Notwithstanding the duty of compliance with legislation on hygiene, health and safety at work, to which any and all Directors are subject to, under the terms of Article 64 of the Portuguese Companies Code (CSC), Directors are required to guide their management activity according to duties of care and loyalty.
Under the duty of care (“reveal the availability, the technical competence and the knowledge of the company's activity appropriate to the role and employing under this scope the diligence of a cautious and methodical manager”), the Portuguese legislator requires the Directors to be committed in the exercise their management role and, in this context, employ the diligence of a cautious and methodical manager. When qualifying the management skills required from the Directors, the legislator emphasizes and intensifies the fiduciary duties of the administration, imposing on the Directors the duty of having the availability, technical competence and the necessary knowledge for the role, being, therefore, apparent that the performance of the Directors must be based on good corporate practices and be oriented to serve the company they manage with diligence, rigor and competence. In the context of the pandemic crisis that we are currently experiencing, the fulfilment of the general duty of care in the management of companies is especially relevant, and thus Directors of companies operating in Portugal must make an additional effort to inform themselves of the best practices to be adopted in the current scenario.
The Directors are also bound by duties of loyalty ("in the interest of the company, taking into account the long-term interests of the shareholders and weighing the interests of other entities relevant to the sustainability of the company, such as its employees, customers and creditors"). Directors must attend to the long-term interests of the shareholders, which, in practice, represents that the Portuguese legislator has taken a position and demonstrates a clear preference for long-term management, thus seeking to discourage aggressive management practices based on maximizing immediate results that often jeopardize the future sustainability of companies. On the other hand, the Portuguese legislator also requires Directors to weigh the interests of other entities relevant to the sustainability of the company, such as their employees, customers and creditors. This means that the legislator, in addition to reinforcing the importance of the company's sustainability, requires the Directors to consider in their decision-making process the interests of other stakeholders that are related to the company. Thus, as a result of the duty of loyalty, Directors must implement measures in the companies they manage in order to protect employees, customers and creditors that are in relationship with the company so that these stakeholders may also be protected in the current scenario of pandemic crisis and, by doing so, ensure lasting and sustainable relationships in the future.
The current situation will also require Directors to consider and disclose the impacts that the current pandemic represents for their companies as a “relevant fact that occurred after the end of the year” and these conclusions must be included under the scope of the management report that must be prepared and attached to the 2019 annual accounts of the companies to be submitted for approval by shareholders (subparagraph b) of paragraph 5 of art. 66 of CSC). In addition, if the current context entails a financial risk for the company, subparagraph h) of paragraph 5 of art. 66 of the CSC establishes that the management report should also include “the company's objectives and policies regarding financial risk management, including the coverage policies for each of the main categories of transactions for which hedge accounting is used, and the company's exposure to price, credit, liquidity and cash flow risks, when materially relevant for the valuation of assets and liabilities, financial position and results, in relation to the use of financial instruments”.
Finally, given the current context in which face to face contact is to be avoided as much as possible, good practices recommend that meetings of corporate bodies of companies (meetings of board of directors and general meetings of shareholders) are carried out by telematic means. We remember that under Portuguese law, namely the Arts. 377 and 410 of CSC, there is a general permission for the meetings of the Board of Directors and the Shareholders’ Meetings to be held through telematic means, such use not being admissible only if there is a prohibition in the company’s by-laws or if such telematic means do not guarantee the authenticity of the statements and the security of communications, registering the content and the relevant parties.
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