Portuguese law provides for various types of companies, 2 of which are most commonly used:

• Limited liability companies by shares ( S .A . or Sociedade Anónima) and

• Limited liability companies by quota (or Sociedade por Quotas).

LDA. Companies

These companies are incorporated with at least 2 shareholders. There is also a sub-type of company bearing 1 single shareholder, being in this case identified by the denomination Sociedade Unipessoal LDA. (sole shareholder company). However, an individual may only be the sole shareholder of 1 Sociedade Unipessoal.

The share capital in these companies is divided in quotas^[1]. As a rule, and upon incorporation, each shareholder has 1 single quota, which nominal value may vary from EUR1 to any given amount. Consequently, the minimum share capital of LDA. companies is EUR2, and for the Sociedade Unipessoal sub-type, the minimum share capital is EUR1.

Quotas are registered with the Commercial Registrar of Companies, do not have a physical existence, and cannot be listed in a Stock Exchange.

LDA. companies have a simplified governance structure, comprising the following corporate bodies:

• General Meeting (which in the case of a Sociedade Unipessoal is assured by the sole shareholder)

• 1 or more directors.

• These companies are also required to enroll 1 accountant (TOC).

Additionally, 1 Independent Auditor (Revisor Oficial de Contas) or a Supervisory Board (Conselho Fiscal) is required should, for a period of 2 years, any 2 of the following thresholds are met:

• Balance exceeds EUR1.5 million.

• Total turnover and other revenue of at least EUR3 million.

• Average number of 50 or more employees.

S.A. Companies

These companies are incorporated with at least 5 shareholders, except in cases where a company is the sole shareholder.

The share capital is represented by shares which can have, or not, a nominal value. In the first case, all shares must have the same nominal value. The minimum nominal value – or, for shares with no nominal value, the minimum issue value – is of EUR 0.01. In any case, the minimum share capital required is EUR 50,000.

Shares are nominative, and may be in book entry form, or titled, and are registered (i) with the company, in a share ledger book, (ii) in a banking entity or (iii) in a central registration entity.

Governance structure is more complex than LDA. companies, and 3 different governance structures are available:

1) Portuguese “traditional” system:

• General meeting
• 1 director (provided the share capital remains below EUR200,000), or a board of directors (more than 1 member and not necessarily in an odd number)
• Supervisory body, which may be:

  • 1 Independent Auditor (plus its substitute; both the auditor and the substitute must be chartered accountants or a chartered accountants’ firm), or

  • A supervisory board (minimum of 3 members plus 1 substitute; at least 1 of the effective members must be a chartered accountant or a chartered accountants’ firm), plus a chartered accountant or a chartered accountant firm (mandatory for Stock Exchange listed companies)

2) 2-tier system:

• General meeting
• A 2-tier board structure comprising: (i) 
• the general and supervisory board and (ii) the 

•  executive board of directors or 1 executive director (provided the share capital remains below EUR200,000).

• 1 independent auditor

3) 1-tier system:

• General meeting
• A board of directors which includes an audit committee of no fewer than 3 members
• 1 independent auditor
• A company secretary (who must have an appropriate degree or be a paralegal) is only mandatory for Stock Exchange listed companies.

_{[1] Normally also translated as shares, quotas are nonetheless subject to a different legal regime under Portuguese law.}

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Phase 1: Definition of type of company and draft of the company’s bylaws. These include:

• Name
• Purpose

• Registered office

• Share capital

• For LDA. companies, number of shareholders and distribution of share capital.

• Management structure and binding form of the company

• For S.A. companies, supervision structure

In case the shareholder is a nonresident company or individual, it is mandatory to apply for a Portuguese Taxpayer Number (NIPC/ NIF).

Phase 2: Application for approval of the corporate name.

Phase 3: Opening of bank account, for the purposes of the deposit of the share capital.

Phase 4: Execution of the incorporation documentation, comprising the incorporation agreement and the bylaws. These documents are submitted to the Registrar of Companies for public registration purposes (regular registration requests cost EUR475, urgent requests approx. EUR950).

Phase 5: Ultimate Beneficial Owner (UBO) declaration submission declaration to the Central Registry of Beneficial Ownership (Registo Central do Beneficiário Efetivo) [2].

The share capital may be contributed in cash or in kind (in which case additional formalities for the evaluation and/or registration of the contributions to the share capital may be required).

_{^[2] Under Directives (EU) 2016/2258 and 2015/849,  on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and their transposition to Portuguese jurisdiction, through Laws no. 83/2017, August 18 and no. 89/2017, August 21, all companies applying for a NIPC are now required to comply with information disclosure requirements regarding their ultimate beneficial ownership (UBO).}

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Save for some supervised entities (eg, fund management companies or collective investment companies), there are no capital requirements, except for the share capital minimum amounts above detailed in FORM OF ENTITY.

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Portuguese corporate law is based on the principle of limited liability, meaning that, as a general rule the liability of shareholders is limited to its contribution to the share capital^[1].

Notwithstanding, there are exceptions to this principle of limited liability:

• Liability over fully owned subsidiaries or subordinated companies: A parent company is liable for the financial responsibilities of a subsidiary if: (i) there is a subordination contract between the parent company and the subsidiary (according to which a parent company is given broad legal powers over the subsidiary company); or (ii) such subsidiary is fully owned (100 percent) by the parent company.
• Joint liability of the shareholder in case of losses caused to the company or to other shareholders by a director appointed by such shareholder: Shareholders or groups of shareholders who have the right to appoint a director, without the need of the vote of other shareholders, are jointly liable with such director for any losses that they cause to the company or to other shareholders.
• Liability of the sole shareholder in case of bankruptcy: In case a fully owned subsidiary is declared bankrupt the sole shareholder shall have unlimited liability for the debts and liabilities created after it has become the sole shareholder of such subsidiary, provided that it has not complied with the rules on the allocation of the assets of the company.

_{[1] In the particular situation of the initial contributions to share capital of an LDA company, shareholders may be jointly liable for all the contributions to the share capital that have been agreed in the incorporation agreement. In such cases, even if a given shareholder has been excluded or its share has been re-integrated by the company, the other shareholders are jointly liable towards to company for the payment of such amount.}

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Tax on Dividends: Dividends paid to a non-resident company are subject to a 25 percent withholding tax (35 percent if paid to a company incorporated in a tax haven or offshore jurisdiction). However, as per the Portuguese qualified shareholding exemption regime, dividends received from a domestic company may be exempted if certain criteria set out in the law are met and the recipient of the dividends is resident in EU/EEA or in a jurisdiction covered by a tax treaty. If the qualified shareholding exemption regime does not apply, the rate may be reduced under the provisions of a tax treaty.

Other Taxes: Other operations between a company and other non-resident companies may be subject to tax or other reporting tax obligations which must be assessed, on a case-by-case analysis (eg, transfer pricing).

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Regular/Traditional Incorporation process:

Documents (incorporation agreement and bylaws) are executed by the shareholders or its representatives, and physically submitted to the Registrar of Companies office, together with a specific registration form that is usually signed by a lawyer. The documents are verified and once cleared by the registration authority, the commercial certificate is made available to the email address provided upon request for registration, and the company is considered as duly incorporated as from the date of the submission of the registration request.

The registrar of companies will automatically provide the newly incorporated company’s details to the Tax Authority, so that it will send to the company’s registered address an access code to its internet portal, allowing the company’s accountant to register the beginning of the company’s activity and enroll the company, its employees and directors with the Social Security.

Online incorporation process:

Similar to the registration process as to the execution of the incorporation agreement and the bylaws by the representatives of the shareholder, the main difference is that a lawyer submits online, through a specific internet access portal - requiring professional authentication - the scanned incorporation documents. In this case, pre-approved company name and pre-approved standard bylaws are also available and allow for a swifter process. The documentation is then sent to a random registration office, which will verify and clear the documentation. The commercial certificate is made available to the email address provided upon request for registration, and the company is considered duly incorporated as from the date of the submission of the documentation.

The registrar of companies will automatically provide the newly incorporated company’s details to the Tax Authority, so that it will send to the company’s registered address an access code to its internet portal, allowing the company’s accountant to register the beginning of the company’s activity and enroll the company, its employees and directors with the Social Security.

“On the Spot Firm” process:

The shareholders, or their representatives, personally attend a registration office, and choose from a pre-approved company name (names are available in an official list) and pre-approved standard bylaws with a basic corporate governance model.

Since names and bylaws follow are pre-approved, signatories and their powers and quality are cleared, and the company is immediately registered and considered duly incorporated.

Since this process is undertaken in specific offices, acting as 1-stop shops, if the relevant form is already signed by the company’s accountant, it may be immediately filed with the Tax Authority.

A notarized hard copy of the bylaws is provided to the shareholders, as well as in internet access code to access the commercial certificate of the incorporated company.

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Smaller businesses tend to use LDA. companies, as they have a basic governance structure and are therefore easier to manage in terms of corporate compliance.

Multinational foreign companies tend to choose single shareholding structures, either Sociedade Unipessoal or S.A. companies’ types.

S.A. companies are mandatory for most of supervised/regulated activities.

Share capital is currently losing its traditional perception as to being an expression of the commitment of the shareholders to the company’s activity. Whereas until some years ago LDA. and Sociedade Unipessoal companies had a minimum of EUR5,000 share capital, recent legislation changed this minimum to EUR1 per quota, thus dramatically decreasing the importance of the share capital. Nonetheless, even for LDA. companies, some activities may require a given share capital (eg, road freight requires a minimum share capital of EUR10,000).

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Shareholders must meet at least 1 time per year to resolve on the annual accounts. Shareholders’ resolutions are taken either in physical presence, through electronic means (unless otherwise provided for in the company’s bylaws) or by means of a unanimous written resolution.

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Directors should meet at least 1 time every month on S.A. companies (unless otherwise provided for in the company’s bylaws). Similarly to shareholders’ meetings, resolutions are taken either in physical presence, through electronic means (unless otherwise provided for in the company’s bylaws) or by means of a unanimous written resolution.

No requirements for other types of companies.

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The company’s accountant must submit online the company’s tax declarations using a specific Tax Authority platform. The annual corporate income tax return must be filed within 5 months after the end of the tax year. The supporting accounting and tax report must be filed by the 15th day of the 7th month after the end of the tax year. CBC reports must be filed within 12 months after the end of the MNE's tax year.

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Not applicable.

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No general requirements apply.

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Shareholders may freely resolve on the winding up of a company.

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1. Yearly approval of accounts
2. Filling of yearly accounts with the Tax Authority and confirmation of UBO details
3. Appointment of corporate bodies (depending on duration of mandates set under the bylaws)

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Prior to being appointed, a director must be granted a Portuguese taxpayer number (NIF). This is easily obtained, as the appointee or a proxy may request for said number in a Tax Authority office.

For supervised entities an adequacy assessment (on professional qualifications, independency and accumulation of positions) may apply.

Directors are not employees of the company. If a labor agreement was in place prior to the appointment, such agreement is suspended and reinstated after the end of the relevant mandate.

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Not mandatory for any type of company, except for Stock Exchange listed companies.

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Not applicable.

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Not applicable.

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Management decisions must be taken in Portuguese territory. As such, and in order to give tax substance to companies whose directors are mostly located outside of Portugal, companies usually arrange for at least the most relevant management decisions to be taken by means of a physical meeting in the company’s registered office.

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The registered office must be located in the Portuguese territory and a physical address must be provided for all legal purposes.

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No legal impediments; it is a common practice for multinational companies whose directors are not permanently located in Portugal.

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Local directors are not a legal requirement. Law firms usually do not provide for local directors, although some 3rd-party service providers do. Corporate secretary is not a common practice, but both law firms and 3rd-party service providers are able to provide this as a service.

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There is no citizenship or residency requirements.

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There is no such distinction under Portuguese law; a shareholder or a director is liable under the general legal terms.

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• Directors

A company is bound by the acts performed by the directors on behalf of the company. Bylaws set the binding rules and its mechanisms, such as the number of directors’ signatures required.

The general rule is that the simple majority of the directors will bind the company. Nevertheless, the company’s bylaws may determine that a fewer number of signatories is required. In order for any written document validly bind the company it must be signed by the director(s) in such capacity.

The directors may also be shareholders. Directors are bound by the resolutions of the shareholders, by law and the bylaws, and act only on the company’s best interest. In that sense, directors are independent from the shareholders and do not have to follow the instructions of a specific shareholder.

• Shareholders

Shareholders have the powers to resolve on structural issues in connection with the company, namely the change of bylaws, capital contributions of the shareholders, removal of directors, yearly approval of accounts, among others. Acquisition and sale of real estate property and participations in other companies are also subject to the shareholders’ decision, unless otherwise provided for in the company’s bylaws. Shareholders may only resolve on management matters following a specific request of the directors.

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• Directors

All directors are registered with the Registrar of Companies and publicly disclosed in the relevant company’s commercial certificate.

• Shareholders

Shareholders are registered with the Registrar of Companies and publicly disclosed in the relevant company’s commercial certificate in case of LDA. and Sociedade Unipessoal companies.

In case of S.A. companies, these are not publicly disclosed and are registered in internal documentation only.

• Beneficial Owners

Beneficial Owners are registered with the Beneficial Owners Database (RCBE) and access to the database is public, although subject to a justification. Despite any registered person may access the information, all accesses are recorded. Information publicly available on the beneficial owner is limited to name and date of birth.

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Directors

• At least 1 director must be appointed for each company. Companies with share capital higher than EUR200,000 must have at least 2 directors.

• No maximum number of directors provided under Portuguese law.

Shareholders

• S.A. companies: At least 5 shareholders, except in cases where a company is the sole shareholder

• LDA companies: At least 2 shareholders

• Sociedade Unipessoal: 1 shareholder

No maximum number of shareholders provided under Portuguese law.

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Please refer to Minimum and maximum number of directors and shareholders above.

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Not applicable.

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Please refer to Board of director meeting requirements above.

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• Shareholders’ meetings quorum requirements:

There is no specific quorum required, except for any matters in connection with the merger, demerger, transformation, dissolution of the company and, in general, decisions requiring approval by a qualified majority, in which a meeting quorum at least 1/3 of the share capital is required.

• Directors’ meetings quorum requirements:

The majority of the directors needs to be present or represented at the meeting.

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A bank account in a Portuguese bank needs to be open upon incorporation.

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The appointment of 1 auditor (Revisor Oficial de Contas) is required for LDA companies whenever 2 of following thresholds are met for 2 consecutive years (and the company has not, in the meantime, adopted a Supervisory Board):

• Balance exceeds EUR1.5 million

• Total turnover and other revenue of at least EUR3 million

• Average number of 50 or more employees throughout the year

In S.A. companies the appointment of one auditor is mandatory, and the auditor may act as Sole Supervisor of the company, or in complementarity with a Supervisory Board.

The auditor must be an individual or a company registered with the Portuguese Chartered Accountants Professional Association (OROC). For some supervised entities, these must also be registered with the Portuguese Securities Market Authority (CMVM).

Company’s books should be kept at the company’s registered office.

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LDA. companies’ quota: at least 1 EUR par value; S.A. companies’ shares: at least EUR 0.01 par value (shares with no nominal value are also permitted).

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Companies must keep an equity amount of at least 1/2 of its share capital. Should a company’s equity reach below this level, the shareholders need to resolve on i) dissolution of the company, ii) share capital decrease or iii) capital contributions by the shareholders.

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Shares’ redemptions are subject to tight legal requirements.

Dividends may be paid to shareholders provided that at least the amount equal to the share capital plus the legally mandatory reserves is maintained. In any case, previously carried forward losses must be fully covered.

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LDA. companies: Transfers to non-shareholders are subject to the company’s prior consent, unless otherwise provided for in the company’s bylaws. A pre-emption right for the remaining shareholders of the company may also apply.

Bylaws may also forbid any transfers of shares; however, in that case, shareholders may exonerate themselves 10 years after the incorporation of the company.

S.A. companies: Bylaws cannot forbid transfers of shares, despite they may (i) set a prior consent of the company to the transfer of shares, or (ii) set a pre-emption right for the remaining shareholders of the company.

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In the traditional and online incorporation processes, the company’s name approval must first be obtained with the relevant authority. This name is suggested by the shareholders or its representatives, in a slot of 3 proposed names. Upon name approval request, the registered office and activity of the company must also be presented in connection with the names suggested.

Names are approved in obedience to an assessment of non-susceptible to confusion with previously approved names, in particular in the same geographical area, and subject to a strict connection with the company’s corporate purpose.

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The beneficial owner(s) of a company must be disclosed upon:

1. Incorporation
2. Any change to the bylaws
3. Submission of the yearly accounts (IES) and
4. Occurrence of any changes to the information previously

Law firms and other services providers (eg, audit firms) are subject to KYC proceedings, depending on the type of services provided. For instance, for law firms, KYC proceedings are required if the firm is receiving and paying any amounts on behalf of the client.

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Amendments of bylaws are subject to a shareholders’ resolution. In case of multiple shareholders, the decision is taken by a 2/3 majority of the votes cast (unless the bylaws determine a higher decision majority), and provided that at least 1/3 of the share capital holders are present or represented at the relevant meeting.

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Licenses depend on the chosen activity of the company.

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Shelf companies may be acquired by means of a shares’ transfer, as other regular shares acquisitions. As a rule, these are undertaken by means of an agreement between the seller and the purchaser, and no special formalities are required. The transfers of shares of LDA. and Sociedade Unipessoal companies are registered with the Registrar of Companies.

The Tax Authority must be notified of the sale and acquisition of shares of S.A. companies. These transfers are not otherwise subject to public registration, but the new shareholder is inscribed in the relevant shares’ accounts or shares’ titles.

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