According to a report by ECO, some of the suspect Golden Visa funds have been offering investors a “guaranteed buyback agreement” so that applicants for such visas will receive the full amount of their invested capital upon maturity of the fund and be granted permanent residency in the future.

A “Buyback Agreement” is a contractual arrangement in which the seller agrees to repurchase the property at a specified price, following the occurrence of a specific event within a specified period of time. Such agreements are quite common in real estate investment, where the owner of a home offers to repurchase the property at an agreed price within a number of years.

However, the legality of offering this type of agreement by fund managers or third parties involved in investing in funds remains unclear. What is debatable about the buyback agreement for funds is mainly the legislation governing the funds and the entities responsible for presenting them.

According to local lawyers familiar with the golden visa application process, they have warned all their clients or any other potential applicants about the potential risks that investing in these Venture Capital Funds, which are associated with the aforementioned market abuse/misleading, may jeopardize their visa application if the investment funds, asset managers or promoters in question do not comply with local security regulations, or at least their visa application is retained by the immigration authority as their investments may be “questionable” during the investigation or prosecution processes carried out by the regulatory authorities.

Complaints and lawsuits have also been filed by local lawyers who are closely linked to a group of leading companies in the Portuguese fund management industry.