The venture capital investment regime, through Venture Capital Collective Investment Undertakings (Organismos de Investimento Colectivo de Capital de Risco – OICCR) was regulated through a diploma that entered into force in September 16th.
Venture capital investment is the purchase, for a limited time period, of equity instruments and debt capital instruments in developing societies.
The OICCR are special collective investment bodies under the Capital Market Commission’s (Comissão do Mercado de Capitais or CMC), and incorporated in one of the following ways:
- Venture Capital Investment Funds (Fundos de Investimento de Capital de Risco – FCR);
- Venture Capital Investment Enterprises (Sociedades de Investimento de Capital de Risco – SCR);
- Venture Investors (Investidores em Capital de Risco – ICR).
The SCR, FCR and the ICR aim primarily at executing venture investments through the following operations:
- investment in equity instruments;
- investment in debt capital instruments of companies in which they participate or intend to participate;
- provision of guarantees to benefit companies in which they participate;
- application of eventual cash surpluses in financial instruments;
- execution of financial operations which prove necessary to the development of their activity.
SCR, ICR and FCR are barred from:
- execution of operations not related to the pursuance of their corporate object or to the corresponding investments policy;
- investment in securities admitted to negotiation in regulated market, exceeding 50% of its assets;
- holding equity instruments for a period over 10 years;
- purchase or holding real estate, except for those necessary for own facilities.
FCR, SCR, and ICR tart up depends on prior authorization from CMC, which entails prior registration at this body.
All investment bodies with investment units for subscription or purchase by institutional investors only, as well as those with investment units that might be subscribed or purchased by any investor categories, including the public, can become FCR.
The incorporation of open FCR is forbidden.
The FCR capital is represented by units with no nominal value, named investment units, with a unit value set by the managing entity,
The SCR are investment companies incorporated as limited liability company, governed by the commercial companies regime.
Finally, the ICR are special venture investment companies, incorporated mandatorily according to the single-member public limited company type, in which only natural persons can become partners.
References
Presidential Legislative Decree nr. 4/15, September 16th
Presidential Legislative Decree nr. 7/13, October 11th