Securities & Guarantees

Question 1

difference b/w guarantee and security ‘in rem’

Answer 1

guarantee: 100% exposure
- eg. A gives corporate guarantee for T (parent company)

security ‘in rem’: specific asset

• mortgage = immovable assets (exceptions = cars, ships + planes)
• movable assets are pledged

Question 2

prohibition of financial assistance

Answer 2

a company cannot grant funds/securities so that another company can obtain its shares

art 322 Portuguese Companies Code

• cannot use the assets of the target company to acquire its control

Question 3

what happens to an agreement that falls under the prohibition of financial assistance?

Answer 3

it will be null and void

art 322 n3

• bank suffers consequences (has no security) - security must be replaced

Question 4

article that allows companies to provide securities/guarantees

Answer 4

art 6 n3 Portuguese Companies Code

only if company:

• has justified corporate interest, or
• is in a group or controlling relation

Question 5

justified corporate interest

Answer 5

if company benefits from the guarantee (eg. business development)

case of acquisitions: art 322 overpowers art 6 n3

Question 6

group or controlling relationship

Answer 6

eg. parent and daughter companies

very complicated b/w sister companies = not a group or controlling relationship

Question 7

Sister wants to buy a house and asks my company for security to obtain money from bank. Can I secure this loan?

Answer 7

No, there is no justified corporate interest.

art 6 n3 companies code