A foreign acquirer completing final due diligence on a Portuguese technology company receives an unexpected message: the transaction requires prior notification to the Portuguese government before signing. Missing this step does not simply delay closing – it can render the transaction void and expose both parties to significant administrative penalties. For international businesses accustomed to post-closing filings in other jurisdictions, Portugal's evolving foreign investment screening regime presents a sharp contrast.
Portugal has strengthened its foreign investment screening rules under national investment control legislation, extending mandatory prior notification requirements to a broader set of transactions and business sectors. The changes apply to non-EU acquirers investing in Portuguese entities operating in designated sensitive sectors, with notification required before the transaction is completed. The competent authority – Autoridade para os Investimentos e para o Desenvolvimento das Infraestruturas (AICEP, the Portuguese investment and infrastructure development authority) – coordinates the screening process alongside relevant ministries.
This alert covers what has changed, which businesses are directly affected, the applicable thresholds, the compliance deadline, and the immediate steps international companies should take now.
What changed – the regulatory development and effective date
Portugal's investment screening regime was originally introduced to implement the European Union's foreign direct investment screening rules. The current round of changes builds on that foundation. The updated notification requirements extend the categories of transactions subject to mandatory prior review. They also clarify the procedural obligations that apply once a notification is submitted.
The key change is a significant expansion of the sectors treated as sensitive. Energy infrastructure, digital infrastructure, data processing and storage, financial market infrastructure, health systems, transport networks, and dual-use technology now all fall within the scope of mandatory screening. Previously, only a narrower set of critical infrastructure categories triggered the obligation.
A second important change concerns the acquirer perimeter. The updated rules apply to any direct or indirect acquisition by a non-EU, non-EEA, or non-Swiss investor that meets the threshold criteria set out below. Investments structured through EU-based holding vehicles are not automatically exempt: where the ultimate beneficial owner is established outside the EU, the notification obligation applies.
The notification requirement is a prior obligation. The transaction cannot close – and no escritura pública (notarised public deed in Portuguese law) transferring ownership can be executed – until screening is complete or the competent authority has issued a clearance or allowed the review period to lapse without objection. The effective date of the updated rules is January 1, 2026. Transactions signed from that date are subject to the expanded regime.
Under Portuguese corporate legislation (CSC), any share transfer in a private limited company or a public company that exceeds the thresholds described below must be documented in a form that allows regulatory verification. Failure to obtain screening clearance before executing that documentation carries serious consequences. The Supremo Tribunal de Justiça (Supreme Court of Portugal) has confirmed, in the context of analogous regulatory restrictions, that transactions completed without mandatory prior approval can be treated as legally void ab initio. The Tribunal da Relação (Court of Appeal) has reinforced this position in cases involving regulated sectors.
For the capital markets dimension – including transactions involving listed companies or investment vehicles with securities in circulation – Portugal's securities and capital markets legislation adds a parallel disclosure layer. Acquirers approaching or crossing notification thresholds in listed entities face concurrent obligations under both the investment screening regime and capital markets regulation in Portugal, including prospectus and disclosure requirements where a public offering is involved.
Who is affected – thresholds, business categories, and the compliance deadline
The notification obligation is triggered when all three conditions below are met:
- The acquirer is a non-EU, non-EEA, or non-Swiss investor, or an EU-based entity ultimately controlled by such an investor.
- The target operates in a designated sensitive sector – energy, digital infrastructure, data storage, financial market infrastructure, health, transport, or dual-use technology.
- The acquisition results in the acquirer holding, directly or indirectly, at least ten percent of the voting rights or share capital, or acquiring decisive influence over the target's operations.
The ten-percent threshold applies at the point of first acquisition. A further notification obligation is triggered each time the acquirer's holding crosses the thresholds of twenty-five percent and fifty percent. Sequential acquisitions that individually remain below each threshold but cumulatively cross it are treated as a single notifiable event once the cumulative position is reached.
For transactions already in progress. where a term sheet or letter of intent was signed before January 1. 2026. However, closing is expected after that date. the updated rules apply in full to the closing documentation. Pre-signing conduct does not exempt the transaction.
The compliance deadline for the initial notification is clear: the notification must be filed and acknowledged by the competent authority before the transaction documents are executed. There is no grace period. The review period is typically thirty business days from the date a complete notification is received. The authority may extend this period by an additional thirty business days where the transaction involves particularly complex cross-sector considerations.
Investment funds and collective investment vehicles are not exempt. Where a fund acquires a stake in a Portuguese target that meets the sector and threshold criteria, the fund manager must file the notification on behalf of the fund. This applies regardless of whether the fund is constituted as a regulated investment vehicle under Portuguese or foreign law. For the banking and finance dimension of fund-level acquisitions, the interaction with prudential and supervisory requirements is covered in our banking and finance practice for Portugal.
Smaller transactions involving targets outside the sensitive sectors – including purely commercial acquisitions with no strategic infrastructure dimension – are not subject to mandatory prior notification. However, where any doubt exists about sector classification, the conservative approach is to file voluntarily. Voluntary notifications submitted in good faith protect the acquirer from retroactive challenge.
The Tribunal Arbitral Administrativo e Fiscal. known as CAAD (the administrative and tax arbitration tribunal in Portugal). has jurisdiction over disputes arising from administrative decisions in the investment screening context. This includes challenges to the authority's refusal or conditional approval of a notified transaction. Businesses anticipating a contested review should factor this forum into their planning.
To discuss how the new notification requirements apply to your transaction in Portugal, contact us at info@ferrazwhitmore.com.
What to do now – immediate actions for international companies
International companies with active or planned investments in Portugal should take the following steps without delay.
First, audit your current portfolio and pipeline. Identify all existing or contemplated investments in Portuguese entities. For each, assess whether the target operates in a designated sensitive sector and whether your current or anticipated holding crosses the ten-percent threshold. This audit should cover both direct holdings and indirect stakes held through intermediate vehicles.
Second, map your ultimate beneficial ownership structure. The notification obligation turns on the nationality and control structure of the ultimate beneficial owner, not the immediate acquirer. If your acquisition vehicle is an EU-incorporated entity but is ultimately controlled by a non-EU investor, the obligation applies. Document the ownership chain clearly before any filing is prepared.
Third, review transaction timelines and update signing schedules. Factor in a minimum of thirty business days – and potentially sixty – for the screening review before any closing can occur. Adjust conditions precedent, long-stop dates, and break-fee provisions in the transaction documents to reflect this regulatory timetable. Failure to do so creates material execution risk.
Fourth, consider voluntary notification for borderline cases. Where a target's sector classification is ambiguous. for example. A company that processes significant volumes of personal data as part of a commercial service. seek a preliminary opinion from counsel before concluding that no notification is required. Voluntary filing eliminates the risk of retroactive invalidity.
Fifth, coordinate with parallel regulatory processes. Transactions in listed companies face concurrent obligations under securities regulation. These include major shareholding disclosure under Portugal's securities legislation and, where relevant, prospectus or IPO listing requirements. IPO transactions in Portuguese companies operating in sensitive sectors now carry a layered screening and disclosure obligation that must be managed in sequence. Notifications to the Comissão do Mercado de Valores Mobiliários (CMVM, Portugal's securities market regulator) and to the investment screening authority should be coordinated from the outset to avoid conflicts between the two timelines. Broader strategic considerations for cross-border investors are also addressed in our analysis of investment screening developments in Spain, where parallel reforms have followed a comparable trajectory.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. As a law firm in Portugal with deep roots in both Portuguese civil law and English common law tradition. We provide end-to-end support on foreign investment screening, capital markets transactions. Additionally, cross-border M&A in Portugal and across the EU. Our capital markets and regulatory practice covers prospectus requirements, securities offering processes, investment fund structuring, and disclosure obligations under Portuguese and EU legislation. We work with international investors, institutional funds, and in-house legal teams who require results-oriented counsel capable of managing multi-authority processes simultaneously. The firm's Lisbon base provides direct access to Portuguese and EU regulatory systems, while our common law expertise supports enforcement and arbitration strategies where screening decisions are challenged. Engaging a lawyer in Portugal with cross-border experience is essential when navigating transactions that trigger both investment screening and securities market obligations. To discuss how the updated requirements affect your business, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.