What is the main source of law authorising this entity form?

Companies Code (Código das Sociedades Comerciais).

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The Company has legal personality.

(Maximum) period of existence

There is no maximum period of existence unless otherwise stated under the Company’s Articles of Association (Estatutos da Sociedade).

Governing document(s)

The Company is governed by its Articles of Association (contained in the Company’s incorporation documentation or subsequent amendment through Shareholders’ resolution).

Liability of incorporators / shareholders

Shareholders are not personally liable for the debts of the Company (unless otherwise provided by the Company’s Articles of Association), except for the subscription amount related to their own quotas.

(Governing) bodies

Managers.

Other particularities

The Company’s Articles of Association may provide for a Supervisory Board (Conselho Fiscal)

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Under Portuguese Law, Private Limited Companies may enter into legal mergers (whereby the Company ceases to exist by operation of Law and its assets are acquired under universal succession of title), legal spin-off of all or part of its assets (with universal succession of title of the relevant assets) and conversions (changing into another form of legal entity without ceasing to exist).

International mergers are possible pursuant to EU legislation.

Can this type of entity be publicly listed or held?

No. Only Corporations (Sociedades Anónimas– S.A.) may be listed on a stock exchange market.

Can this type of entity by used for a non-profit or charitable organization?

Generally no, given its nature of a commercial entity, with the ability and purpose to generate and distribute profit to its shareholders, and being subject to corporate income tax.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Company’s name certificate issued by Companies Registry (Conservatória de Registo Comercial).

Articles of Association.

Incorporation Agreement (Contrato de Sociedade).

Documents for the registration of shareholders, ultimate beneficiary and managers.

Involvement of notary, company register, governmental authorities

The Incorporation agreement is signed by the founder shareholders whose signatures shall be certified by a notary or lawyer and all incorporation documents filed with the Commercial Registry (Registo Comercial for due registration as well as before Tax Department and Social Security Office (Autoridade Tributária e Aduaneira e Segurança Social).

Timing (estimate)

The Company must be registered within 60 days from the date of execution of the Incorporation Agreement before Commercial Registry.

Main costs, including registration and similar fees (excluding legal fees)

Main costs are the registration costs and Lawyers’ fees.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Yes, the business purpose must be specified under the Company’s Articles of Association.

Minimum number of incorporators / shareholders and residency requirements

There must be at least two shareholders, individuals or incorporated entities, local residents or not.

In case of Sole Shareholder Private Limited companies (Sociedades Unipessoais por Quotas), a sole shareholder shall suffice.

Minimum number of directors (or other applicable officers) and residency requirements

There must be at least one appointed manager at the time of incorporation. Macau law does not establish any residency requirements but residency is relevant for tax purposes.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

The minimum share capital of a private limited company is €2. The payment of the share capital may be made at any point prior to the end of the first fiscal year.

In case of Sole Shareholder Private Limited companies, the minimum share capital is €1.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

Incorporation may be undertaken by representatives appointed under a Power of Attorney.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

The Company will be provided with a company number at the time of application for the Company’s name certificate. Such number will identify the Company before all authorities, including the tax department (Autoridade Tributária e Aduaneira).

What is the title of the applicable company registry?

Commercial Registration Department (Conservatória do Registo Comercial).

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The following information must be provided and is publicly available at the Commercial Registry:

• Articles of Association and incorporation documents;
• Shareholders and respective quotas, their names and addresses;
• Beneficial owner;
• Date of incorporation;
• Business purpose;
• Share capital;
• Directors, their names and addresses;
• Secretary (if any) name and address;
• Supervisory board members (membros do Conselho Fiscal) (if any), names and addresses;
• Binding arrangements;
• Annual Accounts;
• Insolvency and liquidation;
• Court procedures subject to registration;
• Liens and encumbrances over the shares (quotas).

 

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Managers (Gerentes).

The managers represent the company and must carry out management duties in the interests of the company in accordance with the Company’s business purpose as provided in the Articles of Association of the company and following the shareholders resolutions.

How are the members of executive body appointed, dismissed and replaced?

Initially, the managers are appointed at incorporation of the Company and afterwards may be appointed by way of resolution by the Shareholders General Meeting (Assembleia Geral dos Socios) unless otherwise stated under the Company’s articles of Association.

Generally, managers are dismissed and replaced by way of resolution by the Shareholders General Meeting or termination of their mandate.

Is it possible to appoint corporate directors or must all directors be natural persons?

Yes.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

No. The Company is managed by the appointed managers who will be able to appoint representatives or attorneys for specific acts or delegate their powers to one or more managers for specific business.

The managers have, generally, the same representative powers, unless otherwise provided by the Company’s Articles of Association.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The Shareholders General Meeting (consisting of shareholders or other parties holding equivalent rights) with capacity to resolve on the matters provided by law and by the Company’s Articles of Association, which must be followed by the Company’s management.

Generally, the main rights are those with respect to amending the Company’s Articles of Association, the appointment, replacement and dismissal of managers, capital changes, distributions, liquidation.

Managers, who undertake the management of the Company fulfilling the Company’s business purpose following the Shareholders’ resolutions.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

In general decisions are taken by the shareholders in accordance with an absolute majority (50% + 1). This general rule can be varied by a specified majority required by law or the Company’s Articles of Association.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

A Private Limited Company which does not have a Supervisory Board (Conselho Fiscal) or an appointed auditor, must appoint an auditor if two of the following limits are exceeded (for two consecutive years): total balance sheet €1,500,000; / Net turnover €3,000,000; / average number of employees 50.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The Shareholders General Meeting must approve the annual accounts within three months counted from the end of the financial year to which they refer. Accounts must be filed with Simplified Company Information (Informação Empresarial Simplificada – IES) until the 15th day of the 7th month counted from the end of the financial year to which it refers.

Is the entity permitted to determine its own financial year?

Yes, subject to notice to Tax Authorities.

Is the entity subject to any statutory (external) auditor obligations?

A Private Limited Company which does not have a Supervisory Board or an appointed auditor, must appoint an auditor if two of the following limits are exceeded (for two consecutive years): total balance sheet €1,500,000; / Net turnover €3,000,000; / average number of employees 50.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

The appointment of a Supervisory Board or Auditor is not mandatory, except when provided by Law or by the Company’s Articles of Association. Likewise, the appointment of a Company Secretary (Secretário da Sociedade) is not mandatory. No residency requirements exist but all members of corporate bodies must obtain their own taxpayer number.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Quotas.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

No, but special rights can be granted to some quotas if so provided pursuant the incorporation agreement.

What documentation is required for the transfer of ownership interests?

For the transfer of quotas a private contract of transfer of quotas signed by the parties shall suffice. Specific requirements for the transfer of quotas may be provided by the Company’s Articles of Association.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The transfer of quotas is not enforceable against the Company until the Company’s consent, except when such consent is waived by the Company’s Articles of Association or when provided by law.

Subsequent registration of the transfer of quotas before Commercial Registry is required.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.

How are shares issued? (including information on payment obligations, registration requirements)

The initial number of quotas and their respective values are defined under the incorporation agreement.

Changes to the Company’s share capital are subject to a Shareholders General Meeting Resolution (deliberação em Assembleia Geral dos Sócios).

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

The payment of the quotas’ value may be made in other forms than cash, subject to prior report issued by an independent auditor regarding the relevant assets.

Supplementary payments are possible if so provided by the incorporation agreement.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Share cancellation is possible subject to legal requirements and conditions provided by the Company’s Articles of Association, including but not limited, to equity availability.

Share repurchases are subject to legal requirements and conditions provided by the Company’s Articles of Association deemed applicable to transfers of quotas.

Capital reductions are possible, subject to legal requirements and conditions provided by the Company’s Articles of Association.

Any requirements with respect to distributions to shareholders?

The Shareholders General Meeting must pass a resolution approving the distribution of dividends subject to legal and statutory reserves.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, a shareholders agreement may be executed by the shareholders and will be enforceable between the signing parties.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The company must maintain its business address and have directors and an appointed accountant. The shareholders must hold their annual general meeting each year (or adopt a resolution in writing). In addition, annual accounts must be prepared and adopted each year and the applicable tax filings must be made.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

Generally, 21% of income tax is due for taxable profits. Local tax (Derrama) may apply in addition up to 1.5%.

Various specific rules and provisions are applicable.

Summary of any specific matters, e.g. recent or prospective major legal developments

No regime changes are expected for Private Limited Companies during 2021.

Private Limited Companies are the most common type of companies existing in Portugal due to their simplified incorporation procedure and simplified and inexpensive corporate operation.