Portugal has one of the most favourable business environments in the World. The World Bank's «Doing Business 2018» Report ranks Portugal in the top 30 of the World’s most attractive locations to do business and in 13th place in the EU28 countries.

There are no restrictions to the establishment of businesses in Portugal. Certain business activities are regulated and require the approval of regulatory authorities, such as banking, telecommunications, energy generation and distribution, pharmaceuticals, etc.

There are no restrictions on foreign ownership of businesses and no nationality requirements regarding the ownership of Portuguese companies, save those established by European law. Foreign nationals may take positions in Portuguese corporations. There is no statutory quota of Portuguese nationals in the boards of companies established in Portugal or conducting business in Portugal.

The average time for incorporating a company and other formalities and registration procedures to start operating is five days.

The incorporation process can take one day if the investor choses to acquire a shell company.

According to the World Bank's «Doing Business 2018» Report Portugal is in the top 15 EU countries where it is easier to set up a business.

Portugal is a pioneer in the use of online platforms for the incorporation of companies and making available company records and accounts. The process of business creation is now totally integrated and dematerialized and allows the incorporation of new companies, the registration of trademarks and business names online.

The Portuguese process of business creation allows for full online service provision with focus on the requirements and demands of investors.

According to the European Commission’s «eGovernment Benchmark 2017» Portugal tops most of the charts concerning the availability and ease of use of eGovernment services.

Portugal has created an online platform named «Entrepreneurs Desk» (Balcão do Empreendedor), as part of its online «Citizen’s Portal» (www.portaldocidadao.pt) which centralizes the provision of eGovernment services to businesses and individuals. Some of the website’s sections are in English and Spanish, but most of the sections are only available in Portuguese.

Investors who wish to do business in Portugal may do so through corporate or contractual structures.

The most common forms of organisation are branches or companies in which the investors intend to develop their activity directly or through cooperation agreements with other companies, done through joint venture agreements, the incorporation of a complementary grouping of companies or a European economic interest grouping (EEIG).

Companies are legal entities created for a commercial purpose. The most commonly used types of limited liability companies in Portugal are quota companies (sociedades por quotas, abbreviated «Lda.») and joint stock companies (sociedades anónimas, abbreviated «S.A.»).

Quota companies have a simpler governance structure and are more suited for smaller or short-term investments. In contrast, joint stock companies are more commonly used for larger or long-term investments.

The capital of joint stock companies is divided into shares (ações) with a minimum value of €0.01. In contrast, the capital of quota companies is, as a rule, divided into as many shares (quotas) as the number of shareholders, representing the part each of them owns in the company. There is no minimum mandatory share capital in quota companies, but the value of each share must be equal to or higher than one euro. In joint stock companies, the minimum share capital is €50,000.

Joint stock companies require a minimum of five shareholders, while quota companies require a minimum of two shareholders. It is possible to incorporate a sole shareholder company. Still, in this case, the liability of the sole shareholder is not limited, as she/he is personally and unlimitedly liable in the case of the company's insolvency if the company’s assets are not kept separately from the shareholder's personal assets.

Unlike the shares of quota companies, which are registered with the National Registry of Companies (Registo Nacional de Pessoas Coletivas, RNPC), the shares of joint stock companies are designed to ensure that they can be freely transferable privately or in stock exchanges and do not need to be registered with the National Registry of Companies.

However, the differences between the two have become blurred, as it is now mandatory that the company or the bank where the shares are deposited keep a record identifying the shareholders and the number of shares that they own. In both types of companies, the transfer might be limited, but it is more difficult to do so in joint stock companies, where the rule is that restrictions must be set out in the articles of association.

Three months after the end of the year (which coincides with the calendar year), the General Assembly must approve the company's annual accounts and register them by the fifteenth day of the seventh month after the end of the year (15 July if the corporate year coincides with the calendar year). Registration must be completed electronically at «Portal das Finanças».

UNINCORPORATED JOINT VENTURES

Unincorporated joint ventures or consortia are set up through a contract where two or more parties agree to pursue a given activity jointly.

The unincorporated joint venture is used when the parties wish to undertake a limited and temporary project. The unincorporated joint venture has no legal personality and cannot have common funds.

Unlike other cooperation agreements, the unincorporated joint venture members act separately, acting jointly only when necessary to pursue a specific objective or develop an activity.

Unincorporated joint ventures are called “internal” when its members do not act together in relationships with third parties. Unincorporated joint ventures are said to be “external” if members present themselves to third parties as acting in partnership.

In internal unincorporated joint ventures, the members benefit from broad freedom in determining their obligations; in external unincorporated joint ventures, the parties must designate a steering body, a supervisory board and a leader.

The leader has powers of an internal nature, such as the organisation and implementation of cooperation among all parties, and of an external nature, including the power to represent the joint venture before third parties.

COMPLEMENTARY GROUPING OF COMPANIES

The complementary grouping of companies (Agrupamento Complementar de Empresas, ACE) is a form of association of two or more companies, endowed with legal personality, with the purpose of improving the conditions for jointly developing an specific activity or extract benefits from the activities developed separately by each of its members.

The ACE has its own organisational structure, with three main bodies: general meetings, a board (management and representation body), and a supervisory body.

The ACE may own assets made up of members’ contributions. Each member is personally and jointly responsible for the debts of the ACE, meaning that they share liability for any financial obligations incurred by the grouping

EUROPEAN ECONOMIC INTEREST GROUP

The European Economic Interest Group (EEIG) is the European equivalent of the Portuguese ACE. EEIGs are created by a contract where the parties that carry out activities in the European Union form an international legal entity with the purpose of improving the conditions for the exercise or the results of the activities that the founders develop separately.

The main differences compared to the ACE are:

• The EEIG may have natural persons as members, which is not allowed in ACEs;
• The EEIG must be composed of companies whose headquarters (or individual persons whose main activity) are located in at least two European Union member states.

The EEIG is composed of an Assembly of Members that acts collectively and a manager or managers with powers of representation, as well as other powers set by the members.

Relevant legislation

Companies Code [Portuguese Only]

Macedo Vitorino's briefings

«The Basics About How to Start a Business in Portugal» (2019)

«Portuguese Due Diligences» (2021)

«Merger Control in Portugal» (2021)

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We are used to working on all aspects of corporate and commercial law. We act regularly in domestic and cross-border transactions, including mergers and acquisitions, financings and foreign investments.

We can assist you in setting up your business in Portugal:

• Choosing the appropriate investment vehicle
• Setting up and registering a branch or a corporation
• Negotiating the company’s bylaws and shareholders’ agreement
• Negotiating investment agreements

If you have any question or wish us to provide a budget, please contact us to: whyportugal@macedovitorino.com

For more information on our practices and expertise please go to www.macedovitorino.com/en/expertise