Portuguese media reported that Davidson Kempner Fund (DKF) is the preferred bidder in the sale tender launched by Portuguese banks for a luxury hotels’ portfolio, dubbed the "Crow Project”, which also includes other real estate assets.

The bidding phase ended on 30 September 2021. Only two offers were presented. DKF won the bid against a consortium that included Bain Capital and Cerberus.

The Crow Project includes three important hotel portfolios:

  • Fundo Recuperação Turismo (FRT);
  • FLIT-Ptrel SICAV (FLIT); and
  • Discovery Portugal Real Estate Fund (Discovery).

ECS, Sociedade Gestora de Fundos de Capital de Risco (ECS) manage FLIT and FRT and Explorer Investments SCR SA (Explorer) manages Discovery.

Novobanco, BCP and Caixa Geral de Depósitos are the banks with the largest exposures to these assets, with Santander and Oitante holding a smaller position in the ECS funds.

The Crow Project initially included 30 assets, mainly hotels, land plots and shopping centres. In September 2021, ECS withdrew seven assets valued at €300 million. The portfolio that will be sold includes some landmark hotels, such as the Conrad Algarve and Cascatas Golf & Resort Spa by Hilton, the NAU hotels, the shopping centres La Vie, among other real estate assets, in a transaction that is expected to be concluded in around €900 million, according to the media.

DFK is now in negotiations with ECS on an exclusive basis with closing being expected to occur in the first half of 2022.

This transaction is the continuation of Portuguese banks deleveraging efforts after the Portuguese bailout of 2011.

To protect themselves against a sharp rise in new non-performing loans that may follow the Covid-19 pandemic, Portuguese banks have been increasing their reserves beyond what is statutorily required and continue deleveraging non-performing assets.

According to local media, Portuguese banks are only available to fund up to 60% of the purchase price (around €500 million). The media also reported that bidders were not happy with the proposed conditions, as they put significant pressure to sell the assets before they are restructured.

This may be an opportunity for international banks and loan funds to take part in what may well be the Portuguese real estate deal of the year.

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In March 2020, the Portuguese government required banks to extend loan payments on households and businesses to mitigate the effect of the economic downturn caused by the Covid19 pandemic. The loan moratoria did not negatively impact the banks’ accounts in 2020, but markets are concerned that with the lifting of the loan moratoria, many companies and individuals may default and precipitate a new banking crisis in Portugal.

Portugal was one of the countries that most resorted to the exceptional moratoria on loans during the pandemic, which indicates a greater debt vulnerability in the post-pandemic period.

In September 2020, loans under moratoria reached their peak with €48,100 million. By the end of August 2021, Portuguese banks had suspended principal and interest payments on €36,339 million of corporate and household debt, of which €21,503 million were corporate loans, close to 29% of the total credit granted to companies.

Leisure and catering companies, the businesses most affected by the pandemic, had 55.3% of the amount of their bank debt covered by the moratoria. By sector of activity, the increase in indebtedness in manufacturing and leisure sectors stood out at 8.6% and 7.4%, respectively. Of the total credits to households, 11.1% were in the moratorium, €14,102 million, 91% of which were house mortgages.

At the end of September 2021, non-financial sector indebtedness stood at €746,000 million, of which €347,300 million referred to the public sector; €269,500 million referred to companies, and €144,500 million referred to households.

Corporate debt increased by 8.8 percentage points between the second quarter and fourth quarter of 2020 reflecting the impact of the pandemic and ending its downward trend that started in 2012 when Portuguese corporate debt represented 180% of GDP. Between the third and fourth quarter of 2020 corporate increased from 125.6% of GDP to 134.4% and increased the gap to the Eurozone average of 116.8%.

At the time of the first lockdown, in March 2020, the expectation was that there would be a rapid recovery. However, the economic crisis is lasting longer than anticipated, as a result of the successive waves of the pandemic and strict lockdowns, which is eroding the financial defenses of households and businesses.

By the end of September 2021, when the moratoria on loans was lifted, a large number of debtors had not yet recovered, which may lead to the increase in non-performing loans (NPLs).

Until now, the exceptional moratorium scheme and the state-guaranteed lines protected banks' asset quality, but NPLs will increase with the lifting of these exceptional measures. The loans protected by State guarantees should not pose an immediate problem for banks but may lead to an increase of public debt, which is already at historically high levels.

Between mid-2016 and mid-2020, Portugal reduced its NPL ratio to 4.9%, (which remained double the European average). One of the main measures that led to this decline was the sale of NPLs to international investors, which reached its peak in 2019, with the sale of approximately €8,000 million.

By the end of September 2021, Portugal's NPLs ratio was 4.3%. Moody’s estimates that Portugal's NPLs ratio will increase in 2022 to a percentage higher than 9%. The worsening of NPLs will force banks to increase provisions to cover possible losses, which will further reduce their net income (already squeezed by the impact of the pandemic on financial margins) of financial institutions.

The uncertainties posed by the international energy crisis, a possible increase of inflation, and a possible lifting of the ECB’s monetary support, against a backdrop of Portugal’s high public debt, may put Portugal a step away from a new financial crisis.

The end of the loan moratorium scheme may be a significant setback on Portuguese banks’ deleveraging efforts unless banks act preemptively. Still, Portuguese banks are now in much better conditions than in 2011 to face an increase in NPLs. The time to act is now and banks need to prepare to support viable businesses that are not yet generating sufficient liquidity to repay loans while setting aside problematic loans.

With about 22% of financial institutions’ portfolios under moratoria, we expect that NPLs will increase in 2022 and NPL sales will surge.

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The Strategic Value Partners Fund (SVP) announced its intention to sell the Douro Litoral highway concession, seven months after the settlement of its disputes involving the concession holder AEDL - Autoestradas do Douro Litoral, S.A. (AEDL) and its former owner BRISA - Auto-Estradas de Portugal, S.A. (BRISA).

The Douro Litoral concession comprises a total of 129 km, of which 76 km with toll-Highways A43, A41, A32, with 11 km of twin viaducts, two tunnels and a new bridge over the River Douro, which serves the greater area of Oporto, the second largest city of Portugal, with high population concentration and several industrial parks. The Douro Litoral highway intersects and complements existing infrastructures, such as the North highway (A1), the Porto/Valença highway (A3) and the Porto-Amarante highway (A4).

The Douro Litoral highway was awarded to AEDL in 2007 for a period of 30 years. The construction costs amounted to €1,000 million, of which €833 million were financed by a syndicate of commercial banks.

In 2014, AEDL defaulted its payment obligations for the first time. Later, the commercial banks sold their credits of around €1,010 million to SVP and other funds for approximately €200 million, which implies a discount of 80%. Following the attempts by the new debt owners to recover part of AEDL’s debt – and after the funds having proposed to cancel 60% of the debt, which BRISA refused – SVP stepped-in and took control of AEDL.

This led to several legal actions. In august 2019, SVP and BRISA settled the matter and withdrew all pending litigation. BRISA recognized SVP and other AEDL debt holders as shareholders of AEDL and the new AEDL’s management appointed by SVP and accepted to make a payment of €14 million to SVP.

SVP, assisted by Rothschilds as financial advisor, is now seeking to sell its 99.9% stake in AEDL. According to local media Roadis, Ascendi, Globalvia and Brisa had been contacted to present bids. Some media reports also mentioned that the deadline for the submission of binding offers would end on 3 December 2021 and that Ascendi and Roadis would not be bidding.

This potential transaction follows other transactions that occurred in the last years involving other PPPs, such as the acquisitions of the road concessions of Transmontana, Douro Interior and Beira Interior roads by Globalvia, Auto Estradas do Oeste by Roadis, Via do Infante and Norte Litoral by DIF, and the acquisition of the Braga and Vila Franca hospitals by Aberdeen and the Azores hospital by Horizon. These transactions in the Portuguese infrastructure PPP market come after a reorganization and deleveraging process that started after the 2011 sovereign debt crisis.

The sale of Douro Litoral Road Motorway concession is an opportunity for investors to consolidate or enter in the Portuguese infrastructure market, taking over a concession which still has about 16 years’ life until its expiration in 2037.

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The deadline for the sale of the Portuguese Power equipment manufacturer, EFACEC, is approaching amidst pressure from the extreme left parties for the nationalization of the company and difficulties in finding the right partner.
EFACEC is a midsized company operating in the development of products and systems for infrastructural sectors such as energy, environment & industry and mobility & transport, which include, among other things, the operation of nuclear power plants, city power distribution systems, operation of city transport systems. EFACEC is present in 65 countries, with over 75% of its 2019 sales coming from developed international markets.
In 2019, EFACEC was caught in the turmoil of the Luanda Leaks papers, regarding an alleged misappropriation of Angolan government funds by Isabel dos Santos, daughter of the country’s former president, which caused it to lose an important contract with the government of Norway for the construction of a biogas plant.
To avoid the risk of EFACEC being involved in the disputes between the Angolan Government and Isabel dos Santos, EFACEC’s main shareholder, with 71.73%, the Portuguese government nationalized Isabel do Santos’ shares, in July 2020, pledging to privatise the company.
Under government control, EFACEC’s revenues in 2020 declined 39% to 216 million due to several factors (source: EFACEC’s 2020 Financial Report). Despite the significant reduction of its operating results in 2020, the company’s equity amounted to 180.2 million euros, which corresponds to a 28.7% financial autonomy ratio. In Q42020, EFACEC’s revenues were 91 million euros, more than double the average of previous quarters, and recurring EBITDA for the quarter was positive by 10 million euros.
In January 2021, following the approval of the privatisation procedure by the Portuguese Government, an information memorandum was disclosed with provisional data for 2020, prospects for the following years and a business plan, which included the reduction of labour costs from around €65 million in 2020 to €50 million in 2021.
The privatisation of EFACEC will be made through a “direct negotiation” under 1990 Portuguese Privatization Law, which establishes the legal framework for the privatisation of nationalized companies (Privatisation Law). According to the Privatisation Law, direct negotiation is an exceptional privatisation method which operates under the same conditions of the limited public tender by governmental decision. This method allows the Government to keep more control over the final ownership of the company and setting the technical and financial criteria of the sale, which may include the preservation of the company’s employment levels, investment in certain areas etc.
The privatisation procedure includes the following phases: delivery of non-binding proposals, delivery of binding proposals and, in some cases, the delivery of best and final offers (BAFO), followed by a negotiation of the binding proposals.
The legality of the direct negotiation procedure may be questioned under European competition rules because it does not follow the strict public tender rules and the process has the risk of being discretionary. The negotiations with several different bidders may end up in significantly different contract conditions that will not be comparable.
This poses challenges to the Government when setting the negotiation terms and its ability to accept fundamental changes to the deal conditions in the course of the negotiations, but also to the private bidders, who need to be mindful that adherence to the Government’s goals set out in the request for proposals process documents may be as important, if not more, as the price offered.
This point is underpinned in the Secretary of State’s statements when announcing the tender. João Nuno Mendes noted that the “choice will depend on both technical and financial criteria”. The “technical criteria” include “the strengthening of the company's economic and financial capacity”. The Secretary of State also stated that it would be "absolutely critical” that the winning bidder is capable of improving the company’s “export capacity”.
In our view, to meet the Government’s objectives, bidders must understand the markets where EFACEC operates and be prepared to keep production in Portugal and not to make significant work force reductions for a defined period of time.
The successive delays in the selection of the final bidders seem to show that it has been difficult to find a bidder capable of meeting the Portuguese government’s requirements.
Misunderstanding the way deals with Portuguese public authorities are done is one of the main reasons for protracted negotiations and last-minute changes of mind and heart.

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The Covid-19 pandemic has put the tourism and leisure industry in stress. Portugal is no exception. Successive waves of the pandemic followed by strict lock downs have led to a sharp drop in hotel occupancy.
The moratoria on bank loans, which relieved debtors from making loan payments in most of 2020 and the first months of 2021 is raising concerns for banks regarding the borrowers’ ability to honour their obligations once the loan moratoria are lifted. To protect themselves against a sharp rise in new non-performing loans at the end of the loan moratoria Portuguese banks have been increasing their reserves beyond what is statutorily required and continue deleveraging their non-performing assets.
Against this background, in the last few months, three very important hotel portfolios have been put in the market: Fundo Recuperação Turismo (FRT) and FLIT-Ptrel SICAV (FLIT), both managed by ECS, Sociedade Gestora de Fundos de Capital de Risco (ECS), and the Discovery Portugal Real Estate Fund (Discovery), managed by Explorer Investments SCR SA (Explorer).
FRT was incorporated in 2011 to manage non-performing tourism assets of Portugal’s main banks. FRT is owned by BCP (38.9%), CGD (5.9%), Novo Banco (36.6%), Banco Santander (15.9%) and Oitante (the bad bank legacy of Banif) (2.7%). FRT’s assets include Salgados /Pólo São Rafael hotels in Albufeira, Pousada Solar da Rede on the Douro River and Morgado do Reguengo in Portimão.
FLIT which was set up in 2012, is owned by Millennium BCP (29.7%), CGD (36.2%), Novo Banco (28.8%) and Oitante (5.3%). This fund invested in companies in insolvency or financial difficulties related to leisure, real estate and tourism, such as Vale do Lobo, Conrad Algarve Quinta do Lago, Colombos Resort in Porto Santo and Vigia.
Discovery was incorporated in 2012 and is managed by Explorer Investments. Discovery owns various resorts and hotels, such as the Six Senses Douro Valley and the Eden Resort, the latter in the Algarve. Discovery has recorded net assets of €850 million, which, according to the press, are now valued at around €420 million. The sale process is being led by investment firm Holihan Lokey.
Several international funds have been invited to look at the Discovery portfolio, with non-binding bids expected around the second half of April. The circumstances of this deal are different than the sale of FRT and FLIT because the buyers are expected to assume a more passive management of the fund, as the management of the assets would remain with Explorer Investments.
According to the press, Bain Capital, Brookfield, Blackstone, Cerberus, Fortress, Davidson Kempner Capital Management, H.I.G. Capital e Kildare Partners had been invited to bid in the sale of ECS tourism portfolios, but, meanwhile, news surfaced in the Portuguese economic press that ECS and its entire portfolio were being put in the market. ECS funds include the tourism funds that we mentioned above, FRT and FLIT, as well as Fundo Recuperação (FCR) which owns non-financial assets in various sectors, namely textiles, hotels, logistical and industrial parks and piped gas distribution, such as Iberol, Biovegetal, the Montalva/Montebravo group and Hilton Vilamoura.
The sales of FRT, FLIT and Discovery are very interesting opportunities for equity investors, lenders hotel managers and operators that may want to consolidate their presence in Portugal or enter the Portuguese market because many of the hotels and resorts in those portfolios are being managed directly by the hotel owners. The new owners may make significant improvements in the assets management by aligning with international players. Lastly, some smaller secondary transactions are likely to occur once the new owners recompose their portfolios and dispose of non-core assets, in particular if ECS’ assets are sold in block.

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Employment laws play a particularly important role in decision-making when it comes to setting up business or working in any country. Whether as an employer or employee, Portugal’s employment regime ensures you know where you stand.

The employer-employee relationship has long been a sticking point for potential investors into any country due the rigidity of the laws as well as the obligations, constraints and fine print that come with it. Ten years ago, Portugal addressed this point with a change in the legal regime that it has been revising and adapting to strike the right balance between securing employee rights and giving employers a level of necessary flexibility.

If you look at recent data from the World Economic Forum (WEF), the European Trade Union Institute and PORDATA (the statistical database of socioeconomic subjects) you will see Portugal has a less rigid system and is at the lower end of labour dispute figures and days lost to labour disputes when compared with other EU countries.

Your go-to for everything employment is the 2009 Labour Code, with everything you need in one place including the type of contracts, duration, working hours, holidays, absences and termination. It’s employer-friendly, as it allows certain types of flexible working schedules without increasing costs to the employer, as well as having an overall flexible regime designed by the Government to make the country’s employment legal framework fairer, more balanced and increasingly investor-friendly.

Looking to hiring employees?

The mandatory rules set forth in the Labour Code, as well those part of any collective bargaining agreements with Trade Unions, set out the legal framework that you must follow when hiring an employee in Portugal. Under certain circumstances, however, you and your employees may be allowed to agree different rules, if more favourable to the latter.

You need to be aware of employees’ obligations and entitlements, working hours and holidays.

These are figures to take note of. You have a maximum 40-hour work-week and a 8-hour work-day, along with a minimum rest of 11 consecutive hours between workings days and a mandatory weekly rest day.

Employees’ are entitled to 22 working days of paid annual leave. This limit may be increased by collective bargaining agreements.  

Employees are also entitled to public holidays – a total of 13 days in the year 2019.

Working out salaries.

You need to be aware that for 2019 the minimum national wage is set at €600 per month. In addition to this you must pay two extra month’s salary known as the ‘Christmas allowance’, payable up to 15 December each year, and “holidays allowance” payable preferably before the holidays.

And what are the employees’ rights in relation to absences?

Be aware that Portugal has a rigid regime when it comes to absences. The labour code establishes an exhaustive list of justified absences, which as a general rule do not affect any rights of the employee.

As for employment contracts, what do you need to be aware of?

Contracts can be for indefinite term (permanent) or for a fixed or unfixed term, and certain types must be made in writing, i.e. those with a ‘term’, part-time contracts, contract executed with a minor. To note, ‘term’ contracts can only be used to meet temporary work needs of the employer and for specific periods, and have a maximum duration of two years, renewable up to three times and the total duration of renewals may not exceed the contract’s initial duration.

The duration of the unfixed term contract may not exceed four years.

Does the law allow for probation periods?

Yes, and the length of the probation period depends on the type of contract.

Thus, for permanent contracts, the probation period is equal to 240 days for management positions, 180 days for employees performing functions of high responsibility or high complexity, first job seekers and long-term unemployed, and 90 days for the rest of the employees.

For fixed or unfixed contracts, the probation period is equal to 30 days for contracts over six months and 15 days for contracts of less than six months.

During this period both parties are free to cut the contract short, without justification or notice period.

What are the key rules in relation to terminations and dismissals?

Again, the Labour Code sets out all the circumstances covered as well as the processes to follow. And you must comply with the set criteria otherwise the termination will not be considered effective.

An employee, of course, has the right to quit, terminating the contract with or without a just cause, being that in this last case notice must be given, equal to 30 days for contracts up to two years, of length, or 60 days for contracts over two years. And contracts can of course be terminated without consequence by agreement between the parties.

Can employers terminate ‘permanent’ contracts?

Permanent contracts can only be terminated with just cause, i.e., when the employee breaches his/her duties or when it becomes impossible for them to continue to perform the hired functions. Termination of permanent employees is also possible in cases of redundancy (individual redundancy or collective dismissal), when the company needs to reduce its work force due to market, structural or technological reasons.

And what about ‘term’ contracts?

‘Term’ contracts expire at the end of their ‘term’. However, the employer must give a prior notice. For fixed-term contracts, the employer must give a 15 days’ notice before the term, while the employee must give an eight days’ notice. For unfixed-term contracts, the prior notice is equal to seven days for contracts up to six months, 30 days for contracts with a duration between six-month and two years and 60 days for contracts with a duration over two years.

What is key when it comes to dismissals?

Employers may terminate a permanent employment contract only for just cause. Generally, this would be on account of the employee’s gross misconduct that leads to a fundamental breach of contract, or for objective reasons such as redundancy.

However, it is not enough for the employer to have a fair reason for dismissal: a strict pre-dismissal procedure must be followed. Otherwise, the termination will be deemed as an unfair by the Labour Court.

What are the rules for collective dismissals or redundancy?

Collective dismissal refers to the termination of several contracts either simultaneously or separately over a period of three months. A company will be before a collective dismissal if the termination includes at least two employees, if the company is small, or five employees if it is a medium or large company.

On the other hand, individual redundancy exists whenever the number of employees to be terminated fall below the above-mentioned limits.

Both forms of termination must be based on market, structural or technological reasons and subject to a very strict proceeding.

Is there an obligation to provide severance pay?

Severance does come into play for Collective dismissal and individual redundancy.

The calculation rules regarding the amount of such severance pay have been changed following Troika’s austerity measures, which means that different regimes are applicable depending on the contract’s execution date.

How is this calculated?

For “new permanent contracts”, executed as of 1 October 2013, the compensation corresponds to 12 days of base salary and seniority allowance per each year of service

However, for “old contracts” the rules are as follows:

For contracts executed between 1 November 2011 and 30 September 2013, the compensation considers three periods:

  • period between 1 November 2011 and 30 September 2013, the compensation is equal to 20 days of base salary and seniority allowance per each year of service;
  • period between 1 October 2012 and the date on which the contact completes three years of duration, the compensation is equal to 18 days of base salary and seniority allowance per each year of service;
  • period subsequent to the first three years of duration of the contract and the date of the termination, the compensation corresponds to 12 days of base salary and seniority allowance per each year of service.

For contracts executed before 1 November 2011, the compensation considers three periods:

  • period until 31 October 2012, the compensation is equal to one month of base salary and seniority allowance per each year of service;
  • period between 1 November 2012 and 30 September 2013, the compensation is equal to 20 days of base salary and seniority allowance per each year of service; and
  • period of duration of the contract after 1 October 2013, the compensation corresponds to 12 days of base salary and seniority allowance per each year of service.

For fixed-term contracts:

  • Until 31 October 2012: contracts with a length up to six months, two days of base salary and seniority allowance per each month of service. For contracts over six months, three days of base salary and seniority allowance per each month of service;
  • As of 31 October 2012: 12 days of base salary and seniority allowance per each month of service.
  • After 1 October 2013: the New Rules apply: 18 days of base salary and seniority allowance per each year of service.

For a more detailed insight into this and other employment issues, do read our Guide Why Portugal 2019 and for further clarifications or a more tailor-made approach, please do get in touch.


Why bringing your business to Portugal is easier than you think 

Whether an SME or large business, taking your first steps into the Portuguese market can take less than a day or be done online, with innovative systems offering significant costs reductions.

Starting or internationalising your business can be a cumbersome affair, not to mention costly. But thanks to Portugal’s advanced systems, from online registration at a reduced 40% cost to its ‘on-the-spot’ one-day incorporation, setting up your business has never been easier.

Is there a way to test the waters for temporary or one-off projects?

If you’re not ready to jump in with both feet and prefer to work with a Portuguese partner before setting up your own subsidiary, then the unincorporated joint venture (JV) is a way for you and your partners to come together to work on limited or temporary projects in Portugal without having to create a formal legal structure.

A JV has no legal personality and no common funds; cooperation is merely for a specific project, in the pursuit of a particular objective or in the development of an activity.

JVs can either be ‘internal’ or ‘external’. ‘Internal’ means having the freedom to determine your own obligations without any formal bodies. ‘External’ means having a leader, steering body and supervisory board. Leaders take on both internal administrative obligations, such as the organisation and implementation of cooperation among all parties, as well as external ones, namely the power to represent the UJV before third parties.

If you already have a base in Portugal, how can you collaborate with other domestic companies?

For companies that already have a foothold in Portugal, a way to collaborate is using an ‘ACE’ - an Enterprise Group. This is where two or more domestic companies collaborate creating a new legal entity with its own organisational structure to improve respective business performance and generate results.

The structure comprises three core bodies: General Meeting (deliberative), Board (management and representation) and Supervisory. An ACE can own assets in the form of member contributions and each member is personally responsible for its debts.

What’s the best business form for an EU company to cooperate with a Portuguese company?

To collaborate with businesses in other Member States you can form an EEIG (European Economic Interest Grouping), which is an ACE but at EU level. With an international legal personality, the EEIG allows parties to come together and carry out activities in the EU to improve the exercising or result of their business activities.

The main differences to note when comparing an EEIG with an ACE are that individuals can form EEIGs, something you cannot do with an ACE, and the parties to the EEIG must be located in different EU countries.

Can a business start operations in Portugal without establishing a company?

If you’re looking to take a first step into Portugal, you can take a minimalist approach without having to establish a fixed corporate structure by opening a branch. This operates merely as an extension of the parent company without legal personality, assets, corporate bodies or equity requirements. You can, of course, allocate funds to the branch for operational purposes.

A branch doesn’t need a corporate body merely an appointed legal representative to manage the business, and a simple registration is sufficient for incorporation.

What types of companies can you set up in Portugal?

To take the next step and establish a legal entity, the most common methods are private limited liability companies and public limited companies. Portugal offers the added advantage of being able to incorporate either entity online or in just one day using a system known as the ‘On-the-spot’.

What are the obligations and requirements for a private limited liability company?

With a simpler governance structure, a private limited liability company (LDA) is particularly popular with those taking their first steps into Portugal or looking for smaller or shorter-term investments. There’s no minimum compulsory share capital, shares numbers are usually equal to the number of shareholders (a minimum of two is needed), shares must be of at least €1 and registration is with the Companies Registrar.

You can incorporate a sole shareholder company, but your liability as sole shareholder is not limited as you are personally and unlimitedly liable if you do not keep your company’s assets separate from your personal assets.

An LDA can be managed by one or more managers. General meetings are used to resolve managerial issues - such as the disposal / subscription of holdings in other companies or disposal / encumbering of real estate - and decisions are taken by a simple majority.

Supervision of LDAs is by a supervisory board or external auditor, but you must set up a supervisory board if you exceed at least two set thresholds for two consecutive years, namely: your balance sheet exceeds €1.5m, turnover exceeds €3m and/or your average number of annual workers exceeds 50.

What are the obligations and requirements for a public limited company?

If you’re looking to invest in larger or longer-term investments, a public limited company (PLC) is for you. With a minimum share capital of €50,000 divided into shares at a minimum nominal value of €0.01, PLCs require at least five shareholders - domestic or foreign - and shares are free to trade privately or on the Stock Exchange, in case of listed companies, without the need to register the sale or the acquisition with the Companies Registrar. Do note, however, that it is now mandatory that the company or the bank holding the shares keep a record identifying the shareholders and the number of shares they hold.

If your PLC’s share capital doesn’t exceed €200,000 you can have just a single manager, otherwise you need a board of directors and must adhere to one of the following models:

  • A board of directors plus a supervisory board or sole supervisor. Listed companies must have a supervisory board as well as any company that exceeds two of the following thresholds: balance sheet over €20m, turnover exceeding €40m and average number of annual employees exceeds 250;
  • A board of directors plus an audit committee made up of managers and an external auditor; or
  • An executive board of directors, a general and supervisory board and an external auditor.

The board of directors manages all aspects of your company’s business and is responsible for resolving any management issues, namely: acquisition, sale and encumbering of real estate; any collateral or guarantees; management reports and financial statements; partnerships or forms of cooperation with other companies; opening or closing of important business or relevant fractions; and any major changes in the company’s organization - acquisition of other companies, reduction of its activity and preparation of mergers.

General meetings don’t touch on managerial matters unless requested by the board and are instead used for resolution of any legal matters or those specified in the articles of association, such as: changes to the articles or share capital, assessment of the administration; election of corporate body members and their remuneration; removal of directors, members of the supervisory board or of the audit committee; and, resolutions relating to mergers, spin-offs or transformations of the company.

To note, three months after year-end, the General Assembly must approve your company's annual accounts and register them online at the Portal das Finanças by the fifteenth day of the seventh month after year-end.

What is the process to incorporate a company?

When it comes to the actual incorporation process, you can go the traditional route, online, or the speedy ‘On-the- spot’ method.

What does the traditional route of company incorporation involve?

Traditional incorporation involves more cumbersome steps, physically going to the relevant authorities, and of course a longer timeline and potential costs.

You first request a company name certificate with the National registry of Legal Entities – RNPC – either in person or online at www.portaldaempresa.pt or www.irn.mj.pt.

Next you must execute the articles of association by public deed or private document and deposit your minimum initial share capital in a bank (in the case of public liability companies).

Then follows registration with the Commercial Registry Office, publication of the articles of association and the member list of the company’s corporate bodies and finally registration with the Tax Authorities, Social Security and the Working Conditions Authority (ACT).

What benefits are there to incorporating online and how does it work?

For a 40% reduction in incorporation fees, and to avoid having to go to the relevant authorities, you can incorporate online through www.portaldocidadao.pt, with registration taking up to two working days.

You first fill in the relevant application form online, choosing from pre-approved documentation (including company name and articles of association, all available online) or submit your own. Do note that the online application must be made within 24 hours of starting your business activity.

A declaration of commencement of the activity then has to be filed with the Tax Administration within 15 days but you can choose to appoint a chartered accountant or choose one from the available list to do it for you. If share capital is involved, you must agree to deposit this within five days from the application.

The company is then registered either immediately or within two working days, depending on whether you choose pre-approved articles of association or submit your own.

To note, you cannot apply online if your company’s capital is subscribed to by contributions in kind because the transfer of assets requires an auditor’s valuation.

Be aware that to apply online the applicant must have a Portuguese ID card and a digital certificate to access the authorities online. Costs range from €180 using pre-approved articles to €380 for using your own articles, and you can even register a trademark for an additional €100.

What is ‘On the spot’ incorporation and what are the conditions to qualify?

‘On-the-spot’ is an instant way of incorporating your company at any of the many Desks around the country, with legalities and administrative issues taking as little as an hour and costing €360 if your company name is pre-approved or €435 if you request approval.

Certain conditions must be fulfilled on the day. All shareholders must be present with ID and Taxpayer info, or a relevant representative with a Power of Attorney, and certain documentation must be presented, but this is easily done with pre-approved models available online. There is a list of chartered accountants to choose from as well as articles of association etc previously approved and certified by the Companies Registry and notary services.

Again, a declaration of commencement of the activity then has to be filed with the Tax Administration within 15 days but you can choose your own chartered accountant, one from the pre-approved list or do it yourself. Share capital must be deposited within five business days following the incorporation.

Your company is registered that same day with all the relevant authorities – Tax, Social Security and ACT - and you receive the articles of association certificate, the company access code to its permanent certificate at the Commercial Registry, access to the company’s electronic card and its social security number.

To find out more about this and any other aspects of starting a business in Portugal, and how we can help, do visit our platform 'Why Portugal'.


Macedo Vitorino & Associados launched a new edition of its «Why Portugal» report today. 

«Why Portugal 2019 - Doing Business in Portugal» contains the main information needed for anyone who wants to invest in Portugal: the creation and organization of companies, partnership contracts, labour law, tax law, intellectual property, real estate and litigation. 

Together with the investor's guide we publish the «Why Portugal 2019 – How does Portugal compare?» report, which shows the situation of Portugal in comparison to other countries according to information from international sources such as the World Bank and the Economic Forum Comparative tables on the most important aspects to be taken into account by investors when choosing the best places to invest. 

"We are delighted to have been able to review and update the information provided by our investor guide. These reports represent the effort of many people and demonstrates a remarkable organization capacity that shows the way we work," says António Vitorino, the partner in charge of the" WhyPortugal "project since it started off in 2013. 

"After several years of crisis, during which it was difficult to explain the advantages of Portugal both to foreigners and to Portuguese, today it even seems easy to praise Portugal," added António Vitorino. "But we must always try to improve. The competitiveness of an economy always depends on its ability to innovate, to correct the worst and to improve the best. Competitiveness is a race: we cannot stop." 

This guide reviews the main aspects to be considered by foreign investors looking at Portugal as a place to invest, such as how to set up of a businessgovernment incentivesemployment rulestax systemintellectual property protectioninvesting in real estate and judicial system. 

Learn more at «Why Portugal 2019 - Doing Business in Portugal» and «Why Portugal 2019 – How does Portugal compare?» 


Recent changes to the law and an upcoming auction hope to take Portugal from Europe’s lowest solar user to a being considerable presence in the market.

The future may be getting brighter for Portugal’s solar industry. The country’s as yet unexploited sunny climate is being put to market next month with its first ever solar auction for 1.4 GW in four key regions - Portugal’s largest ever solar energy auction. The auction comes on the back of recent reforms to the Energy Law addressing setting up the way forwards for increasing the energy grid capacity.

There has, however, been criticism and a worry that the longer-term costs are being compromise for hitting short-term goals, says João Macedo Vitorino. “While the auction system itself has been discussed at government level, it has never been discussed with the market itself. Certain issues such as the impact of reducing the return on investment in a very competitive European market, long-term costs to consumers and clarity on the actual capacity available on the grid remain unclear.”      

Until recently, solar project licences were sought directly from DGEG, the Portuguese Energy Authority. Without a clear view of the actual capacity available on the grid, investors would go down the road of working on obtaining the production licence, getting environmental and geology reports, etc, but in the end there was either no capacity or the authorities simply said ‘no’, he explains. “This risk just wasn’t attractive for investors.”

Up until recently the costs of implementation were high and wouldn’t be feasible at market prices. “To sell energy at that price on the market wouldn’t get a return on an investment,” says João Macedo Vitorino, “but over the past two years, prices of solar panels has gone down, projects at market value are viable and the political will is there to get things moving with a new regime.”

From now on, to apply for a licence you first need a grid connection reservation title. This can be done in one of three ways. First, enter into a direct contract with a grid operator where there is available capacity in the grid; second, where there’s no such capacity, a direct contract with a grid operator but with the producer assuming the costs of connection to the grid; and finally through a Government auction, such as the one next month.

These positive changes to the regime have had a knock-on effect for current projects with licences or in the process obtaining them. “The Government has effectively cancelled these projects and they need to resubmit to the auction,” explains João Macedo Vitorino, “which means running the risk of refusal, so we are likely to see some court cases cropping up in the future”.

While next months’ auction has the potential to increase the number of projects to be connected to the grid, one concern is that successful bids are to be awarded on the basis of the lowest tariffs. While an aggressive  fixed tariff (starting at 20% below the market price as of today) means short-term savings for consumers, should energy prices go down the fixed tariffs granted in the auction will remain the same, adding a substantial advantage for the producers but imposing high invoices for the consumer.

Comparison can be drawn with what happened with the Portugal’s  small hydroelectric projects auction for capacity back in 2010. Bidders made offers for tariffs that couldn’t sustain the investments that the projects needed, projects didn’t go ahead, and no further auctions took place, he explains. “To hit the new 5GW to 6GW solar targets set by the Government, we would need at least 3 or 4 auctions to take place, which may not be feasible if conditions remain as they are as they may not be enough to attract investors.”

An alternative to this auction system would be a free market approach where all stakeholders have clarity on the grid capacity available today and in the near future. This would mean they could plan in advance where to invest, with a grid connection being granted on a simple principle of first-come first-served. While there are numerous viable locations for solar projects, such as in the Alentejo region, many do not have grid capacity access in their vicinity. To cover the distance needed to put these locations on the grid requires substantial investment, driving up the costs of the project itself, adds João Macedo Vitorino. “This is something that could deter investors when coupled with auction conditions designed to reduce project profitability. Although encouraging costs sharing between grid operators and developers could be one way to bridge this gap, as laid out in the revised Energy Law, investors will not be attracted to auctions in areas of low grid density.”

Ultimately, while elements of the new legislation and auction system do address difficulties brought up by market players, the overall solution and architecture has never been validated by those same market players. “While the potential is there to put Portugal on the solar map, the Government is trying to force the market players to share profit margins with consumers, which will most likely result in delaying the deployment of solar energy output in Portugal,” explains João Macedo Vitorino. Unless these conditions change for future auctions, we run the risk of history repeating itself and either failing to get the investors needed to increase grid capacity or see consumers bearing the costs in the long-term.

For anyone interested, the tender documents and maps of grid availability can be accessed online at https://leiloes-renovaveis.gov.pt/ and bidders registration is open until 7th July.

António de Macedo Vitorino
In 2018, Portugal won the 25th edition of the World Travel Awards for «Best Destination in the World» and «Best European Destination». But is Portugal just a nice country to visit or can Portugal become a preferred destination for investors?

In 2018, Portugal won the 25th edition of the World Travel Awards for «Best Destination in the World» and «Best European Destination» for the second consecutive year, along with 15 other awards.

Lisbon was voted «Best Destination City» and «Best City Break Destination». Madeira was considered the «Best Insular Destination» and Passadiços do Paiva «Best Adventure Tourism Attraction».

Portugal won awards for «Best Tourism Organization» and «Best Conservation Company». The Portuguese airline TAP won three awards. Five hotels in Portugal received awards, including «World’s Leading City Hotel», «World’s Leading Classic Hotel» and «World’s Leading Design Hotel».

The World Travel Awards reward excellence across all sectors of the global travel and tourism industry. Portugal beat many other recognized destinations such as South Africa, Brazil, Spain, Greece, India, Indonesia, Jamaica, Malaysia, Maldives, Morocco, New Zealand, Kenya, Rwanda, Sri Lanka and Vietnam.

Portugal was also recognized as «Best World and European Golf Destination» in the World Golf Awards in 2018.

The surge in tourism has been fuelling Portugal’s economic growth since 2014 with significant investments in new hotels and residential projects for short-term leases.

Since 2013, the number of international visitors increased from € 15,9 million to € 24,6 million in 2017. According to the Portuguese National Statistics Institute, tourism-related revenues reached € 15,2 million in 2017.

Foreign direct investment (FDI) increased 61%. Unemployment fell to 8,9% and 7.657 new jobs were created as a direct result of FDI.

The afflux of tourists is offering Portugal an unique opportunity for showcasing the country’s best qualities, attract new business ventures and make Lisbon one of Europe’s best cities to create innovative companies.

Lisbon is now recognized as a popular city for entrepreneurship, innovation, internationalization and financing of startups. 

According to EY, the perception of investors of Portugal’s future attractiveness for business increased 7% since 2013.

Portugal promotes the creation of startups through the «Startup Visa», a hosting program for foreign investors who wish to develop new projects in Portugal. Applicants for startup residence visas must among other things: 

  • Have a real and effective interest in developing a new venture, such as the creation of innovation-based businesses;
  • Propose a project with the potential to create at least five jobs in its first 24 months; and
  • Have the support of a certified incubator.

In November 2018, Lisbon hosted the annual edition of the Web Summit, now the largest event for startups in the world. The Web Summit brought about 60.000 visitors and 2.250 companies from 170 countries to Portugal. 

The City of Lisbon secured the Web Summit for the next 10 years and created «Hub Criativo do Beato», a new business incubation project in the centre of Lisbon that will house innovative and technology-driven companies. Factory Berlin, one of Europe’s largest incubators, Mercedes-Benz and Web Summit are among the first companies to secure a place at Hub Criativo do Beato.

For further information about Portugal’s economy and key legal aspects visit our web platform «Why Portugal».

António de Macedo Vitorino
The United States lead the World Economic Forum’s competitiveness global ranking, followed by Singapore and Germany. EU countries take half of the top 10 positions.

The World Economic Forum’s 2018 edition of «The Global Competitiveness Report» assesses the performance of 140 countries in 98 relevant topics divided in 12 different subjects, including, among others, infrastructure, health, financial system, market size, business dynamism and innovation capability.

For the first time since the financial crisis of 2008, the United States topped the global ranking, much due to the successful combination of an outstanding performance of its financial system with significant funds made available for venture capital and financing of SMEs (a leading 5.6 and 5.8 out of 7 in both indexes), fluid product and labour dynamics (with notable marks on HR practices and mobility) and the market size, second only to China.

Germany was 1st among the EU countries and 3rd in the global ranking. Singapore took the 2nd place. Switzerland and the Netherlands move down.

Portugal moves up from 42nd place in 2017 to 34th and from 18th to 16th in the ranking of EU countries.

EU countries kept half of the first 10 positions. The EU as a whole improved its performance with better rankings and additional Member-States in the top fifty economies.

China and India did not move up on the charts but added 0.9 and 1.2 points to their 2017 scores, respectively. There is still a substantial gap to the leaders in the innovation race, where China and India rank 24th and 31st respectively.

The EU, Portugal included, performed better in the WEF report, showing good results on improving the competitiveness of its economies, than in the World Bank’s «Doing Business 2019», where the EU is losing ground to emerging countries in the attraction of investors.

Portugal has its highest performance in the following pillars: Infrastructure, 19th, Health, 23rd, and Business dynamism, 27th.

The World Economic Forum points out the vulnerabilities of the small size of Portugal’s domestic market, which is an unavoidable fact that can only be compensated by a dynamic exporting economy, and Portugal’s fragile macro-economic stability, especially because of the debt dynamics where Portugal scores 70 points in 100, in line with Italy and ahead of Greece by almost 30 points. Portugal drops seven positions in the employment pillar Skills, but improves in half of the indexes related to the training of its workforce.

The Global Competitiveness Report 2018 highlights Portugal’s reputation as a jurisdiction with business dynamics and as the innovation hub in Southern Europe, leading the region in the growth of innovative companies, scoring 8.3 more points than Spain and 17.9 more than Greece.

Portugal improved significantly in the strength of institutions pillar, moving up 13 positions to 30th place.

Portugal achieves its best performance in crime-related incidences, 12th, road quality, 5th, electrification rate, 1st, inflation, 1st, and the prevalence of non-tariff barriers on product markets, 5th.

In total, Portugal scores 10.2 points above the average of all 140 economies. Portugal closed the gap to 12.4 points to the 10 most competitive economies.

For further information about Portugal’s economy and key legal aspects visit our web-platform «Why Portugal».

António de Macedo Vitorino

The World Bank reviews the ease of investment in 190 economies. The European Union, Portugal included, loses ground to emerging economies, but keeps half of the top 40 positions.

The World Bank’s «Doing Business 2019» assesses 190 different economies. The World Bank scores countries in 10 topics of relevance to investors, which include starting a business, protecting creditors in insolvency, obtaining building permits, labour market and judicial system.

In 2019, European countries as a whole fell in the global rankings. The OECD’s high income countries improved slightly, while other regions of the world moved at a faster pace.

Still, Europe scores half of the top ten positions. Denmark keeps leading the way in Europe and ranks in 3rd place globally, after Singapore and New Zealand, which remain the World’s top two economies. Portugal ranks in the 34th position, 14th of the European Union (EU) 28 countries.

The UK, which is widely recognised for its openness to foreign investment, falls from the 9th to the 11th place, overtook by Georgia and Norway. The US falls to the 8th position, from 6th in 2017.

It is worth noting that Georgia, which became independent from the USSR in the 90s, reaches the 6th position globally, improving on most topics and standing out in 2nd place in the global rankings: Starting a Business and Protection of Minority Investors.

Russia (#31) is now close to the top 30, when in 2011 it occupied the 120th position, while China climbs 32 positions from 78th place in 2017 to 46th in 2018.

Doing Business 2019 shows that Europe and other Western countries are losing ground to emerging countries in the East. Although EU countries still hold most of the top positions, their efforts to attract investors seem to have relinquished. 

Portugal shows good results in Starting a Business, Trading Across Borders, Resolving Insolvency and Getting Electricity.

The World Bank estimates that it takes 6,5 days to start a business in Portugal. In Germany, the same process takes 8 days, 10 days in Switzerland, 12.5 days in Spain and Greece, and 21 days in Austria. It should be noted that to start a business in Portugal may take a single day, as all acts for opening the business and the registration and communications to the Finance Department and Social Security are now done officiously in the act of incorporation.

The cost and procedural steps required to start a business in Portugal are in line with the average of the OECD high income countries. Judicial costs in Portugal, 17.2% of claim value, are lower than those of other European countries such as France (17.4%), Italy (23.1%) and the UK (45.7%).

The most negative aspects pointed out by the World Bank are related to the weak degree of protection, guarantees and information system given to creditors, which push Portugal to the 112th position, followed only in Europe by Luxembourg and Slovenia.

Portugal stands out positively in respect to the easiness and reliability of its electric grid, scoring the highest grade in the reliability of access to the grid, and also for the strength of the insolvency regime, reaching the 16th position and one of the best European scores (14.6 out of 16) in the insolvency regimes. Portugal ranks in the 1st position on Trading Across Borders, together with a few other EU countries, because of the easiness of making imports and exports.

Summing up, Portugal fares reasonably within the EU but is losing ground to emerging economies in the East. Portugal, like Europe, needs to boost reforms to make it easier to do business.

Read our paper here "World Bank publishes «Doing Business 2019»".

To learn more about Portugal's profile in this report click on «Doing Business 2019 - Portugal Economy Profile».


According to a paper published by the European Central Bank (ECB), «Foreign Direct Investment and its Drivers: a Global and EU Perspective» prepared by Federico Carril-Caccia and Elena Pavlova, Portugal is one of the three countries in Europe with less restrictions on foreign direct investment. In general restrictions on foreign direct investment in the EU are lower than those of other OECD countries. Portugal together with Luxembourg and Slovenia have "virtually" no restrictions on inbound foreign investment, says the ECB, while Austria, Poland, Sweden, Italy, Slovakia and France are above the EU average, although still below the OECD average.

To read the full paper click here «Foreign Direct Investment and its Drivers: a Global and EU Perspective»

To learn more about Portugal's investment conditions read our report «Why Portugal 2018 - Investors Guide»


For those who are looking to live, work and invest in Portugal, Macedo Vitorino & Associados published a new edition of its report «Why Portugal - Living in Portugal».

The report «Why Portugal 2018 - Living in Portugal» complements our investment guide «Why Portugal 2018 - Investing in Portugal» released earlier this year. We have also updated the "Living in Portugal" section in our digital platform «Why Portugal», with new chapters about the health and the education systems.

Available in English and Portuguese «Why Portugal - Living in Portugal» describes the main aspects to consider for those who want to live and work in Portugal. In «Why Portugal 2018 - Living in Portugal» you can learn more about how to obtain a residence or golden visa, how to buy or rent a house, Portugal’s working conditions and rights and have an overview of the Portuguese private and public education and health systems.

"Our report «Why Portugal 2018 - Living in Portugal» is very simple and brings together the most relevant information for those who want to move to Portugal. It also helps investors to learn about the living conditions of expatriates and Portuguese workers" says António de Macedo Vitorino, project coordinator and partner of Macedo Vitorino & Associados.

«Why Portugal 2018 - Living in Portugal» portrays today’s Portugal, a multicultural and open country, an unique place to live, one of the best places for families and retirees to live, the World’s 3rd safest place to live in, according the Global Index for Peace from Institute for Economics and Peace.

To read the report «Why Portugal 2018 - Living in Portugal», click here.

To access the «Why Portugal» digital platform, click here.

António de Macedo Vitorino

EDP’s Board of Directors rejected China Three Gorges’s (CTG) takeover bid for EDP. CTG’s bid of 3.26 euros a share represents a 4.8 percent premium in relation to EDP’s shares value on the day of the bid but is below the price of 3.45 euros a share paid by CTG to the Portuguese Government in 2011 when it acquired 21,35% of EDP. Presently CTG controls 28% of EDP.

The market expects the price to the raised or other counteroffers. EDP’s share price surged and fueled other Portuguese stocks.

If you want to know more about Portuguese takeover rules and merger control process, read our briefings:

A Guide to Takeovers in Portugal

Merger Control in Portugal


The «Why Portugal» platform is a pioneer project developed by Macedo Vitorino & Associados which offers economic, political, and legal information online, in an easy to access format.

The «Why Portugal» platform goes further than the «Why Portugal» investment guides published by Macedo Vitorino & Associados since 2014 as well as other national and international investment guides which are available in PDF and paper formats.

«Why Portugal» is available in Portuguese and English and organised in nine chapters, which describe how to set up a business, forms of investment incentives and government grants, how to apply and obtain a Portuguese residence permit or a golden visa, Portugal’s main taxes, acquiring and leasing property, hiring employees, intellectual property, software, patents trademarks and technology and dispute resolution.

The «Why Portugal» platform also includes a database of documents and publications in each chapter which gives easy and quick access to laws, official documents, reports from national and international organisations, official forms and contract templates.

“The project «Why Portugal» aims to be provide useful information to investors about Portugal. We believe that the promotion of investment should start by explaining in a simple and accessible manner the economic, political, social and legal conditions that interest investors. With this new platform we want to give investors access to the tools we use every day, giving away some of our own contract templates and forms.”, stated António de Macedo Vitorino, project coordinator and partner of Macedo Vitorino & Associados.

In preparing the «Why Portugal» website we used international sources, such as the World Bank, the World Economic Forum and the European Commission, which provide basic information to international investors about Portugal’s key economic, political and legal information and its competitive advantages when compared to other investment destinations in Europe.

To learn more about «Why Portugal» please go to https://www.macedovitorino.com/en/why-portugal/

This project reinforces Macedo Vitorino & Associados’ digital portfolio and online presence, following the launch, in 2016, of «MVStart», a program that aims to support the creation of startups in Portugal.