Company formation process in Portugal
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Company formation process in Portugal


What types of companies in Portugal?

In Portugal, there are 8 types of companies that fall under two categories: 

Individual companies:  

  • The Individual Entrepreneur 

  • The Single-Member company 

  • The Individual Limited Liability Establishment  

Collective companies:  

  • The Joint-Stock company 

  • The Private Limited company 

  • The General Partnership  

  • The Limited Partnership 

  • The Cooperative 

 

Individual Entrepreneur:  

  • No minimum amount for share capital. 

  • Unlimited liability: the entrepreneur is responsible for all debts of the business. 

  • Personal property and business assets are combined.  


Advantages:  

  • Full control of the business. 

  • The possibility of reducing tax costs. 

  • No minimum share capital. 


Disadvantages:  

  • The risk of combining personal and business assets. 

  • Potential difficulty obtaining credit for funds. 

 

Single-Member company:  

  • A minimum value of 1€ for the share capital.  

  • Liability is limited to the amount of the share capital. 


Advantages:  

  • Full control of the company. 

  • Lower minimum capital. 

  • The owner's assets are not liable for debts incurred by the company, because they are separated from the company's assets. 


Disadvantages

  • No tax benefits.  

  • More complex to manage. 

 

Individual limited liability establishment 

  • Minimum capital of 5000€, 1/3 of which is in monetary form.  

  • The assets of the company and the assets of the entrepreneur are independent of each other.  

  • If the owner declares bankruptcy due to a cause connected to the activity of the company, the owner of the company is liable for all their personal and company assets (if it is proven that the complete separation of goods has not taken place). 


Joint-Stock company:  

  • Minimum of two partners. 

  • Minimum of 5000€ of capital.  

  • The assets of the company are independent of the personal assets of the partners.  

  • Liability is limited to the share capital.  

  • The capital is responsible for the debts of the company.  


Advantages:  

  • The separation of personal assets from the assets of the company. 

  • Personal assets are not liable for the debts of the partnership. 

  • It is easy to organize funds and investments. 


Disadvantages:  

  • No control of the business by an entrepreneur. 

  • Complexity in the formation and dissolution of the company. 

  • Minimum share capital. 

  • A member can be called by creditors to account for the entire capital. 

 

Private Limited company:  

  • A minimum of either five single or collective partners, or a single member if a company is incorporated. 

  • Minimum of 50000€ of capital.  

  • Each associate is responsible for the value of the shares to which they subscribe. 


Advantages

  • Each associate is only responsible for their contributions.  

  • It is easy to organize funds and investments. 


Disadvantages: 

  • Disadvantages: Great dilution of the control of the company (from the lowest to the highest shareholder). 

  • Complex and costly dissolution and incorporation.  

  • The company is subject to strict supervision if listed on a capital market. 

 

General Partnership:  

  • Minimum of 2 partners.  

  • No minimum capital requirement.  

  • Unlimited liability: the members are liable for their shares and the entries of all other members. 

  • Assets of the members and assets of the company are merged. 

  • One of the main characteristics of this type of company is working together with the advantages and disadvantages - joint and several liability. That is, each partner is liable not only for his debts but also for the debts of all other partners. 

 

Limited Partnership: 

  • This is a mixed company because there are two types of partners: a general partner and a limited partner.  

  • Minimum capital of 50 000€. 

  • Different liability according to the type of member (a limited partner is only responsible for his registration, and a general partner is responsible for all debts, including those of the other partners). 

  • Personal assets are separate from the company's assets for limited partners. 

 

Cooperative 

  • Non-profit, freely incorporated. 

  • Variable capital and composition.  

  • Minimum of 2500€ of capital. 

  • Members' liability is limited to the amount of the subscribed capital. 

  • Creation of the company by public act and private instrument.