The capital market’s competitiveness, in order to attract foreign investment, forces the adoption of strategies that bring a higher diversification of the financial sources, reducing the dependency on the financial banking sector and increasing the incentive for profits reinvestment.
Following that strategy, the decree-law no. 19/2019, published on the 28th of January, gives concrete expression to these objectives through the approval of the legal regime of investment and property management companies (henceforward “SIGI”).
Among its advantages, we state as the most relevant the fact that the SIGI (i) constitute a dynamization mechanism for the real estate market, transparent and suited to the needs of economic agents, (ii) promote the market opening to foreign investment, (iii) increase the investment in economy and market competitiveness and (iv) diversify the financial sources for companies.
SIGI are Public Limited Companies (“PLC”) with a supervision model constituted by Statutory Auditor (“SA”) or an Audit Firm, with the minimum capital of 5.000.000 € in common shares, which are traded on regulated market.
What are the main functions?
- Acquisition of property rights, surface rights or other equivalent rights on real estate;
- Ownership of shares in other SIGI;
- Ownership of shares in real estate investment funds and property investment companies for rental housing.
It must fulfil, cumulatively, the following requirements:
- At least 80% of the asset total value represented by the property rights value and the shares;
- At least 75% of the asset total value must be represented by the property rights value, subject of rental or other equivalent form of economic exploitation;
- At least 75% of the profit coming from the asset sale must be reinvested;
- The statutory reserve can not exceed 20% of the SIGI share-capital;
- The amount in debt can not exceed 60% of the asset total value.
This diploma establishes the possibility to convert real estate investment institutions under corporate form, into SIGI, against deliberation of the general meeting with 90% of the voting capital in favour, as well as the possibility to convert PLC already formed into SIGI, against general meeting deliberation with the approval of a majority of the votes required to resolve on the amendment of the articles of association.
In case of non-compliance with the requirements, the companies lose the SIGI status and cannot reacquire it for the following 3 years.
Regarding the entry into force, it is established that its entry will take place in the month following its publication.