The Portuguese Executive changed the Securities Market Code, namely an article related to the joint liability for the voting rights of shareholders from companies that are connected with each other.
The change made by the Portuguese Executive to the Securities Market Code last Summer will make it easier for China Three Gorges to launch its takeover bid on EDP. The legislative change concerns a decree-law that approves capitalization and financing measures for companies within the Capitalizar Programme.
According to the Portuguese newspaper Público, based on a diploma with the measures proposed by the Task Group for Companies’ Capitalization (its executive commission had, in addition to Pedro Siza Vieira, Esmeralda Dourado, João Nuno Mendes and José António Barros), the Government changed the Code in an article related to the joint liability for the voting rights of shareholders from companies that are connected with each other.
China Three Gorges ended up being benefited with the change. Without this alteration, the Chinese, which have 23.27% of the company, along with CNIC, which has 4.98%, would have their voting rights accounted for jointly and limited to 25%, due to a statutory clause from EDP preventing a shareholder from voting with over 25% equity.
On the other hand, if they were to stand over 33% of EDP’s equity, both shareholders owned by the Chinese State would have to launch a takeover bid. With this change, it no longer needs to.
This change to legislation had its first practical consequence this Tuesday night, with CTG Europe — the society through which CTG will launch the takeover bid — having to change the preliminary announcement of their offer, clarifying that, “according to CMVM”, they are not liable for CNIC votes.
Other effects might come in the future, namely when it is time for EDP’s general assembly to vote the removal of the voting rights’ cap, a key condition for the success of the takeover bid.
The legislative change was made within the Capitalizar Programme, which had the minister of State Pedro Siza Vieira as one of its members, which is said to have caused some discomfort within the Finance ministry and the Portuguese Securities Market Commission (CMVM).
António Siza Vieira sent a request to the Portuguese PM to be excused from interfering in issues related to the electricity sector. All because China Three Gorges is legally advised by the law firm Linklaters, and Siza Vieira was its partner before entering the Government.