GV holders/applicants using Investment Funds - raising a possible issue in the current draft law

I’m addressing this to people who have invested in funds, e.g. IMGA or BPI Portugal but other non-venture capital funds too. I wanted to highlight a potential problem for us in the draft legislation going through parliament. (I’ve created a separate topic, as this only affects a small sub-group)

The governing Socialist Party (PS) has filed proposed amendments to its own bill, including clauses relating to the ARI/Golden Visa. The original draft bill contained new Articles 43 (which revoked the entire ARI architecture) 44 (which protected existing ARI holders), and 45 (which protected pending applications). The degree of ‘protection’ offered is open to debate, but that’s not my purpose here.

The new PS amendments take a different approach. The ARI is preserved, but some of the eligible investment types are removed. Three of these relate to large capital transfers and real estate, and are defined in paragraphs (i), (iii) and (iv) of Article 3(1)(d) of Law 23/2007. The fourth is “investment funds”, which is contained in paragraph (vii) (as distinct from “venture capital funds”). You can see “investment funds” struck from the definition below:

image

Under the PS draft, new Articles 44 and 45 specifically offer ‘protection’ to ARI holders or pending applicants who have used capital transfers and real estate. But no such protection is given for those who have used investment funds (see below), as the Articles only specify paragraph (i), (iii) and (iv) as above. This seems to me a simple drafting mistake.

The risk for us seems to be that we will end up in some sort of legal limbo, where we are unable to get final approval or renewals, because of a drafting error.

I don’t want to get over-dramatic about this, and at least one Portuguese lawyer has assured me that we are still early in the drafting process and nothing in the law is yet set in stone. Probably we’ll see another draft in a few days which fixes this. And it may be the issue that I’m highlighting could anyway be judged retroactive and unconstitutional.

But I thought it was worth flagging as something for us to be aware of. I’d welcome any additional thoughts.

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one of my friends hinted that, this could be the lobbying of venture capital fund companies trying to steer away the capital in to their funds. Otherwise it does not make sense at all. We are essentially investing in the portuguese broad market indexes which is good for their economy and is harmless in every aspects.

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My assumption is that many funds seem to be real estate oriented, and the government wants to prevent all forms of investment in real estate.

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As long as I’m protected from retroactive trouble, I’m fine. I think it’s foolish to cut off that investment route if they leave capital transfer available but I imagine venture capital is more directly helpful to Portugal for sure

Perhaps we should write up a quick form letter we can all send to the relevant parties and see if we can improve the next draft?

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I had invested in 2 funds and both are listed in the list of venture capital funds.
However, I can also see some funds which are listed as a VC fund invest in RE.
The main issue is retroactivity, and proving that our funds are compliant to these new rules every renewal.
If these rules do go through without corrections, I can imagine fund managers changing their mandate to be compliant.
But it would be far worse for those who have invested directly in RE, every renewal.
Currently this entire drafting is a mess.
Also I am grateful to fellow investors such a @joelvogel and @cj807, for taking our cause up and going through all this mess with fine tooth comb. I really don’t see many lawyers being very concerned about this, besides saying there won’t be any retroactive steps. They or someone need to show the lawmakers all these errors in the draft law.

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Strongly agree, thank you you those that are doing the dirty work here

Later today I’ll try and write a short summary of the above to send to people, and share it here for us to send out together (after a little review of course)

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Thanks for the update! In my opinion investment funds like IMGA, BPI are the most efficient way for the government to allow capital injection. Even though it might be just ‘share price go up’ effect, there would be several positive benefits of this capital injection.

Anyway, how can i contribute to suggesting the improvement in the next draft?

To whom it may concern,

I have been following the drafting of the “lei de Mais Habitação” and have been happy to see it take shape with protections for existing ARI/Golden Visa Investors. In the most recent draft (link) though, it appears there is an oversight in protections granted to existing investors - some investment types are explicitly protected (Capital Transfer investment, and real estate investments) but others are left out. Specifically, Investment Fund investors are not protected in the same way.

A legal limbo with unclear and arbitrary distinctions between which investment types are explicitly protected and which are not is clearly a bad situation, with risks to the Portuguese Government of many investors unable to renew their visas and forced to sue in order to protect their constitutional rights. I hope to see this fixed in a future draft of Mais Habitação

Thank you for your time

The above is what I’ve got, apologies I got wrapped up in things yesterday. I think we need some specific section/article numbers to sprinkle in, but otherwise that might be a good template to use. We’ll want a translated version too, but my portuguese isn’t good enough to do that. ChatGPT translator maybe?

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Sounds good - some comments

  • where you say “the most recent draft”, it’s really the most recent draft issued by the Socialist Party (PS): we’re into the process where drafts issued by the various parties are reconciled. Obviously PS is the governing party, so their draft is likely to be the one (in large part) that’s ultimately adopted

  • the latest drafts can be accessed via https://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheIniciativa.aspx?BID=152805 - the PS draft is “C19” at the bottom of the page

  • the relevant sections are amendments to Article 3(1)(d) of existing Law 23/2007, and new Articles 43 to 45 proposed to form part of the new Law

I’ve written to my lawyer to raise the issue.

To whom it may concern,

I have been following the drafting of the “Lei Mais Habitação” and have been happy to see it take shape with protections for existing ARI/Golden Visa Investors. In the most recent PS draft (link) though, it appears there is an oversight in protections granted to existing investors - some investment types are explicitly protected (Capital Transfer investment, and real estate investments but others are left out. Specifically, Investment Fund investors are not protected in the same way. The relevant sections of the proposal are the amendments to Article 3(1)(d) of existing Law 23/2007, and new Articles 43 to 45 proposed to form part of the new Law

A legal limbo with unclear and arbitrary distinctions between which investment types are explicitly protected and which are not is clearly a bad situation, with risks to the Portuguese Government of many investors unable to renew their visas and forced to sue in order to protect their constitutional rights. I hope to see this fixed in a future draft of Mais Habitação

Thank you for your time

Updated, do we need to be specific about which section is missing the protection for existing fund investors? I assume this would be enough, to point them in the right direction.

Assuming this is good, can someone figure out where to email it? I know we’ve had some success with that before but I can’t remember which thread

This page has the contact email address for the Committee (I’ve addressed letters to Sr. Oliveira, Presidente da Comissão)

https://www.parlamento.pt/sites/COM/XVLeg/6CEOPPH/GTCE/paginas/contactos.aspx

I think @tommigun has sent letters on ARI-related issues to each committee member individually, which seems heroic. Composition of the Committee:

https://www.parlamento.pt/sites/COM/XVLeg/6CEOPPH/Paginas/Composicao.aspx

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I’ve emailed the Committee (in english, as I didn’t trust translators) and maybe it will help.

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Sent it as well. At this point I don’t know what to do. Wait and watch, see in court or check out of the whole process.

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I have encouraged my law firm to give the government continuous feedback, but they were already doing that.

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Does this mean that people who have invested in investment funds are not eligible for renewal? Is this the final draft?

Thanks

Is this meant for GV holders/applicants using Investment Funds - raising a possible issue in the current draft law - #13 by garrett ?

If so, it’s not entirely clear. The start of voting on the housing bill has been put back a week to 6th July, so perhaps that gives time for the text to be tweaked. Then there are still more steps: a plenary vote, presidential review, perhaps the constitutional court, perhaps a return to parliament. I think there are therefore moments when the draft can be changed. Even if the bill is passed as per current drafts, I suppose it’s then possible for further amendments to be made with subsequent laws or regulations.

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Thanks all. Sounds like the committee should have three or four letters from us, and I’ve flagged this with my lawyer and some others. At least one Portuguese lawyer has confirmed our interpretation of the issue. I’ll keep an eye on the drafts.

I sent an email as well. Thanks @cj807 and @garrett for the contact info and the template.

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I just sent to one person (that’s all see in the links). Can you guys provide me other email addresses as well.