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Legal papers

Legal framework of Credit Institutions and Financial Companies:

(Provisions of Decree-Law no. 298/92, and amended by Decree-Laws no. 246/95 of 14 September, no. 232/96 of 5 December, no. 222/99 of 22 June, no. 250/2000 of 13 October and no. 201/2002 of 26 September, concerning the deposit guarantee scheme and the respective Fund)

TITLE II
Authorisation of credit institutions having their head office in Portugal

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CHAPTER II
Authorisation procedure

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Article 22
Withdrawal of authorization

1. The authorization of a credit institution may be withdrawn on the following grounds, as well as on others envisaged by law:

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g) The institution fails to meet the obligations arising out of its participation in the Deposit Guarantee Fund or in the Investor Compensation Scheme;

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TITLE IV
Activity in Portugal of credit institutions having their head office abroad

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CHAPTER II
Branches

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Article 49
Requirements for establishment

1. As a prerequisite for the establishment of a branch, Banco de Portugal shall receive, from the supervisory authority of the home country, notification of the following:

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f) A detailed description of the deposit-guarantee scheme in which the credit institution participates and which ensures the protection of depositors in the branch.

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TITLE VI
Rules of conduct

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CHAPTER II
Professional secrecy

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Article 79
Exceptions to the obligation of professional secrecy

1. Facts or data regarding relations between the customer and the institution may be disclosed if the customer thus permits it and informs the institution accordingly.

2. With the exception of the case envisaged in the foregoing paragraph, the facts and data subject to secrecy may only be disclosed:

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c) To the Deposit Guarantee Fund and to the Investor Compensation Scheme, within the scope of its duties;

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Article 81
Co-operation with other bodies

1. The provisions of the foregoing articles shall not prevent Banco de Portugal from exchanging information with the Stock Market Commission, the Portuguese Insurance Institute, Caixa Central de Crédito Agrícola Mútuo, bodies, authorities and persons performing functions equivalent to those performed by these entities in another EC Member State, as well as with the following bodies also belonging to an EC Member State;

a) Bodies which administer deposit guarantee or investor-protection schemes, as regards the information required for the performance of their functions;

Article 89
Advertising

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2. The use in advertising of references to the guarantee of deposits or investors shall be restricted to a merely factual reference and shall not contain any value judgment nor make comparisons with deposit-guarantee schemes of other institutions.

TITLE IX
Deposit Guarantee Fund

Article 154
Creation and nature of the Fund

1. A Deposit Guarantee Fund is created, hereinafter called the "Fund", as a public-law legal person, with administrative and financial autonomy.

2. The Fund has its head office in Lisbon, on the premises of Banco de Portugal.

3. The Fund shall enjoy a special regime pursuant to the provisions laid down in the framework law of public institutes. The Fund shall be governed by this Decree-Law and its regulations and, save as otherwise provided therein, it shall be governed by the same framework law of public institutes.

Article 155
Purpose

1. The purpose of the Fund is to guarantee the repayment of deposits with credit institutions which are members thereof.

2. The Fund can also cooperate, on a temporary basis, in actions intended to:

a) Restore the solvency and liquidity conditions of its member credit institutions, within the framework of the intervention programme envisaged in Article 142;

b) Provide financial support to the Investor Compensation Scheme, in the form of loans or guarantees, more specifically in the cases where a credit institution participating in the Fund makes the claim for compensation. .

3. For the purposes of this title deposit shall mean any credit balance which a credit institution must repay under the legal and contractual conditions applicable and which is constituted by available monetary funds left in an account or resulting from temporary situations deriving from normal banking transactions.

4. The provisions of the foregoing paragraph cover funds represented by certificates of deposit issued by the credit institution, but not those represented by other debt securities issued by the same institution nor liabilities arising out of own acceptances nor promissory notes in circulation.

Article 156
Member institutions

1. The following shall compulsorily be members of the Fund:

a) Credit institutions having their head office in Portugal and authorised to take deposits;

b) Credit institutions having their head office in non-EC Member States, in relation to deposits taken by their branches in Portugal, unless these deposits are covered by a guarantee scheme in the home country under terms deemed equivalent by the Banco de Portugal to those of the Fund and without prejudice to any bilateral agreements on the matter;

c) Until 31 December 1999, credit institutions listed in Annex III to Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994, in relation to deposits taken by their branches in Portugal.

2. In order to supplement the home country guarantee scheme, credit institutions having their head office in other EC Member States may also be members of the Fund, in relation to deposits taken by their branches in Portugal, if the level or scope of that guarantee is lower than the one offered by the Fund.

3. Credit institutions referred to in the foregoing paragraph shall be subject to the legal rules and regulations governing the Fund.

4. The Banco de Portugal shall establish, through a notice and in compliance with the principles embodied in Articles 160 to 162, the conditions according to which the credit institutions referred to in paragraph 2 above may be members of and excluded from the Fund.

5. If one of the credit institutions referred to in paragraph 2 above is excluded from the Fund, deposits made with its branches before the date of exclusion shall continue to be guaranteed by the Fund until the date on which they fall due.

6. The Deposit Guarantee Fund cooperates with other bodies and institutions with similar functions in the context of deposit guarantee, more specifically with regard to deposits taken by branches of credit institutions having their head office in other Member States or deposits taken in other Member States by branches of credit institutions having their head office in Portugal.

7. A specific law governs the guarantee of deposits taken by mutual agricultural credit banks belonging to the Integrated Mutual Agricultural Credit Scheme.

Article 157
Reporting requirement

1. Credit institutions that take deposits in Portugal shall make available to the public, in a readily comprehensible form, all the pertinent information on guarantee schemes on the deposits taken by them, including the identification, provisions, amount, the scope of cover offered, and the maximum repayment term.

2. Credit institutions shall also inform depositors whenever deposits are excluded from the guarantee.

3. That information shall be made available at the branches, in a well identified place and in a readily comprehensible manner.

4. On request, the entities mentioned in paragraph 2 shall provide information on the conditions under which deposits covered by the guarantee may be repaid and on the formalities which must be completed to obtain compensation.

5. Credit institutions shall inform Banco de Portugal of the terms and conditions regarding the deposits taken from the public that fall under the scope of cover offered by the Fund.

6. Banco de Portugal shall establish, by means of a Notice, the particulars, manner and frequency of the information mentioned in the foregoing paragraph.

Article 158
Management committee

1. The Fund is managed by a management committee comprised of three members, the chairman being a member of the board of Banco de Portugal, appointed by the Bank, another member being appointed by the Minister responsible for Finance, in his representation, and a third member appointed by the association representing in Portugal the participating credit institutions which, on the whole, hold the largest volume of deposits covered by the guarantee.

2. The chairman of the management committee shall have the casting vote.

3. The Fund shall be legally committed by the signatures of two of the members of the management committee.

4. The members of the management committee shall remain in office for renewable terms of three years, up to a maximum of three terms of office, during which they may engage in any other public or private occupation, provided that upon nomination they have been authorised for the purpose .

Article 159
Financial resources (*)

1. The Fund shall have the following financial resources:

a) Initial contributions from member credit institutions;

b) Periodical and special contributions from the member credit institutions;

c) Sums received on loan;

d) Income from investment of resources;

e) Endowments;

f) Proceeds of fines exacted from credit institutions.

2. In an urgent situation, namely if systemic stability aspects are at stake, the Banco de Portugal may, under the condition laid down in its Organic Law, grant temporarily to the Fund the financial resources required to meet its immediate needs.

(*) According to Decree-Law No. 211-A/2008, of 3 November 2008, until 31 December 2008, the financial resources of the Fund may still be supplemented by Treasury transfers or loans

Article 160
Initial contributions

1. Member credit institutions shall pay to the Fund, within 30 days of the registration of the commencement of their activity, an initial contribution whose amount shall be fixed by a notice of the Banco de Portugal, on a proposal of the Fund.

2. Credit institutions resulting from merger, splitting or transformation operations shall be exempt from the initial contribution.

Article 161
Periodical contributions

1. Member credit institutions shall pay an annual contribution to the Fund up to the last working day of the month of April.

2. The amount of the annual contribution of each credit institution shall be based on the average amount of monthly credit balances of deposits over the previous year, not considering those excluded under Article 165.

3. Banco de Portugal shall, in consultation with the Fund and the associations representing member credit institutions, fix the brackets of annual contributions and their upper limits, and may take into account regressivity criteria and the state of solvency of the institutions.

4. Up to a limit of 75% of the annual contribution and under the terms to be defined in the notice referred to in the foregoing paragraph, member credit institutions may be exempt from making the relative payment within the time limit established in paragraph 1 of this article, provided they commit themselves irrevocably and through the collateralisation of transferable securities to pay to the Fund, at any time as required by the latter, the whole or part of the amount of the contribution that was not paid in cash.

Article 162
Special contributions

1. When the Fund's resources are insufficient for the fulfilment of its obligations, the Minister of Finance may determine, by executive order and on a proposal of the management committee, that the member credit institutions make special contributions, and may set the amounts, instalments, time limits and other conditions of these contributions

2. The overall value of a credit institution's special contributions shall not exceed, in each fiscal year of the Fund's activity, the value of its annual contribution.

3. The Minister of Finance, on a proposal of the Fund, may exempt new member institutions, with the exception of those referred to in Article 160 (2), from the obligation to make special contributions for a period of three years.

Article 163
Investment of resources

Without prejudice to the provisions of Article 167-A, the Fund shall invest its available resources in financial operations, according to an investment plan agreed with Banco de Portugal.

Article 164
Deposits covered by the guarantee

The Fund guarantees, up to the limits laid down in Article 166, the repayment of:

a) Deposits taken in Portugal or in other EC Member States by credit institutions having their head office in Portugal, without prejudice to the fact that until 31 December 1999 the guarantee of those taken in these Member States by branches of the aforementioned institutions have as a limit the level and scope of cover offered by the host Member State guarantee scheme, if they are lower than those provided by the Fund;

b) Deposits taken in Portugal by the branches referred to in Article 156 (1) (b) and (c);

c) Deposits taken in Portugal by branches of credit institutions having their head office in other EC Member States that voluntarily participate in the Fund, in the part that exceeds the guarantee offered by the home country scheme.

Article 165
Deposits excluded from the guarantee

1. The following deposits shall be excluded from any repayment by guarantee schemes:

a) Deposits made on their own behalf and for their own account by the qualified investors referred to in Article 30 (1) of the Securities Code and by general government bodies;

b) Deposits arising out of transactions in connection with which there has been a final criminal conviction for money laundering;

c) Deposits with unauthorised entities;

d) Deposits directly made outside the territorial scope mentioned in the foregoing Article, namely in an offshore jurisdiction, except if the depositor is not aware of the final destination of such deposits;

e) Deposits by members of the management or auditing boards of the credit institution, shareholders directly or indirectly representing at least 2% of its capital stock, certified auditors at the service of the institution, external auditors responsible for carrying out the audits of the institution or depositors of similar status in other companies in the same group or holding a controlling interest in the institution;

f) Deposits by persons or entities that have performed functions, held stakes or provided the services under the foregoing subparagraph in the four years before the date on which deposits became unavailable, or the date of imposition by Banco de Portugal of financial reorganisation measures under the terms of the law, and whose action or failure to act caused the financial difficulties experienced by the credit institution or which helped to aggravate that situation;

g) Deposits by the spouse, relatives by consanguinity or persons related to them by affinity in the first degree or third parties acting on behalf of the depositors referred to in subparagraph d);

h) Deposits by other companies in the same group or holding a controlling interest in the institution;

i) Deposits by persons responsible for facts related to the credit institution, or that have profited from these facts directly or through a third party, which have caused its financial difficulties or helped to aggravate that situation, due to action or failure to act in the performance of their functions;

j) Deposits for which the depositor has, on an individual basis, obtained from the same credit institution, rates or other financial concessions which have helped to aggravate its financial situation;

l) Deposits arising out of the full or partial repayment of investment operations with guaranteed return or with guaranteed repayment of the amounts invested when they have been wrongfully agreed between investors and participating entities, or granted by the latter. Such guarantees are assumed to be illicit when they are provided in the three months before the date on which deposits become unavailable, or the date of imposition by Banco de Portugal of financial reorganisation measures under the terms of the law;

m) Deposits by persons acting on behalf of the persons or entities referred to in the previous subparagraphs.

2. If there is reasonable doubt as to any of the situations referred to in paragraph 1, the Fund shall suspend any repayment to depositors pending notification of the court decision recognising the depositor’s right to it.

3. When judicial or breach of regulations proceedings have been initiated for any acts related to deposits covered by the Fund that violate legal or regulatory rules, the Fund shall suspend any repayment to depositors pending notification of the final court decision of non-indictment or acquittal.

4. In the event of a court decision that does not recognize the depositors’ right to compensation by the Fund after the repayment has been made, that amount shall be returned to the Fund.

Article 166
Limits of the guarantee

1. The Fund covers in full the value of the cash credit balances of each depositor, whenever that value does not exceed € 25,000 (According to article 12 of Decree-Law No. 211 - A/2008, of 3 November 2008, until 31 December 2011, this limit shall be increased from € 25,000 to € 100,000).

2. For the purposes of the foregoing paragraphs, the credit balances to be considered shall be those existing on the date on which the deposits became unavailable.

3. In determining the value referred to in the paragraph 1 the following criteria shall be observed:

a) Account shall be taken of all the deposits held by the party concerned with the institution in question, regardless of their type;

b) Interest due and payable up to the date mentioned in paragraph 2 above shall be included in the credit balances of deposits;

c) The credit balances of deposits denominated in foreign currency shall be converted into euros at the exchange rate prevailing on the same date;

d) Except where otherwise provided for, the credit balances of joint accounts, whether jointly or jointly and solidarily held, shall be considered as belonging in equal parts to the holders;

e) Where the holder of the account is not entitled to the sums held in an account, the person who is absolutely entitled shall be covered by the guarantee, provided that that person has been identified or is identifiable before the date on which the competent authorities make the determination that deposits became unavailable;

f) If there are several persons who are entitled, pursuant to the provisions of subparagraph above, the share of each shall be taken into account when the limits provided for in paragraphs 1 of this article are calculated;

g) Deposits in an account to which two or more persons are entitled as members of an association or a special committee, without legal personality, shall be aggregated and treated as if made by a single depositor and shall not be taken into account for the purpose of calculating the limits applicable to each of these persons and provided for in paragraphs 1 and 2 of this article.

4. In the event of a court decision that does not recognize the depositors’ right to compensation by the Fund after the repayment has been made, that amount shall be returned to the Fund.

Article 167
Repayment procedures

1. Repayment shall take place within the following time limits:

a) A share of up € 10,000 of all deposits covered, within a maximum period of seven days;

b) The remainder up to the amount fixed in Article 166 (1), within a maximum period of twenty working days.

2. The time limit mentioned in the foregoing paragraph shall be counted as of the date on which deposits became unavailable, and the Fund, in exceptional circumstances and on a case-by-case basis, may apply to Banco de Portugal for one extension of the time limit, which shall not exceed a maximum period of ten working days.

3. Without prejudice to the period of limitation set forth in the general law, the expiry of the time limit prescribed in the foregoing paragraph does not affect the depositors' right of compensation.

4. Where the depositor or any person entitled to or interested in sums held in an account has been charged with an offence arising out of or in relation to money laundering, the Fund may suspend any payment pending the final judgement of the court.

5. Unavailability of deposits is considered to exist when:

a) The deposit-taking credit institution, for reasons which are directly related to its financial circumstances, has not repaid the deposits under the legal and contractual conditions applicable, and Banco de Portugal has verified, at the latest five days after first becoming aware of that fact, that the credit institution concerned appears to be unable on the occasion to repay the deposits and has no current prospect of being able to do so in the forthcoming days; or,

b) The Banco de Portugal makes public the decision through which it revokes the authorisation of the deposit-taking institution, if publication is prior to the determination mentioned in subparagraph a) above; or,

c) In relation to deposits in branches of credit institutions having their head office in other EC Member States, the supervisory authority of the home country has sent a declaration stating that the deposits taken by that institution are unavailable.

6. Where appropriate, Banco de Portugal shall communicate to the Fund any situation observed in a credit institution that may be liable of triggering the deposit guarantee.

7. The deposit-taking institution is bound to provide the Fund, within a maximum period of two working days and under the terms to be defined by means of a Notice of Banco de Portugal, with a full account of the depositors’ claims, together with whatever information the Fund requires to meet its obligations, the Fund having the option of examining the institution’s books and collecting on the institution’s premises any other relevant information.

8. Banco de Portugal, in cooperation with the Fund, regulates, controls and conducts regular tests to the efficacy of the mechanisms referred to in the foregoing paragraph, and may decide on the performance of such tests by the institutions themselves.

9. The Fund shall be subrogated to the rights of the depositors to the extent of the repayments it has effected.

Article 167-A
Attendance Rule

1. The Fund may participate in operations, deemed adequate to put an end to situations of financial distress involving participating credit institutions.

2. The Fund shall confine its financial support operations to the cases in which financial distress situations are most likely to come to an end within a short period of time, the objectives are clearly defined and outlined and the way how the Fund's support will end is ensured.

3. The execution of the financial support operations referred to in the foregoing paragraphs shall depend on the unanimous decision of the members of the Fund's management committee, on a favourable opinion by the association mentioned in Article 158 (1) and on the opinion of Banco de Portugal that such operations are adequate to the resolution of the situations in question.

6. Without prejudice to the provisions of the latter part of paragraphs 2 and 3 above, the financial support to the Investor Compensation Scheme, provided for in Article 155 (1) (b), shall be requested on a well-founded basis by the executive committee of the Scheme to the member of government responsible for finance. When the latter issues a favourable opinion, after hearing Banco de Portugal and the Securities Market Commission, he must send that opinion to the management committee of the Deposit Guarantee Fund for a decision.

Article 168
Services

Banco de Portugal shall ensure the technical and administrative services required for the smooth operation of the Fund.

Article 169
Fiscal years

The Fund's fiscal years shall correspond to the calendar years.

Article 170
Chart of accounts

The Fund's chart of accounts shall be drawn up in such a manner as to permit the clear identification of its assets composition and its operation and to record all the transactions carried out.

Article 171
Auditing

The Board of Auditors of Banco de Portugal shall monitor the Fund's activities and the observance of the applicable laws and regulations and shall issue its opinion on the annual accounts.

Article 172
Report and accounts

Not later than 31 March, the Fund shall submit for approval to the Minister of Finance its report and accounts as at 31 December of the previous year together with the opinion of the Board of Auditors of Banco de Portugal.

Article 173
Regulations

1. The Minister of Finance shall approve, by executive order and under the proposal from the managing committee, the regulations governing the Fund's activity.

2. Likewise, it shall be incumbent on the Minister of Finance to set the remunerations of
the members of the managing committee.

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Regulations Governing the Deposit Guarantee Fund

Approved by Executive Order No 285-B/95 of 15 September, as amended by Executive Order No 530/2003 (Series II) of 14 April and by Executive Order No 1426-B/2009 (Series I) of 18 December

CHAPTER I
Nature and purpose

Article 1 (1) The Deposit Guarantee Fund, hereinafter called the “Fund” is a public-law legal person, with administrative and financial autonomy.

(2) The Fund has its head office in Lisbon, on premises of Banco de Portugal, which shall ensure the technical and administrative services required for its operation.

Article 2 (1) The purpose of the Fund shall be to guarantee the repayment of deposits made with credit institutions, which are members thereof, under the conditions and according to the limits set forth in the Legal Framework of Credit Institutions and Financial Companies, hereinafter called the “Legal Framework”, and respective legal ordinances.

(2) The Fund can also cooperate, on a temporary basis, in actions intended to restore the solvency and liquidity conditions of the above-mentioned credit institutions and to provide financial support to the Investor Compensation Scheme, in accordance with the provisions laid down in Article 155 (2) (a) and (b) and in Article 167-A of the Legal Framework.

(3) For the purposes of these Regulations deposit shall mean any credit balance which a credit institution must repay under the legal and contractual conditions applicable and which is constituted by available monetary funds left in an account resulting from temporary situations deriving from normal banking transactions.

(4) The provisions of the foregoing paragraph cover funds represented by certificates of deposit issued by the credit institution, but not those represented by other debt securities issued by the same institution nor liabilities arising out of own acceptances nor promissory notes in circulation.

CHAPTER II
Member institutions and deposits covered by and excluded from the guarantee

Article 3 (1) The following shall compulsorily be members of the Fund:

(a) Credit institutions having their head office in Portugal and authorised to take deposits;

(b) Credit institutions having their head office in non-EC Member States, in relation to deposits taken by their branches in Portugal, unless these deposits are covered by a guarantee scheme in the home country under terms deemed equivalent by Banco de Portugal to those of the Fund and without prejudice to any bilateral agreements on the matter;

(c) (Revoked by paragraph (1) of Executive Order No 530/2003).

(2) In order to supplement the home country guarantee scheme, credit institutions having their head office in other EC Member States may also be members of the Fund, in relation to deposits taken by their branches in Portugal, if the level or scope of that guarantee is lower than the one offered by the Fund.

(3) Credit institutions referred to in the foregoing paragraph shall be subject to the legal rules and regulations governing the Fund.

(4) If one of the credit institutions referred to in paragraph (2) above is excluded from the Fund, deposits made with its branches before the date of exclusion shall continue to be guaranteed by the Fund until the date on which they fall due.

(5) The Deposit Guarantee Fund, whenever necessary, shall cooperate with other bodies or institutions with similar functions in the context of deposit guarantee, in accordance with the provisions laid down in Article 156 (6) of the Legal Framework.

Article 4 (1) The Fund guarantees, up to the limits laid down in the Legal Framework, the repayment of:

(a) Deposits taken in Portugal or in other EC Member States by credit institutions having their head office in Portugal;

(b) Deposits taken in Portugal by the branches referred to in Article 156 (1) (b) of the Legal Framework;

(c) Deposits taken in Portugal by branches of credit institutions having their head office in other EC Member States that voluntarily participate in the Fund, for the part that exceeds the guarantee offered by the home country scheme.

(2) Deposits under any of the situations provided for in Article 165 of the Legal Framework shall be excluded from the guarantee of repayment.

Article 5 (1) The Fund guarantees any deposit of monetary assets, regardless of its type, namely demand, notice and time deposits, deposits not mobilisable in advance, special deposits, housing-savings deposits, emigrants’ deposits, retirement-savings deposits, savings deposits for joint-property owners, other savings deposits, deposits represented by certificates of deposit, and compulsory deposits.

(2) Guaranteed deposits include those held by residents or non-residents, denominated in domestic or foreign currency.

CHAPTER III
Limits of the guarantee

Article 6 - The Fund covers the value of the cash credit balances of each depositor, pursuant to the provisions of Article 166 of the Legal Framework.

CHAPTER IV
Financial resources and indebtedness of the Fund

Article 7 (1) The Fund shall have the following financial resources:

(a) Initial contributions from member credit institutions;
(b) Periodical and special contributions from member credit institutions;
(c) Borrowed funds;
(d) Income from investment of resources;
(e) Endowments;
(f) Proceeds of fines exacted from credit institutions.
(2) In an urgent situation, namely if systemic aspects are at stake, Banco de Portugal may, under the conditions laid down in its Organic Law, grant temporarily to the Fund the financial resources required to meet its immediate needs.
Article 7 – A (1) Where there is need to resort to the financing mechanisms of the Fund envisaged in Article 12 (2) of Decree-Law No 211-A/2008 of 3 November, the Deposit Guarantee Fund shall submit a grounded request to the Directorate-General of the Treasury and Finance, which shall issue its opinion within 10 days as of the date of receipt of the request or of any supplementary information requested.

(2) For the purposes of the foregoing paragraph, the Fund shall supply to the Directorate-General of the Treasury and Finance all the information required by the latter or deemed relevant by the Fund itself, whenever inquired for the purpose or according to the established frequency.

Article 8 - Member credit institutions shall pay to the Fund an initial contribution fixed by Banco de Portugal.
Article 9 (1) Member credit institutions shall pay to the Fund an annual contribution, whose amount shall be calculated according to the brackets fixed by Banco de Portugal on the basis of the average amount of monthly credit balances of deposits over the previous year, not considering those excluded under Article 4 (2).
(2) Up to a limit of 75% of the annual contribution and under the terms to be defined in a notice of Banco de Portugal, member credit institutions may be exempt from making immediately the relative payment provided they commit themselves irrevocably and through the collateralisation of transferable securities to pay to the Fund, at any time as required by the latter, the whole or part of the amount of the contribution that was not paid in cash.
Article 10 - Payment of contributions by member institutions shall be made by crediting the account of the Fund with the Banco de Portugal.
Article 11 - The Fund may propose to Banco de Portugal, when its accumulated assets reach an amount deemed adequate for its purposes, the reduction of the value of the annual contributions.
Article 12 (1) The borrowing of funds referred to in Article 7 (c) shall only be made when the Fund’s assets are not sufficient in relation to the Fund’s effective liabilities.
(2) The Fund shall preferably borrow from member institutions, proportionately to the respective degree of participation in the Fund on that date.
(3) Should the Fund resort to other entities, borrowings shall preferably be guaranteed by member credit institutions, in the proportion referred to in the foregoing paragraph.
(4) Degree of participation of a credit institution in the Fund shall mean the relative position of the last annual contribution in relation to the annual contributions of the member institutions.

CHAPTER V

Membership of and exclusion from the Fund

Article 13 (1) Those credit institutions which will join the Fund in the future shall pay, within 30 days of the registration of the commencement of their activity, an initial contribution whose initial amount shall be fixed by a notice of Banco de Portugal, on a proposal of the Fund.

(2) Credit institutions resulting from merger, splitting or transformation operations shall be exempt from the initial contribution.

(3) The Minister of Finance, on a proposal of the Fund, may exempt new member institutions, with the exception of those referred to in the foregoing paragraph, from the obligation to make special contributions for a period of three years.

Article 14 (1) Credit institutions that will cease to be members of the Fund:

(a) Are not entitled to any repayment of the contributions made by them, and the Fund may require the payment of part of the annual contributions that were the object of commitments assumed under Article 161 (4) of the Legal Framework;

(b) Guarantees provided by them, under Article 12 (3) shall be maintained as long as the guaranteed obligations are not extinguished.

(2) If the Fund finds itself in a debtor position due to borrowings made under Article 7 (c), the institutions referred to in the foregoing paragraph that do not appear as creditors nor as guarantors shall offer a guarantee, when they cease to be members of the Fund, to an amount equal to their share and corresponding to their degree of participation in the Fund on the date of negotiation of each loan.

CHAPTER VI

Repayment procedures and refusal of repayment

Article 15 (1) Repayment shall take place within the following time limits and in accordance with the provisions laid down in Article 167 (1) and (2) of the Legal Framework.

(2) Without prejudice to the period of limitation set forth in the general law, the expiry of the time limit set out in the foregoing paragraph does not affect the depositors’ right of compensation.

(3) Where the depositor or any person entitled to or interested in sums held in an account has been charged with an offence arising out of or in relation to money laundering, the Fund may suspend any payment pending the final judgment of the court.

(4) Unavailability of deposits is considered to exist in any of the situations referred to in Article 167 (5) of the Legal Framework.

Article 16 (1) For the purposes of Article 166 (1) and (2) of the Legal Framework, the credit balances to be considered shall be those existing on the date and time on which deposits became unavailable, under the terms of Article 167 (5) of the Legal Framework.

(2) In determining the overall value of the cash credit balances of each depositor, the following criteria shall be observed:

(a) Account shall be taken of all the deposits held by the person concerned with the institution in question, regardless of their type;

(b) Account shall be taken of the credit balances of demand deposits, plus or minus the amount of final and irrevocable operations settled through payment systems under Directive 98/26/EC, namely the Interbank Clearing System and TARGET 2-PT, during the day on which deposits became unavailable;

(c) The credit balances of deposits shall include the corresponding interest, calculated up to the date referred to in (1) above;

(d) The credit balances of deposits denominated in foreign currency shall be converted into euro at the exchange rate prevailing on the same date;

(e) Except where otherwise provided for, the credit balances of joint accounts, whether jointly or jointly and solidarily held, shall be considered as belonging in equal parts to the holders;

(f) Where the holder of the account is not entitled to the sums held in an account, the person who is absolutely entitled shall be covered by the guarantee, provided that that person has been identified or is identifiable before the date on which the competent authorities make the determination that deposits became unavailable; if there are several persons who are absolutely entitled, pursuant to the provisions of subparagraph (e) above, the share of each shall be taken into account when the limits provided for in Article 166 (1) and (2) of the Legal Framework are calculated;

(g) Deposits in an account to which two or more persons are entitled as members of an association or a special committee, without legal personality, shall be aggregated and treated as if made by a single depositor and shall not be taken into account for the purpose of calculating the limits applicable to each of these persons and provided for in Article 166 (1) and (2) of the Legal Framework.

(3) For the purposes of the provisions laid down in Article 166 of the Legal Framework, any changes in the ownership of deposits taking place after they became unavailable shall be of no relevance.

Article 17 (1) In the event of unavailability of deposits, the deposit-taking credit institution must send to the Fund, within two working days, a full account of the depositors’ claims, duly identified, as at the date on which deposits became unavailable, and prepared in accordance with the rules set forth in Articles 164 to 167 of the Legal Framework.

(2) For the purpose of calculating the amounts to be repaid, the credit balances of deposits denominated in foreign currency shall be converted into euro at the exchange rate prevailing on the date on which deposits became unavailable.

(3) The deposit-taking credit institution is bound to provide the Fund with whatever information the Fund requires and examine the institutions’ books, collecting on the institutions’ premises any other relevant information.

(4) The Fund may assign a member credit institution a mandate to make repayment operations, under conditions to be agreed upon.

(5) The Fund shall advertise in all branches of the deposit-taking credit institution and, at least, in one of the most widely read newspapers of the country, not only the unavailability of deposits but also the repayment operation, the period during which repayment will take place and the credit institution mandated to make the payment.

(6) Information shall also be made available on the conditions to be fulfilled and formalities to be completed to obtain compensation in the official language or languages of the country in which the guaranteed deposit is made.
(7) The Fund shall notify each depositor of the amount that he/she will receive as well as of the way, place and date of payment.

(8) The Fund shall have the right of subrogation to the rights of depositors for an amount equal to the repayments it has effected.

(9) Repayment of deposits shall be made in euro.

(10) Where depositors are repaid undue amounts considering the legal and regulatory rules applicable, the said amounts must be returned to the Fund within a maximum of five working days as of the date of receipt of the notification of the Fund for this purpose.

Article 18 - The Fund may assign a mandate to a reliable entity, which will submit its conclusions within the time limit established, for the procedures required for the Fund to take full account of the facts mentioned in Article 4 (2) (g).

CHAPTER VII
Management Committee

Article 19 (1) The Fund is managed by a committee comprised of three members, the chairman being a member of the board of Banco de Portugal, appointed by the Bank, another member being appointed by the Minister of Finance, and a third member appointed by the association representing in Portugal the member credit institutions which, on the whole, hold the largest volume of deposits covered by the guarantee. (As amended by paragraph (2) of Executive Order No 530/2003).

(2) The chairman of the management committee shall be replaced, in case of absence or impediment, by a member of the committee appointed by him or failing this, by the senior member and in equal circumstances by the oldest in age.

(3) The members of the management committee shall remain in office for renewable terms of three years.

(4) The members of the management committee shall remain in office after the end of the respective term, until the new members take office.

(5) In the event of the death, exoneration or prolonged impediment of any of the members of the management committee, an alternate shall be appointed, who will perform his duties until the end of the term of office of the others or until the impediment ceases.
Article 20 (1) The meetings of the management committee shall take place on a regular or extraordinary basis.

(2) Regular meetings shall be convened by the chairman and shall be held monthly or more frequently, if deemed necessary by the management committee.

(3) Extraordinary meetings shall be convened by the chairman, on his own initiative or at the request of any of the members of the management committee.

(4) Meetings shall be held at the head office of the Fund or elsewhere as convened.

(5) The presence of two of the members of the management committee is sufficient to validate its decisions.

(6) Decisions of the management committee shall be made by majority of votes and the chairman shall have the casting vote.

(7) The summary records of the meetings of the management committee shall be signed by all those who attended the meetings.

Article 21 (1) The Fund shall be legally committed by the signatures of two of the members of the management committee and by the signature of the mandatees, within the scope of their mandate.

(2) The signature of one of the members of the management committee shall be sufficient in merely office matters.

Article 22 - It shall be incumbent on the management committee to take all appropriate measures to ensure the smooth functioning and the pursuance of the purpose of the Fund, namely:

(a) Establish the internal organisation of the Fund and prepare the instructions deemed adequate;

(b) Obtain from member credit institutions the documents and other relevant information deemed necessary for the activity of the Fund, taking into account the provisions laid down in Article 79 (2) (c) of the Legal Framework; the Fund’s agents shall be bound by professional secrecy;

(c) Promote adequately the publication of the initial list of member institutions as well as of the relative changes;

(d) Give its opinion to the Banco de Portugal on the brackets to be fixed for the annual contribution and respective upper limits of each member institution;
(e) Propose to the Minister of Finance the establishment of amounts, instalments, time limits and other conditions of the special contributions to be made by member institutions, when the resources of the Fund are not sufficient to comply with the Fund’s obligations;

(f) Request information to Banco de Portugal on the economic and financial situation of member credit institutions;

(g) Within the scope of the Fund, inform Banco de Portugal on the conduct of member institutions, with respect to acts committed which are deemed to be mere breaches of regulations;
(h) Decide on the recourse to borrowing by the Fund;

(i) Invest the Fund’s available resources in financial operations according to management criteria and an investment plan agreed with Banco de Portugal;

(j) In the event of unavailability of deposits, ensure the carrying out of all the procedures required for repayment, or refusal to repay within the established time limit;

(l) Establish the chart of accounts of the Fund;

(m) Submit the annual report and accounts of the Fund until 31 March of each year for approval by the Minister of Finance together with the opinion of the Board of Auditors of Banco de Portugal;

(n) Purchase and sell any goods and rights, within the scope of its activity;

(o) Represent the Fund in and out of court.

Article 23 (1) The management committee may entrust one or more of its members with management issues of the Fund.

(2) The management committee may delegate in any of its members the day-to-day management of the Fund.

(3) The management committee may appoint mandatees with the powers deemed adequate.

Article 24 - It shall be particularly incumbent on the chairman of the management committee to:

(a) Represent the management committee in and out of court;

(b) Coordinate the activity of the management committee and convene and chair its meetings;

(c) Monitor the correct execution of the decisions of the management committee.

CHAPTER VIII
Auditing

Article 25 - The auditing of the Fund shall be incumbent on the Board of Auditors of Banco de Portugal, which shall:

(a) Monitor the operation of the Fund and the observance of the applicable rules and regulations;

(b) Convene regular or extraordinary meetings with the management committee;

(c) Call the attention of the management committee to any question deemed of interest and give its opinion on any issue submitted by the management committee;

(d) Give its opinion on the reports and accounts of the Fund.

CHAPTER IX
Final provisions

Article 26 - The current expenditure of the Fund shall be borne by it, when they are not covered under the provisions of Article 1 (2).

Article 27 - The management committee shall issue instructions to member credit institutions, whenever necessary, by circular letter or by any other means deemed appropriate, namely as regards the regular information to be supplied to the Fund on the structure of deposits, according to a table and reporting terms to be defined by the Fund.

Notices of the Banco de Portugal:

Notice No. 11/94
Summary: Stipulates the amount of the annual contribution that member credit institutions must pay to the Fund.

Notice No. 9/95
Summary: Rewords paragraphs 1, 11 and 12 and amends paragraphs 13, 14 and 15 of Notice no. 11/94. (see Notice No. 11/94).

Notice No. 10/95
Summary: Regulates the membership of credit institutions having their head office in other EC Member States, in order to supplement the home country guarantee scheme.

Notice No. 3/96
Summary: Rewords paragraph 3 and revokes paragraph 9 of Notice no. 11/94 (see Notice No. 11/94).

Notice No. 4/96
Summary: Rewords paragraph 12 of Notice no. 11/94, according to the wording given by Notice no. 9/95 on the limit of the annual contribution that member credit institutions may be exempt from making payment, provided that they commit themselves irrevocably and through the collateralisation of transferable securities to pay to the Fund, at any time as required by the latter, the whole or part of the amount of the contribution that was not paid in cash. (see Notice No. 11/94).

Notice No. 7/2001
Summary: In accordance with the provisions laid down in paragraph 1 of Article 160 of the Legal Framework of Credit Institutions and Financial Companies, fixes at EUR 50,000 the value of the initial contribution of member credit institutions.

Notice No. 11/2003
Summary: Rewords paragraphs 3 and 5 of Notice No. 11/94 and stipulates the annual contribution that member credit institutions must pay to the Fund in 2004.

Notice No. 5/2004
Summary: Sets the annual base contribution for the year of 2005.

Notice No. 6/2004
Summary: Rewords article 13º of Notice 11/94, concerning the guarantee of irrevocable commitments.

Notice No. 7/2005
Summary: Rewords article 3º of Notice 11/94, concerning the limit of annual contributions to the Deposit Guarantee Fund.

Notice No. 11/2005
Summary: Regulates the opening of a bank deposit account.

Instructions of the Banco de Portugal:

Instruction No. 25/2007
Subject: Sets a limit for the irrevocable payment commitment to be applicable to contributions to the Deposit Guarantee Fund for the year of 2008. .

Instruction No. 24/2007
Subject: Sets the annual base contribution for the year of 2008 Instruction.

Instruction No. 12/2006
Subject: Sets a limit for the irrevocable payment commitment to be applicable to contributions to the Deposit Guarantee Fund for the year of 2007.

Instruction No. 11/2006
Subject: Sets the annual base contribution for the year of 2007.

Instruction No. 28/2005
Subject: Limit of the irrevocable payment commitment applicable for contributions in 2006.

Instruction No. 27/2005
Subject: Calculation of the contributory rate for 2006.

Instruction No. 4/2005
Subject: Special system providing for a reduced contributory rate.

Instruction No. 23/2003
Subject: Sets a limit for the irrevocable payment commitment to be applicable to contributions to the Deposit Guarantee Fund in 2004.

Instruction No. 26/2002
Subject: Sets a limit for the irrevocable payment commitment to be applicable to contributions to the Deposit Guarantee Fund in 2003.

Instruction No. 27/2002
Subject: Sets the annual base contribution for the year of 2003.

Instruction No. 51/1997
Subject: Defines the “prudential returns” used in the weighting of the basic contributory rate to be applicable to the annual contribution to the Deposit Guarantee Fund by member institutions.