Setting up a company in Portugal – Part 1

By Dr. Eduardo Serra Jorge [email protected]

In his new monthly column, Lawyer Eduardo Serra Jorge from lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., will be addressing legal issues affecting foreign residents in Portugal.

Investors have several choices when deciding to set up a business – a private limited company, a single-member private limited company and a public company or joint stock company.

Briefly, the main characteristics of these companies are:

Private limited company

The limited company (Limited or Ltd.) is a limited liability company. The liability of each partner is limited to their share in the capital of the business but partners are jointly accountable for the unrealised value of all other shares subscribed.

The required minimum capital is 5,000 Euros and the company can be run by a director (Gerente), and the setting up process is relatively simple.

Its characteristics suit small and medium enterprises, with few directors/partners and does not require a public offer of capital.

Single-member private limited company

Individual limited firms exist in almost all member states of the European Union, both for legal reasons and due to economic factors, hence their introduction into Portuguese company law.

The creation of this type of company aims to facilitate the emergence of small businesses, as they constitute a stabilising factor in economic activity and job creation.

But it is particularly important to give people a way of limiting their liability which does not result in the creation of shell companies, with fictitious shareholders, giving rise to an unclear situation in the business.

Public Company

The Public Company (S.A.) is a company formed by a minimum of five shareholders, whose capital is represented by shares where the liability of each shareholder is limited to the value of the shares subscribed. The minimum capital required is €50,000.

The S.A. company is managed by a single member (called Administrador) of the Board or alternatively by a Board of Directors (called Conselho de Administração).

One of the conditions required for admission to listing of shares on the Lisbon and Oporto Stock Exchanges is an expected market capitalisation of not less than one million Euros.

Next week: Employing staff – legal framework.

Dr Eduardo Serra Jorge is founding member, senior partner and CEO of lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., created in 1987. He can be contacted at his Faro office at Gaveto das Ruas Pedro Nunes e José de Matos, 5 R/C, on telephone +351 289 829 326, Fax. +351 289 829 327 or email: [email protected]. Alternatively, please visit www.esjmjgadvogados.com