of additional services.
The sole supervisor or any member of the supervisory board, if there is one, must perform, jointly or separately and at any time during the year, all acts of verification and inspection that they deem necessary to ensure full compliance with their supervisory duties.
The statutory auditor´s duty in particular, notwithstanding the actions of other members, is to carry out any examinations and checks necessary relative to the audit and legal certification of the accounts, under the terms set forth in specific legislation, as well as to perform any other special duties established in law.
The statutory auditor shall be responsible for immediately informing the chairman of the board of directors or executive board, by registered letter, of any facts that it may become aware of and which it considers to constitute a serious impediment to the pursuit of the company´s object. These facts may include repeated default on payments to suppliers, the protest of credit bills, the issue of cheques without sufficient reserves, defaulted payment of social security contributions or taxes.
For the performance of their duties, the sole supervisor, the statutory auditor or any member of the supervisory board may, jointly or separately:
a) Obtain from the management any of the company´s ledgers, registers and documents for examination and certification thereof, and may verify the stock of all types of assets, namely cash, securities and merchandise;
b) Obtain from the management or from any of the directors, information or clarification on the situation of the company´s operations or activities or on any of its businesses;
c) Obtain from third parties who have carried out operations on behalf of the company, any information that would permit the clarification of such operations;
d) Attend board meetings, whenever it sees fit.
The supervisory board may decide to contract the services of experts, to assist it in the performance of its duties.
The supervisory board must meet at least once a quarter. All decisions are approved by majority vote.
The sole supervisor, statutory auditor or members of the supervisory board are removed from office, without the need for justification, if, during the company´s financial year, they are absent from two meetings of the supervisory board or fail to appear at a general meeting or two meetings of the company´s management to which they have been invited by the chairman of the board or at which the accounts for the financial year are to be discussed.
Board of directors, audit committee and statutory auditor
Board of directors
The above-described provisions for a board of directors with a supervisory board are applicable to the board of directors in the form of governance and control described herein.
Audit committee
The audit committee is a corporate body comprising part of the members of the board of directors specified in the articles of association, with at least three permanent members.
The members of the audit committee are prohibited from exercising executive functions in the company, and are subject to the incompatibility rules applicable to members of the supervisory board, the sole supervisor or the statutory auditor.
In companies issuing shares admitted to trading on a regulated market and companies that surpass two of the following thresholds for two consecutive years:
a) Balance sheet total: EUR 100.000.000,00;
b) Total income: EUR 150.000.000,00;
c) Number of employees: 150.
The audit committee must include at least one member holding a university degree appropriate to the performance of these duties, with auditing or accounting skills and who is independent.
In companies issuing shares admitted to trading on a regulated market, the audit committee must be comprised of a majority of independent members.
Law firms, statutory audit firms or shareholders may be members of the audit committee, although, in relation to shareholders, only natural persons with suitable qualifications and experience for these duties must be considered.
The members of the audit committee are appointed together with the other directors. If the general meeting does not appoint the chairman then the audit committee must appoint one. The chairman has a casting vote in the event of an even number of members of the committee or when such a faculty is provided for by the memorandum of association.
The audit committee is responsible for:
a) Supervising the company´s management;
b) Ensuring compliance with legislation and the memorandum of association;
c) Verifying that books and ledgers, accounting registers and supporting documents are in order;
d) Verifying, whenever it deems such action convenient and by the means it considers appropriate, the extension of the cashbook and the stock of any kind of goods or assets belonging to the company or received by way of guarantee, deposit or for some other end;
e) Verifying the accuracy of financial statements;
f) Verifying whether the accounting policies and valuation criteria adopted by the company lead to the correct evaluation of the assets and the profit/loss;
g) Drawing up an annual report on the supervision of the company and issue a statement of opinion on the annual report, accounts and proposals presented by the board;
h) Convening the general meeting when necessary, whenever the chairman of the general meeting should do so but does not;
i) Supervising the effectiveness of the risk management system, the internal control system and the internal audit system, if these exist;
j) Receive any communication of irregularities from shareholders, company employees or others;
l) Supervising the process of preparing and disclosing financial information;
m) Proposing the appointment of the statutory auditor to the general meeting;
n) Supervising the audit of the company´s financial statements;
o) Supervising the independence of the statutory auditor, in particular with regard to the provision of additional services;
p) Contracting the services of experts to assist one or more of its members to perform their functions. The hiring and remuneration of experts must take into account the importance of the matters committed to their attention and the economic situation of the company;
q) Complying with all other duties established in law or in the memorandum of association.
Statutory Auditor The general meeting, based on the audit committee´s recommendation, must appoint a statutory auditor or a statutory audit firm to audit the company´s accounts.
The term of office must not be greater than 4 years and the appointed statutory auditor performs the duties established above in sub-paragraphs c), d), e) and f) for the supervisory board.
Executive board of directors, general and supervisory board and statutory auditor
General and Supervisory Board
The general and supervisory board is a collegial body comprising the number of members established in the memorandum of association
The members must be natural persons with full legal capacity. If a legal person is appointed as a director, it must appoint a natural person to exercise the office in their own name; the legal person is joint and severally liable with the appointed natural person for the actions of the latter.
In companies issuing shares admitted to trading on a regulated market and companies that surpass two of the following thresholds for two consecutive years:
i) Balance sheet total: EUR 100.000.000,00;
ii) Total income: EUR 150.000.000,00;
iii) Number of employees: 150;
The general and supervisory board must include at least one member holding a university degree appropriate to the performance of these duties, who has auditing or accounting skills and is independent.
In companies issuing shares admitted to trading on a regulated market, the audit committee must be comprised of a majority of independent members.
The incompatibilities defined for members of the supervisory board are also applicable to the members of the general and supervisory board.
Unless so authorised by the general meeting, the members of the general and supervisory board cannot undertake, on their own account or on behalf of third parties, any business activity competing with the company, nor can they hold an executive post in a competing company or be designated on behalf of or in representation of such companies.
The members of the general and supervisory board are appointed in the memorandum of association or elected by the general meeting or inaugural meeting.
The chairman of the board can be elected by the general meeting that elected the general and supervisory board or by the board itself. The memorandum of association can approve the provision of a casting vote to the chairman for the general and supervisory board´s resolutions.
No director of the company or of any other company of the same group or with which a control relationship exists may be appointed as a member of the general and supervisory board.
The general and supervisory board´s duties are to:
a) Appoint directors and remove directors from office, if this duty is not assigned to the general meeting in the memorandum of association;
b) Designate the director to serve as chairman of the executive board and remove the same from office, if such powers are not conferred on the general meeting in the memorandum of association, notwithstanding the provisions of Article 436 of the Portuguese Companies Act;
c) Represent the company in relations with the directors;
d) Supervise the activities of the executive board;
e) Ensure compliance with legislation and the memorandum of association;
f) Verify that ledgers, accounting records and supporting documents are in order, as and when it sees fit and in the manner which it deems appropriate, as well as verify the situation of any assets or securities held by the company through any means;
g) Verify whether the accounting policies and valuation criteria adopted by the company lead to the correct evaluation of the assets and the profit/loss;
h) Issue an opinion on the annual report and accounts for the financial year;
i) Supervise the effectiveness of the risk management system, the internal control system and the internal audit system, if these exist;
j) Receive any communication of irregularities from shareholders, company employees or others;
l) Supervise the process of preparing and disclosing financial information;
m) Propose the appointment of the statutory auditor to the general meeting;
n) Supervise the audit of the company´s financial statements;
o) Supervise the independence of the statutory auditor, in particular with regard to the provision of additional services;
p) Contract the services of experts to assist one or more of its members to perform their functions. The hiring and remuneration of experts must take into account the importance of the matters committed to their attention and the economic situation of the company;
q) Draw up an annual report on its activities and submit it to the general meeting;
r) Grant or deny consent for the transfer of shares, whenever this is required under the terms of the memorandum of association;
s) Convene the general meeting, whenever it shall see fit;
t) Comply with all other duties established in legislation or by the memorandum of association.
The general and supervisory board does not have the power to manage the activities of the company. Legislation and the memorandum of association may however establish that the executive board is required to seek the consent of the general and supervisory board prior to performing certain categories of acts.
In all of the company´s dealings with its directors, the company is bound by two members of the general and supervisory board designated by the same.
The general and supervisory board shall, whenever deemed appropriate, appoint one or more committees from amongst its members to perform specific purposes, in particular the supervision of the executive board and defining directors´ remuneration.
In companies issuing shares admitted to trading on a regulated market and companies that surpass two of the following thresholds for two consecutive years:
i) Balance sheet total: EUR 100.000.000,00;
ii) Total income: EUR 150.000.000,00;
iii) Number of employees: 150.
The general and supervisory board must establish a financial affairs committee, which shall be specifically responsible for the duties referred to in sub-paragraphs f) to o) of the abovementioned duties of the general and supervisory board.
The board responsible for financial matters should include at least one member with an appropriate university degree as well as knowledge of auditing or accounting issues, who is independent and drafts an annual report in respect of their supervisory activities.
In companies issuing shares admitted to trading on a regulated market, the financial affair committee must be comprised of a majority of independent members.
The general and supervisory board must meet at least once a quarter.
Executive Board
The executive board is a collegial body composed of the number of directors established in the memorandum of association. Companies with capital no greater than EUR 200,000.00 can select a sole director.
If not appointed in the articles of associations, directors may be appointed by a general assembly or by the general and supervisory board, if permitted by the articles of association, for a term of office established in the memorandum of association, to be no greater than four calendar years.
Although appointed for a fixed period of time, directors shall remain in office until such time as a new appointment is made. Directors can be re-elected, except in situations of dismissal from office or resignation.
Directors need not be shareholders, but they must not be:
a) Members of the general and supervisory board, notwithstanding the provisions of article 437, paragraph nos. 2 and 3, of the Portuguese Companies Act;
b) Members of the supervisory bodies of companies in a group or control relationship with the company in question;
c) Spouses, relatives or kin in a direct line and up to and including the 2nd degree in an indirect line, of the persons referred to in the previous sub-paragraph;
d) Persons not endowed with full legal capacity.
If a legal person is appointed as a director, it must appoint a natural person to exercise the office in its name. The legal person is jointly and severally liable with the designated natural person for the actions of the latter.
If no chairman is appointed in the act of designating the members of the executive board, that board shall choose its chairman. The chairman will possess a casting vote whenever the board is composed of an even number of directors or if so established in the memorandum of association.
The executive board is responsible for managing the company´s business activities. The board has full powers to represent the company before third parties.
nteraction between the Executive Board and the General and Supervisory Board
The executive board must provide the following to the general and supervisory board:
a) At least once a year, the management policy it intends to follow, as well as the facts and issues on which its choices are based;
b) On a quarterly basis, prior to the meeting of that board, information regarding the company´s situation and business in general, in particular sales and services-provided turnovers;
c) At the time of year established by law, the full version of the annual report for the previous financial year.
The executive board must inform the chairman of the general and supervisory board, in good time, of any transaction which may have a significant impact on the profitability or liquidity of the company and, in general, any abnormal situation or any situation deemed to be important for whatever reason.
Statutory Auditor
The general meeting, based on the general and supervisory boards or financial affairs committee´s recommendation, must appoint a statutory auditor or a statutory audit firm to audit the company´s accounts.
The term of office must not be greater than 4 years and the appointed statutory auditor performs the duties established above in sub-paragraphs c), d), e) and f) for the supervisory board.
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