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LEGAL BASIS FOR BUSINESS
Company law
Forms of company
Accounting records
Contractual regime
Incorporation of a company
COMPANY LAW
Branch versus subsidiary
In general, there is little operational difference between a branch and a subsidiary in Portugal. The real differentiating factor between them is the tax efficiency of repatriation of profits. Dividends are subject to a withholding tax, transfers of branch profits are not. Other differences include the following:
- A subsidiary is a separate legal entity, while a branch is not a legal entity distinct from its parent;
- The liability of the shareholders of a company is limited to the amount of the capital. In the case of a branch, the liability of the head office is the amount of its net worth;
- Minimum numbers of shareholders (acting on their own behalf or on behalf of other persons or companies) are necessary for the incorporation of a company. Only a representative of the parent company is needed to register a branch;
- Costs of registering a branch are broadly similar to those for incorporating a company although notary fees and fees for registration of the articles of association are not applicable.
The choice between a branch or a legal entity in Portugal may be influenced by commercial reasons. In general, a legal entity is perceived as a stronger and more lasting presence in the country than a branch.
FORMS OF COMPANY
The most common forms of a company are:
- The private limited liability company ("sociedade por quotas" or "Lda")
- The corporation ("sociedade anónima" ou "SA")
PRIVATE LIMITED COMPANY
In practice, a private limited liability company is the most widely used type of company. It is a convenient form of organization for small and/or closely-held enterprises, due to its less complex administrative and supervisory structure. The main characteristic of a Lda. is the fact that its partners are liable not only for their own contributions but also, jointly with the others, for all contributions necessary to pay up the full amount of the company"s share capital.
Members of a Lda. have "quotas", rather than shares, and the quotas are described in the Articles of Association, rather than being represented by share certificates. "Quotas" can be transferred only by public deed.
A Lda. requires in general two members. However the setting up of private limited companies with a single quotaholder is also permitted. The quotaholder may be either an individual or a legal entity resident or not in Portugal but not another Portuguese private limited liability company with a single quotaholder.
The capital of a private limited company may not be less than 5.000 €. Contributions of labour in place of cash are not permitted. A Lda. is required to maintain a legal reserve, intended to protect third parties and to cover any losses, so that a minimum of 5% of profits must be appropriated to the reserve each year.
CORPORATION
A corporation has a more complex administrative and supervisory structure. It is an appropriate form of organization for large and widely-held enterprises. It requires a minimum of five shareholders.
This type of company is essential in Portugal for companies wishing to have their shares listed on the Stock Exchange. The main characteristic of a SA is that its shareholders are liable only for the amount of their own contributions necessary to pay up the shares subscribed by them.
The minimum capital required is 50.000 €. Contributions of personal services in place of cash are not allowed.
The incorporation of an SA can be made by means of a public or private subscriptions.
Shares may be of nominative or bearer form. Bearer shares may be converted into nominative and vice-versa. Shares can also be ordinary or preference. Two types of preference shares are permitted, non-voting preference shares and redeemable preference shares. Redeemable preference shares may be redeemed with or without reduction of share capital.
INCORPORATION OF A COMPANY IN PORTUGAL
The following steps must be taken in order to incorporate a Portuguese company:
- Obtain the Certificate of Approval of the company"s name from the National Registry of Collective Persons (RNPC);
- Obtain from the RNPC the provisional identification card of a collective person;
- Sign the deed of Incorporation or Association in the presence of a notary after the finalization of the Articles of Association;
- File the declaration of commencement of activities with the local tax office for the area of its head office;
- Registration at the commercial registry ("Conservatória do Registo Comercial");
- The Memorandum of Association must be published in the official gazette "Diário da República". This is the responsibility of the "Conservatória do Registo Comercial" which must also ensure its final registration with the RNPC and its publication in a national newspaper;
- The "Conservatória do Registo Comercial" ensures that the final registration takes place at the RNPC which then issues the final identification card of a collective person (NIPC).
On average, the incorporation of a Portuguese Company may be done within a period of two months.
But presently there is a fast program where we can get a company in one day.
See in www.empresanahora.mj.pt and choose a name for your company.
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