New Inside Information Regime Replaces the Former Material Events Regime 

July, 2006 -

Further to the recent amends to the Portuguese Securities Code arising from the implementation of the EU Directives on the prospectus to be published when securities are offered to the public or admitted to trading and on insider dealing and market manipulation, the Portuguese Securities Exchange Commission (“CMVM”) approved a set of rulings and guidelines1 now creating an overall framework on the new Inside Information regime. I. The duty to disclose Inside Information to the public This duty is the “successor” of the duty to disclose Material Events. The definition of Inside Information now foreseen in the Portuguese Securities Code is broader than the one of Material Events to the extent that (i) it is not limited to events related to the issuer’s activity as well as (ii) it no longer depends upon its impact on the issuer’s assets or financial condition or normal business. In fact, the duty to disclose Inside Information to the public now covers: a) Information of a precise nature, which has not been made public, relating directly to the issuer or to its issued securities and which, if it was made public, might have a significant effect on the price of those securities or related derivatives or underlying instruments; b) Any change to the Inside Information already made public; c) Past or actual events or events that may reasonably be expected to occur, irrespectively of the degree of formalities already executed, constituting price sensitive information, which, if came to the knowledge of any reasonable investor, he could use it as part of the basis of his investment decision. On the other hand, by contrast with the former regime, all issuers of securities admitted to trading on a regulated market (or who have requested its admission) will be subject to the duty to disclose Inside Information, no longer being set forth a specific regime for issuers of shares and debt instruments. However, in order to prevent any damages that, in certain circumstances, could arise from the immediate disclosure, issuers may decide to delay the public disclosure of Inside Information provided that they ensure that the following conditions are satisfied: (i) the immediate disclosure might prejudice his legitimate interests; (ii) the delay is not able to mislead the public; and (iii) the issuer evidences its ability to ensure the confidentiality of the information. The issuers may be exempted by CMVM from complying with the duty to disclose Inside Information to the public where (i) the disclosure conflicts with the public interest and (ii) is able to cause a serious prejudice to the issuer provided that (iii) said exemption does not mislead the public as to the key facts to assess the relevant securities. Anyone in possession of Inside Information is prohibited from, in any way, disclosing it to any other person outside the normal course of its functions, or from using it prior to said Inside Information being made public. II. Events that may be deemed as Inside Information The following examples, not fully covered in the former CMVM’s Understanding on Material Events, now fall under CMVM’s Understanding concerning the events that may be deemed as Inside Information: a) The occurrence of negotiations that, if publicly known, would have a significant effect on the price of the related securities; b) Any references to financial performance included in the issuer’s financial information when closed (at the most upon the conclusion of the financial results process and prior to the shareholders general meetings) and the correction of any forecasts previously announced; c) Alteration on the composition of the corporate bodies and persons discharging managerial functions and the resignation of the auditor registered with CMVM. III. Insider Dealing Preventive Measures The new regime also establishes measures aiming to prevent insider dealing: a) The issuers and any persons acting on their behalf or for their account shall draw up — and maintain updated — a list of persons with access to Inside Information (insiders list); b) Persons discharging managerial functions (and not only the Directors as previously required), and persons closely associated with them, shall notify CMVM all transactions, on their own account or for the account of third parties, direct or indirectly, relating to shares of the relevant issuer or related financial instruments. IV. Sanctions The scope of the insider dealing crime remains essentially the same. The applicable penalty may correspond to up to 3 years of imprisonment. The breach of the Inside Information regime, where it is not deemed to be subject to a criminal sanction, will be qualified as a very serious administrative offense subject to fines amounting from € 25,000 up to € 2,500,000.



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