Business Structures and Requirements
The most common legal structures according to Portuguese law are the private limited company (Lda) and the share company (S.A).
However, two other legal structures are widely used to operate in Portugal and in the institutional framework of Madeira’s IBC. These are the branch and the S.G.P.S. (Shareholdings Management Company).
The main characteristics of these legal forms of companies are as follows:
In order to create more favourable conditions for competitiveness in the international markets by companies operating in the Madeira’s Free Trade Zone, it was declared the possibility of formation of sole proprietorships that have as their object the offshore trust, private limited companies and share companies.
Share companies and private limited companies licensed to operate in the framework of the Madeira’s Free trade Zone may be established with a single shareholder, which can be natural or legal person, of Portuguese nationality or foreign one. They should include in their name the words “sole proprietorship” (“sociedade unipessoal”).
Shares of share companies of sole proprietorship must be registered. If a company is incorporated as a private limited company, there will be only one share owned by the single shareholder. The decisions of the single shareholder must be written in the act book, as well as contracts concluded between the single shareholder and the sole proprietorship; they must also be written in the management reports in the financial year when they are concluded, except those ones resulting from the current operations of the company.
It is not allowed for a sole proprietorship to form other companies with the same single shareholder.
Private limited company (Lda)
There must have at least one shareholder and a minimum capital of one Euro per shareholder. Without obligation to appoint directors, because the minimum requirement is to appoint a manager who has the power, by law, to undertake the management of the company according to its object.
Share Company (S.A.)
It can also be incorporated with one shareholder and a minimum capital of 50.000,00 Euro. The management of this company is guaranteed by a board of directors. It is needed only one director if the share capital does not exceed 200 thousand euro.
They have no minimum capital requirements.
SGPS (Portuguese pure holding company)
It must have the legal form of an S.A. or Lda. and the only object must be the management of shares held in other companies, although it can provide services or, in some cases, lend credit to the companies in which it holds shares.
- Legal reserve
- Auditing requirements
(a) For Lda, 5% of the annual profits corresponding to at least 20% of the share capital, with minimum amount of 2.500,00€;
(b) For S.A., 5% of the annual profits corresponding to at least 20% of the share capital.
(c) The total equity of a company, whether limited by shares, S.G.P.S., or a Share Company, must be half the value of its share capital.
If the company is S.A. or a S.G.P.S., it is required a Committee with a minimum of three members where one member must be a qualified auditor or an auditing company that operates in Portugal.
In the case of private limited companies (Lda.), if two of the following pre-requisites are fulfilled during any two consecutive years, then such companies are required to present annual accounts audited by either a qualified auditor or an auditing company:
(a) Average of 50 employees per annum;
(b) Total assets of 1,5 million Euro or more per annum;
(c) Total income of 3 million Euro per annum.
The obligation ceases if two of the three limits mentioned above are not reached for two consecutive years.
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