Published in D.R. number 112 (Series I-A) of 14 May 1994

Ministério das Obras Públicas, Transportes e Comunicações (Ministry for Public Works, Transport and Communications)

Decree-Law

The enterprise tissue reorganisation and renewal of the communications sector has been definitely launched when the public company Correios e Telecomunicações de Portugal was transformed in an incorporated company - CTT, S.A. (made by Decree-Law no. 87/92 of May 14, and with the creation of CN - Comunicações Nacionais, SGPS, S.A. (settled up by Decree Law nr. 88/92 of May 14, which has aggregated all State participations of the sector as well its management: CTT, S.A., Telefones de Lisboa e Porto, S.A. (TLP), Companhia Portuguesa Rádio Marconi, S.A. (CPRM) and Teledifusora de Portugal, S.A. (TDP).

The following step was the split of the telecommunications activities from CTT, S.A. through the Telecom Portugal, S.A. creation in force of Decree-Law no. 277/92 of December 17, and so CTT, S.A. start exclusively to operate the public postal service.

With the autonomy of Telecom jointly with the developed work by CN, namely at the investment policies co-ordination level and market approach modes, the conditions for the constitution of one national telecommunications operator have been created which shall agglutinate through a merge, at this moment, the companies whose capital is fully State owned by CN: Telecom, TLP and TDP.

With this operation it is envisaged, without prejudice of further necessary adjustments, to endow Portugal with a capable telecommunications operator, in dimension and structure, to enhance the quality of service and to diversify the user service provisions and to emphasise its competitivity either at the network range level or other services, either at its respective commercial supply structure.

By other side, the question is to grant the creation of conditions for the existence of a strong operator with national characteristics either at share capital level or at the engagement and development levels of the national technological capacity of the sector.

Hence:

Under the terms of subparagraph a), of the no. 1 of article 201 of the Constitution, the Government decrees as follows:

Article 1

The present diploma establishes the terms under which Telecom Portugal, S.A. (Telecom), Telefones de Lisboa e Porto, (TLP) and Teledifusora de Portugal, S.A. (TDP) should give rise through a merge to Portugal Telecom, S.A. (Portugal Telecom).

Article 2

1. The merge should report its effects as of the decision date of CN - Comunicações Nacionais, SGPS, S.A. (CN) general assembly that should ratify the general assemblies of the involved companies in the merging process.

2. The referred decision of the preceding number should cause immediately the stipulated effects, namely those foreseen under article 112, sections a) and b) of Código das Sociedades Comerciais (Commercial Company Code), henceforth known as CSC.

3. What is laid down to Decree Law nr. 168/90 of 24 May is applicable to all operations and deeds related to the merge and the consequent Portugal Telecom formation within its respective privatisation process framework. 

Article 3

Portugal Telecom should have as purpose the setting up, management and exploration of telecommunications infrastructures, a public telecommunications service provision, the transport and broadcast service of broadcasting telecommunications signals as well as the carrying out of any complementary, subsidiary or accessory activities to the latter, either directly or through company formations or participations. 

Article 4

1. Portugal Telecom initial share capital shall be determined by the merging project whenever approved under the terms of nr. 1 of article 2 and shall be realised with the transfer of the merged companies net assets.

2. The rights due to registration which ownership belongs to the extinguished Administração-Geral dos Correios Telégrafos e Telefones and those due to CTT, S.A. split have been registered under the Telecom's name shall be made under Portugal Telecom's name whereas, in case of doubt concerning that ownership, the confirmation by Direcção-Geral do Património do Estado that those assets are included in the aforementioned Administratração-Geral patrimony, is a sufficient title.

3. The rights due to registration which at the Portugal Telecom formation date, are still registered under the CTT - Correios e Telecommunications de Portugal, S.A. or RTP - Radiotelevisão Portuguesa, E.P., and due to these companies splits its ownership has been transferred to Telecom or TDP shall be registered under Portugal Telecom's name.

4. The universality of rights and obligations which integrate the juridical scope of the merged entities is transferred to Portugal Telecom in which should be included all rights and obligations arising from leasing contracts where the merged companies have taken part in it as well the faculty to use the leased buildings by those companies or CTT - Correios de Portugal, S.A., under the same terms before its split date.

5. Until the corresponding contract expiration dates, the State shall maintain the same supportive relations with the financial institutions or others which have signed contracts with the merged companies and the present diploma shall not serve as an alteration in circumstances for the purposes of the said contracts. 

Article 5

1. Telecom workers and pensioners, under the terms of the present diploma, shall maintain with respect to Portugal Telecom all the rights and obligations which they held on merging date, this company undertaking to ensure the maintenance of the pension fund referred to in nr. 1, article 9 of Decree Law nr. 87/92 of 14 May in the respective quota.

2. CTT - Correios de Portugal, S.A. and Telecom responsibilities concerning the fund mentioned in the preceding number shall be made autonomous; CN shall replace the latter in its solidary responsibility as a result of the CTT - Correios e Telecommunications de Portugal, S.A. under the terms of nr. 2 of article 122 of CSC.

3. The legal regimes defined in the applicable legislation in force of the stipulated in nr. 2 of article 3 of Decree law nr. 277/92 of 15 December shall continue to take effect with regard to the workers, pensioners and beneficiaries covered by the said regimes.

4. The relations between Caixa Geral de Aposentações (National Pension Scheme) and Portugal Telecom shall continue to be governed by article 25 of Decree Law nr. 36 610 of 24 November 1947 with regard to Portugal Telecom workers that are CTT, E.P. natives. 

Article 6

1. TLP workers and pensioners shall maintain, under the terms of the present diploma, face to Portugal Telecom all the rights and obligations which they held in the company at merge date.

2. The workers and pensioners mentioned in the preceding number shall maintain, face to Personnel Social Security of Telefones de Lisboa e Porto the inherent rights of their beneficiary situation.

3. Portugal Telecom, S.A. undertakes to ensure, concerning the workers and pensioners mentioned in nr. 1, the existing retirement pension or survival complement as well the maintenance of the respective pension fund. 

Article 7

1. TDP workers and pensioners shall maintain, under the terms of the present diploma, face to Portugal Telecom all the rights and obligations which they held in the company at merge date.

2. The workers and pensioners mentioned in the preceding number shall maintain, face to Personnel Social Security Institution of Telefones de Lisboa e Porto the inherent rights of their beneficiary situation. 

Article 8

Without prejudice of what is laid down to articles 5 and 7, Portugal Telecom shall take the appropriate measures to progressively harmonise the working conditions and regime as well the complementary social security schemes ensured by the public systems which are applicable to Telecom, TLP and TDP workers. 

Article 9

1. What is laid down in article 8 of Decree Law nr. 88/92 of 14 May and in nrs. 4 and 5 of article 9 of Decree Law nr. 87/92 of 14 May are applicable to Portugal Telecom workers.

2. What is laid down to article 28 of Decree Law nr. 283/89 of 23 August is still applicable to those Portugal Telecom workers that are CTT, E.P. natives.

Article 10

1. The association without profitable ends created during the split process of CTT - Correios e Telecomunicações de Portugal, S.A. to undertake the maintenance of rights held by CTT, E.P. native workers transferred to CTT, S.A. and Telecom under what is laid down to article 30 of the Annex to Decree Law nr. 49 368 of 10 November 1969, under the stipulations of nrs. 1 and 2, article 9 of Decree Law 87/92 of 14 May and article 3 of Decree law nr. 277/92 of 15 December shall be compared to a private social security institution, without registration dependence of what is laid down in article 7 of Estatuto das Instituições Particulares de Solidariedade Social (Articles of Association of the Social Solidarity Private Institutions) approved by Decree Law nr. 119/93 of 25 February for all legal deeds, except for the foreseen in article 4 of the mentioned Articles of Association and in the base XXXVIII of Law nr. 48/90 of 24 August.

2. The operation scope of the entity mentioned in the preceding number might be enlarged to Portugal Telecom, S.A. and CTT workers not embraced by the referred stipulations, namely to the merged company natives under the conditions which shall be defined in approved convenants by the Minister of Public Works, Transports and Communications. 

Article 11

1. Telecom, TLP and TDP Board of Directors shall jointly prepare a merging project where shall be reported, within the data stipulated in sections b), d), g) and i) article 98, nr. 1 of CSC, the relevant data considered necessary to protect the creditors, bondholders, and other company title holders.

2. The merging project should be registered, without prejudice of what is laid down to the following number, under the provision of article 100, nr. 3 and article 101 of CSC.

3. The merging project should be appraised by the internal audit organs of each involved company and by one chartered accountant or by an independent chartered accounting firm from those companies which should be chosen by CN; it shall be appraised, after, by the general assemblies of the merging companies in accordance with the stipulations of article 54 of CSC.

4. Once the merging project is approved by the general assemblies mentioned in the preceding number, it shall be submitted to CN general assembly for the purpose of what is laid down to nr. 1 of article 2.

5. All the merging necessary deeds, namely the approval of the new company articles of association, that shall not require to be registered by public deed will only be documented without other formalities, being those sufficient evidence for the necessary registrations.

6. The merge application at the commercial registration office should be made within 90 days after the ratification which has been stipulated in nr. 1 of article 2. 

Article 12

1. After the publication of the news over the merging project registration, the creditors, for their opposition, have a deadline of 30 days counted from the publication date.

2. The creditors opposition shall not interrupt the merge, but when resolved in creditor's favour, Portugal Telecom undertakes the responsibility for the credit payment, having the latter preference over the ones of similar nature obtained after the merge.

3. The preceding number stipulation should be applicable to bond creditors under the terms of article 109, nrs 2, 3 and 4 of CSC.

4. To title holders, except for shareholders, is applicable the stipulations in article 110 of CSC. 

Article 13

On the ratification date of the merging project by the CN general assembly and after the latter, Portugal Telecom general assembly should meet to elect the social body members and to approve their compensation statute. 

Article 14

Until the signature of the respective concession contract, Portugal Telecom shall continue to perform the public telecommunications service under the same terms as it was being performed by Telecom and TLP.

Article 15

As of the effective merge date, hereupon are revoked:

a. Decree Laws nrs. 277/92 of 16 December and 138/91 of 8 April and article 3, nr. 5 of Decree Law 88/92 of 14 May.

b. Decree Laws nr. 49 368 of 10 November 1969 and its annex I in what concerns to Telecom, and nr. 147/89 of 6 May, except for the norms which should be considered applicable by enforcement of the preceding article provision. 

Article 16

1 - As of the merge date, article 13, nr. 2; article 20, nr. 2 and article nr. 25 of CN articles of association, approved by Decree Law 88/92 of 14 May, should have the following wording:

« Article 13

1. ........

2. The chairmen of the Boards of Directors of public telecommunications operating companies and Correios de Portugal (CTT) shall, by the very nature of their functions, members without executive functions and part-time workers of the CN - Comunicações Nacionais, SGPS, S.A. Board of Directors.

Article 20

1. ........

2. What is laid down to article 10, nr. 3 of Decree law nr. 495/88 of 30 December is applicable to CN.

Article 25

1. The duly approved annual net profits shall be used in the following way:

a. A minimum of 10% shall constitute the legal reserve until this reaches the amount which may be required;
b. A percentage is to be distributed by the shareholders as a dividend, this to be defined by the General Assembly;
c. The remainder for those purposes which the General Assembly decides are in the interest of the company.

2. During an exercise period, profit advancements may be made to the shareholders, without being subject to the foreseen in article 297, nr. 2 of CSC.

3. The CN articles of association alterations approved in the preceding number shall not require to be registered by public deed and the respective registration should be made on evidence given by Diário da República (Journal of the Republic) where the latter has been published. »

Article 17

1. The access rate to the television signal transport and broadcast networks mentioned in article 4 of Decree law nr. 401/90 of 20 December should be agreed upon a convenant to be settled by the central administration, represented by the Gabinete de Apoio à Imprensa da Presidência do Conselho de Ministros Press office of the Cabinet Presidency) and Direcção-Geral da Concorrência e Preços (General Direction for Competion and Price Supervision); Communications Institute of Portugal and Portugal Telecom, after having been heard the television service operators.

2. The stipulations of Decree Law nr. 207/92 of 2 October are applicable to the convenant of the preceding number.

3. The ratification of the concerned convenant in the present article should be enforced through a joint executive order of the Ministers with responsibilities in the communications, commerce and media domains.

Article 18

The present diploma shall come into force on the day immediately following its publication. 
 
Seen and approved by the Cabinet on February 17, 1994 - Aníbal António Cavaco Silva - Eduardo de Almeida Catroga - José Manuel Cardoso Borges Soeiro - Joaquim Martins Ferreira do Amaral - Adalberto Paulo da Fonseca Mendo - José Bernardo Veloso Falção e Cunha - Fernando Manuel Barbosa Faria de Oliveira - Luís Manuel Gonçalves Marques Mendes.

Enacted on May 4, 1994.

That this shall be published.

The President of the Republic, MÁRIO SOARES.

Countersigned on May 5, 1994, The Prime Minister, Aníbal António Cavaco Silva.